By Jason Warner, GOPC Manager of Government Affairs
The Ohio Senate is considering changes that were recently amended into the State Budget (HB166) which would treat property owned by residential housing developers differently than other property by freezing the taxes for up to three years of until the sexennial reappraisal is completed or until construction begins or the property is sold. These changes not only attempt to usurp local decision making on land use, community planning and economic development incentives with a one-size-fits-all mandate, but subsidizes urban and suburban sprawl by incentivizing greenfield development on the edge of our metros.
Originally introduced into the legislature as House Bill 149 (HB149), the provisions of the bill were amended into the budget very late in the process by the House Finance Committee. Prior to the inclusion of the provisions into the budget, HB149 had received only two hearings in the House Economic and Workforce Development Committee, with no opportunity for opposition testimony to be heard.
Greater Ohio Policy Center has joined with a number of organizations representing schools, local governments and local economic development interests in opposing both HB149 and the inclusion of the bill’s provisions in HB166.
The bill specifies that residential construction is not deemed to have begun even if streets, sidewalks, curbs, driveways or water, sewer, or other utility lines being constructed or installed. While this is intended to create an incentive for developers to retain and develop land and promote an increase in residential development, the fiscal impacts on local government will negatively impact local governments and school districts.
GOPC’s underlying concern with HB149 is that the bill essentially subsidizes sprawl by incentivizing and promoting economically and environmentally unsustainable development across the state at a time when Ohio’s population growth has essentially flat lined.
It has been noted by the bill’s proponents that while Ohio is the seventh most populous state, housing starts in the state are very low per capita, and the major share of the growth in Housing starts is in the Cincinnati and Columbus areas. This however aligns with population growth in those areas, where Census Bureau statistics show rates of growth in Hamilton and Franklin Counties at 1.8 percent and 12.6 percent respectively.
The United States Census Bureau estimates that Ohio’s population has grown by a modest 1.3 percent since 2010, well below the national rate of 6 percent over that same period. Ohio ranks 40th among all states and the District of Columbia in terms of population growth since 2010, and has had an average year to year rate of growth of just 0.16 percent. Yet, according to the forecast for total housing starts provided by the National Association of Home Builders, Ohio was tied for 16th in terms of total starts in 2018, ranking us ahead of faster growing states including Nevada (7th in Percentage Population Growth, 21st in Housing Starts), Oregon (14th in Percentage Population Growth, tied for 22nd in Housing Starts), and neighboring Indiana (30th in Percentage Population Growth, 18th in Housing Starts).
Below are three maps which capture the scope of the issue and why HB149/HB166 is unnecessary in a statewide framework. The first map shows population growth in the United States between July 1, 2016 and July 1, 2017. That year, Ohio’s population grew by 0.25%.
The next map shows the vacant housing rate across the United States in 2016. That year, Ohio has a vacancy rate of 1.5%.
The final map shows the increase in housing starts by state between 2016 and 2017. Over that year, Ohio saw an increase of 4.81% in new units constructed (or started at the very least).
What this shows is that, while Ohio’s population only grew by 0.25%, and 1.5% of the homes in the state were vacant, construction of new housing increased by 4.81%.
GOPC does not suggest that there is no need for development; indeed, as we have noted, there are communities throughout Ohio where the need for increased housing development does exist. It is our firm belief the financial risk of building-up an undeveloped area must be carried by the developer, not the local government in which the development is proposed to occur.
Likewise, we know that there may be some communities who are willing to shoulder the financial risks of building-up an undeveloped area and providing such an exemption for developers. GOPC does not object to any community that deliberately chooses to enter into such an agreement. However, to enact such a provision as a state mandate will undercut the redevelopment plans of many Ohio communities.
The enactment of the so-called Affordable Homebuilding and Housing Act will subsidize unnecessary urban and suburban sprawl and fuel economically and environmentally unsustainable development across the state of Ohio. At a time when the state has an abundant supply of available housing and the lowest rate of population growth in thirty years, it simply does not make sense to incentivize this dangerous build-up at the expense of local governments. It is for this reason that GOPC opposes these provisions and is urging lawmakers to reject this cookie-cutter policy and leave such decisions up to local policy makers.