25 May SHOULD CINCINNATI REQUEST ANY ADDITIONAL INFORMATION IN ITS CRA APPLICATION?
Using the annual payroll estimate of $150,000 and the financial positions in Exhibits 6 and 7, what will be the monthly rents in the proposed development? Are these calculations reasonable?
2. Cincinnati has a proportional income tax of 2.1%, for both residents and workers in the City. Without considering inflation, what amount of payroll would John Blatchford need to create in order for Cincinnati to break-even on the CRA tax abatement using the assumptions in the memo?
3. The ordinance reports a positive ROI for the City of Cincinnati. However, does the tax abatement, in its entirety, generate a positive ROI for the region?
4. Will some industries generate a higher ROI for a given property tax abatement? Why or why not?
5. Any future development contains uncertainty. How should an applicant calculate future payroll and employment, knowing that the answers will affect the value of the tax abatement. Is there an inherent ethical conflict?
6. Should Cincinnati request any additional information in its CRA application?
7. Cincinnati’s income tax of 2.1% applies to both workers in, and residents of, Cincinnati. Based on the two statements below, do you think that the City Administration properly calculated the ROI?
a) Section 13.C. CRA Tax Exemption Agreement
Community Reinvestment Area Employment. The Company shall (i) adopt hiring practices to ensure that at least twenty-five percent (25%) of the new employees shall be residents of the City of Cincinnati and (ii) give preference to residents of the City relative to residents of the State who do not reside in the City when hiring new employees under this Agreement.
b) Footnote to CRA Tax Exemption Agreement Memo for 205WM, LLC
The revenue gains from the Cincinnati earnings tax associated with the CRA may be impacted if the positions created or relocated to Cincinnati are filled by Cincinnati residents previously paying the earnings tax on wages earned outside Cincinnati. Potentially, the net revenue impact may be reduced because Cincinnati may be collecting all or some of the earnings tax from resident employees.
1. What improvements can be made to the CRA tax abatement program?
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