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Columbus Spends 6% Of Its Budget On Development. Here’s Where That Money Is Going

By Jaelynn Grisso

Columbus is set to spend more than $60 million on development in 2020, according to the budget passed in February. Despite the seemingly large total, it’s a drop in the bucket for the budget as a whole.

The city’s budget provides an opportunity to see if the city is putting its money where its mouth is. Ginther likes to say his priorities are “neighborhoods, neighborhoods, neighborhoods,” and in some ways, his budget proposal reflects that. Yet, Columbus’ spending is on par or lagging behind similarly situated cities.

The mayor proposed $965 million for the 2020 budget in November, and City Council adopted it in February after tacking on an additional $5.3 million, with $4.5 million of that coming from the general fund. Those additional funds will go to public safety, development, a general financial fund and neighborhoods. Each council member advocated for specific increases, according to a Council press release.

“Many have said, ‘show me your budget, and I’ll tell you what you value,’” Council President Shannon G. Hardin said in the release. “Council’s budget amendments clearly show our commitment to the idea that if it’s not for all, then it’s not for Columbus.”

Development was marginally increased by $175,000 from Council’s amendment, with $75,000 for economic development and $100,000 for housing. Neighborhoods, another development-related budget not in the development category, increased by $20,000, according to the amended budget document passed in mid-February.

Councilmember Shayla Favor is the chair of the housing committee and chose to prioritize housing increases in the amended budget.

“One of the most important issues we face right now in Columbus, Ohio is more affordable housing,” she said in a video explaining her priority. “That’s why I’m looking forward to working with the mayor and Department of Development to find a liaison that will work to expand our affordable housing toolkit.”

The increases from City Council bring the total 2020 budget from the general fund to $969.5 million.

The 2020 Proposed Columbus Budget

Although development is one of the top five highest categories of spending for the 2020 budget — totaling almost $30 million — the category as a whole saw the biggest decrease in the budget compared to last year’s projected spending, which was slashed by 24%.

But, that doesn’t include line items for building and zoning services or neighborhoods spending, which are included in separate budgets. Adding in zoning and neighborhoods, the city plans to spend $60.8 million on development. That’s only 6% of the entire spending budget.

Code Enforcement- $9 Million

The 2020 Columbus budget proposal includes $9 million for code enforcement, which Ginther highlighted as a priority during the budget proposal announcement in November. That’s up $1.4 million from the year before. It’s also the highest budgeted amount within development.

During his November budget announcement, Ginther said the increased funds would go toward creating more Proactive Code Enforcement or PACE teams. These groups routinely go into communities and inspect properties rather than enforcement officials responding to resident-submitted violations, or 311 calls.

Ginther used the example of an apartment building in the Near East area of Columbus that recently received code violations after a similar team examined the property.

“The 500-plus unit apartment complex was home to multiple code violations making the residences unfit and sometimes unsafe, but it also generated literally hundreds of police runs,” he said. “With another PACE team, we’ll be able to continue to hold landlords accountable.”

The history of code enforcement and changing neighborhoods is a troubled one, and it’s questionable how much code enforcement helps or hurts residents.

 Source:Matter News Created with Datawrapper

On one hand, as the mayor argued, it can keep landlords in check and ensure they are providing adequate housing to renters. On the other hand, code enforcement has also put an extra burden on residents, especially homeowners and building owners.

In Cincinnati’s neighborhood Mount Auburn, for example, residents said they were hit with a deluge of code violations during a sweep from a team similar to Columbus’ PACE teams. Some of the residents and property owners who received citations said they were unsure about their ability to address the violations, according to Cincinnati’s CityBeat. One man who owned two small apartment buildings in the area got a violation for siding falling off and an issue with a porch. He eventually ended up spending $3,500 in fines and a night in jail before posting bond, also according to CityBeat.

In Columbus, code violation complaints can be filed by anyone. The violations — usually reported by residents calling the city’s 311 hotline — played a key role in Olde Towne East’s gentrification in the last two decades.

“There is this narrative out there that code enforcement is forcing all of these folks out of their homes. But it is never our intent. Frankly, government does not move at a speed where that would happen.” – Hannah Jones, Deputy Director of Community Development

In the early 2000s, the 311 complaints allowed new residents to put pressure on long-time residents in Olde Towne East to make the repairs or sell their homes, forcing them out of the neighborhood, according to a report by Linda Bryant, who co-produced the 2001 documentary “Flag Wars.” The documentary detailed conflicts between the existing working-class black residents and the higher-income, gay white residents who were moving into the neighborhood.

She explained that the culture of the neighborhood was not to report neighbors to code enforcement before new residents started moving in.

“Residents usually talked to each other about what was going on in the community and resolved problems informally,” she wrote. “[T]hey did not bring trouble upon one another by involving outside officials.”

