Columbus approves $150,000 to study economic-development incentives

Columbus plans to take a closer look at the incentives that it offers developers.

The City Council approved spending $150,000 on a contract with firm HR&A Advisors of New York on Monday night to analyze its tax-incentive offerings and to potentially offer suggestions for changes.

“It’s a prioirty to invest tax dollars in a way that leverages smart and sustainable growth as we see that kind of population growth in our city while also protecting public funds,” Councilwoman Elizabeth Brown said.

The analysis will look at how competitive Columbus is with other cities; how incentives affect development patterns; and whether the city should be offering different types of incentives. It will take up to six months to complete, said Steve Schoeny, the city’s economic-development director.

Tax incentives are to blame in part for flattening property tax revenue in recent years, said Hugh Dorrian, city auditor. Dorrian said property-tax revenue has bounced up and down about $500,000 a year over the past several years, but it hasn’t jumped significantly even as the city has grown.

In 2012, the city collected about $44.3 million in property taxes — about $900,000 more than what it will take in this year, Dorrian said. Next year, he’s expecting that to tick up to about $45 million.

“I don’t think there’s any question that one of the reasons these property taxes have been flat is because so much property has been exempted,” Dorrian said. “Tax incentives anymore, I think, have kind of reached the pinnacle of their usefulness. That is largely because of the competition among cities.”

Schoeny said the analysis will look at how the city competes with neighboring cities along with others around the country.

The study will include incentives for both residential and commercial tax incentives, he said.

Consultants will look at three or four Columbus neighborhoods to try to understand how incentives used there have affected them and how the city can get more value out of them. That could include, for example, encouraging environmentally friendly buildings and mixed-income development.

The city generally uses property-tax abatements and tax-increment-financing districts, along with income-tax credits, to entice commercial development, Schoeny said.

Taxes are forgiven with a property tax abatement, but they are set aside to pay for nearby public infrastructure improvements in a tax-increment-financing district.

Schoeny said the analysis will tell the city more about what “levers to pull” to maximize what it is getting out of its incentives.

Also Monday night, the council approved spending about $5.4 million to buy 16 new garbage trucks. The city will buy four trucks each from four different contracts. It will evaluate which truck works best and purchase more on that contract in the future.

The city has 83 automated side-loader trucks for trash pickup, and it replaces about eight each year, said Jeff Ortega, assistant director in the Department of Public Service.

The truck purchases that council approved Monday will come from the 2015 and 2016 capital budgets. The new trucks will be powered by compressed natural gas.

“This is an opportunity to review how this is being done to see what the industry is suggesting in terms of the latest technology,” he said.

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