There is growth and investment going on in our downtown. Newcomers may not realize that not long ago, investment was going to the suburban mall in Lansing and downtown was struggling. If you visit cities of similar size around upstate New York today, you’ll get an idea of what Ithaca looked like 15 years ago. Ithaca’s turnaround was no accident.
Much of the credit for the rebirth of our vibrant downtown belongs to leaders at the City and the Industrial Development Agency (IDA), who developed the “Density Policy,” now known as CIITAP (Community Investment Incentive Tax Abatement Program). A unique program to combat suburban sprawl, and mitigate the extra difficulty and expenses of building in a city versus a suburban “green field,” this policy has attracted development to the urban core of our county. It has worked, and it continues to work, to the benefit of all of us.
In the five years of the CIITAP era, the Commons area has seen the approval and construction of nearly $200 million in new tax base. The City of Ithaca’s tax rate declined almost 38% in the past four years, largely because these new projects are now contributing to the tax base.
Beyond the direct property tax benefits that have come from these projects getting built, there are multiple indirect benefits for our community:
We have been able to attract developers to build some of the most energy efficient buildings in Tompkins County. These projects set a new standard for what is possible here.
The projects have added substantial amounts of new housing without removing any.
Having these projects around the Commons creates economic activity for local businesses (For example, estimates for the new Marriott Hotel show an annual spend on food, beverage and shopping of over $1 million.).
The local dollars spent at our local businesses result in sales tax revenue for our local governments.
IDA projects pay property taxes from day one and provide substantial tax revenue for decades afterwards. The incentives they get only apply to the increase in value due to the new construction, and the new property taxes phase in over seven to ten years, after which the owner is paying 100% of the taxes. The new Marriott Hotel contributed more than $100,000 in new property tax revenues last year alone.
Development in the urban core – of housing as well as commercial and office opportunities – combats climate change. The more walkable our community is, the lower our carbon footprint is as a community. Building a sustainable future will be impossible without a strong and vibrant downtown.
This is what success looks like. Truly, other upstate communities marvel at what’s happening in Ithaca. Yet, there are some people in our community who claim that CIITAP is a failure and has “run its course”; that the IDA is just gifting tax abatements to wealthy developers; that the projects do not result in living wage jobs; that the IDA should focus instead on affordable housing. These claims are dressed up as statements of progressive values and protecting our community. While these claims may be easy to make, they do not hold up to scrutiny.
Before any project is approved, the IDA staff works to determine if the development would be financially viable without the support. Some projects don’t move through the process for exactly this reason.
An abatement does not apply to the existing taxes. The developer continues to pay the base property taxes. The temporary abatement only applies to the new value that would not exist otherwise, and that abatement reduces over time.
The IDA has a long-term commitment to work with Ithaca Neighborhood Housing Services and any other developer that is willing to construct affordable housing here. For example, the IDA supported the Hancock Plaza affordable housing project. That commitment will continue.
IDA-supported projects create construction jobs and then the permanent jobs that follow. In 2016, the average hourly wage of these career opportunities was $28.00. While some of the new jobs may be below that average, employers invest in training and provide opportunities for advancement.
For those of us who have a progressive vision for our community, there must be a realistic and sustainable way to fund the programs we care about. As examples, affordable housing, responding to the opiate crisis, improvements to our criminal justice system and supporting alternative energy options all require government investment if we wish to make a difference. As representatives of the city and county, we want to make these things happen.
Giving up on new development as a revenue resource is, frankly, careless and foolish. Raising taxes or cutting other services are poor options to find the funding. Creating new revenue through these investments is a sustainable way to allow government to do a better job. Our community should make no apology to those who advocate for nothing to be done; rather, we can be proud of what we have achieved and look to a promising future for our city.
Rich John is a Tompkins County Legislator and IDA member. Svante Myrick is the Mayor of the City of Ithaca and an IDA member.
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