Columbus Won't Punish Developer That Failed To Meet Tax Break Agreement

Jun 20, 2018

The city of Columbus will not penalize a Short North developer that received tax abatements but did not deliver on promised jobs.

City officials say developer Pizutti promised to create 217 new jobs while building a Short North parking garage and nearby office space. In return, the 2012 agreement granted Pizutti a 10-year, 75 percent property tax abatement.

The developer, though, created just 20 jobs that paid more than $12 an hour, which was the city’s minimum in order to count toward abatement deals at the time. The city has since increased that minimum to $15 an hour.

The wages associated with those 20 jobs came in at about $1.2 million per year, far below the expected amount of $13.3 million.

The company did create more than 100 other jobs, but the overwhelming majority paid below $12 an hour, the wage needed to count toward abatement agreements. The wages from those jobs combined with the 20 higher-paying jobs totaled about $10 million.

Despite the shortfall, Columbus City Council voted this week to not penalize the company, and to instead amend the tax abatement agreement to reflect how many jobs were actually created, rather than the number promised.

Columbus’ $12-per-hour benchmark was in place at the time the Pizutti deal was passed, but was not written into the Pizutti agreement until Monday. The original deal includes no mention of the $12-per-hour minimum. Even including the lower-wage jobs, Pizutti still fell short on the number of jobs promised.

The deal with Pizutti was approved before Council President Pro Team Michael Stinziano took office. He sided with a city board that evaluates tax abatements when he voted to restructure the agreement.

“We’ve always leaned and followed the recommendation of the incentive review group, and this wasn’t one that necessarily stood out different than previous recommendations that they’ve made to us,” Stinziano said in an interview with WOSU.

Pizutti did not immediately respond to WOSU’s request for comment, but managers have previously criticized how the city tallies jobs that count toward abatements. They also claim the project in question created many jobs that in turn led to more jobs.

When asked about whether the restructured abatement deal sends a message to other developers, Stinziano referenced an effort to gather public input on possible changes to how the city grants abatements. One of a series of public hearings to gather public input on the issue is Wednesday at 5 p.m. inside council chambers in City Hall.

Earlier this year, the city announced plans to look into potential changes to how abatements are handed out. The proposed changes include making developers in the Short North and other “market ready” neighborhoods building anything five stories and higher to have at least 20 percent of residential units be affordable for people making 80-100 percent of the region’s median income.

Council has been criticized for handing out abatements to developers in the Short North, an already-thriving neighborhood sandwiched between some other neighborhoods with much higher poverty rates.

A study released last year found that generous tax abatements were not necessary to spur certain types of residential development in the Short North.