Many of these changes may still impact residents in the Near East area.

Deputy Director of Community Development Hannah Jones said the intent behind code violations is not to push residents out, but to help make housing safer and protect tenants. The Department of Development has a fund with about $500,000 allocated per year to help lower income residents make emergency repairs to their homes if it is for the safety of the building.

But there isn’t any assistance from the City for visual violations like chipped paint, city development officials said.

“The process of going from a violation to somebody actually being removed from their home for chipping paint — first of all, we’d never do that — and secondly, it takes like so long,” Jones said.

Her Department of Community Development oversees housing and code enforcement.

“There is this narrative out there that code enforcement is forcing all of these folks out of their homes. I don’t deny that they might feel that pressure and they might be hearing it from folks who may not have their best interests at heart. But it is never our intent. Frankly, government does not move at a speed where that would happen. So wrestling with the aesthetic stuff, though, is a conversation, and we’ve had it in a number of communities,” she told Matter.

If a homeowner fails to address a cited code violation, they could face fines of up to $1,000 and 180 days in jail for criminal-related penalties, as well as a separate fine of up to $250 a day and potential foreclosure for civil-related penalties, according to the City of Columbus’ website.

Housing- $7.5 Million

Another top subcategory within development is housing, which is budgeted for $7.5 million for 2020. That’s up from the year before by $942,357.

Most of this year’s housing budget, $6.3 million, is for the homelessness nonprofit Community Shelter Board. The money will be used for housing and helping unhoused folks find permanent homes.

Ginther also said affordable housing is a priority for the City during the budget announcement in November.

“We’ve got to create housing residents can afford, and we know density is key,” he said.

The City aims to foster more growth — and as a result more density — by incentivizing the construction of new housing through a community redevelopment program, which is part of the federal Community Redevelopment Act (CRA), said William Webster, assistant director of the Department of Development. This act has fostered growth in areas such as Easton, the Short North, Franklinton and Weinland Park.

 Read more about the CRA and its implications for Columbus here.

Columbus has experienced sharp increases in its population in recent years — and alongside that, significant increases in housing demand — which has caused housing in Columbus to become even more unaffordable to residents.

In fact, last year’s rising housing costs caused Columbus to reach its lowest housing affordability in 10 years, according to Columbus Business First.

Economic Development- $4.5 Million

Economic development accounts for $4.5 million of the development category in the 2020 budget.

On the surface, that may seem like a sharp decrease from previous years, but it’s not as much of a reduction as it appears on paper.

The reason it seems lower is because the City budgets much less for economic development than it ends up actually spending. The city only budgeted a few million dollars for 2017, 2018 and 2019, but actually spent $20.3 million, $19 million and $16.8 million, respectively. That trend has continued since 2015.

So why are the actual expenditures almost four times as much as the proposed budget?

Source: Matter News. Click here for interactive version.

It’s because of incentives the city pays out to developers from a general city fund labeled “Finances City-wide” on the budget. The money used to incentivize development is budgeted in that fund, but after it’s paid out to developers, the money is accounted for in the economic development fund, said Dan Giargandella, deputy director of the Department of Finance and Management for the City.

The biggest reason for this separation is that the City requires reports from developers before they dole out incentives, and those reports don’t get in until after the year has started, Webster, assistant director of the Department of Development, said.

“We’re not able to say definitively how much we’re going to need,” he said. “So instead of being in a situation where [the Department of Development is] giving us too much, we are leaving the money where it should be until we know how much we need.”

More than $10 million are budgeted in the “Finances City-wide” category that end up being development dollars, which makes the budget proposals look like the City is spending much less on economic development than it will likely actually spend.

That money is slated for incentive packages given to developers, city officials explained, that range from trying to encourage downtown development to fostering job growth.

The city most often tries to encourage development through tax breaks, which generally means that the company owning the property doesn’t have to pay a portion of property taxes for a specific number of years, usually 10 or 15.

However, these specific incentives work a bit differently, Webster said. Instead of allowing the company to not pay taxes initially, these incentives work by giving companies back a portion of what they paid in taxes.

It works essentially like a tax refund, but comes from a different source. The money the City gives developers is not from taxpayer dollars, but from fees that the City charges for certain services, Webster said.

Neighborhoods- $6 million

“You’ve all heard me say this before, and you’ll hear me say it for the next four years. My top three priorities are neighborhoods, neighborhoods, neighborhoods,” Ginther said while announcing the budget proposal in November. “Neighborhoods are the backbone of our thriving community, and we’ll continue to invest in them in 2020.”

While it comes as no surprise that Mayor Ginther announced neighborhoods as his top three priorities, the Department of Neighborhoods has a relatively small budget compared to development and building and zoning services. But over time, it has increased steadily since Ginther created the department in 2016. It has nearly doubled from then to the $6 million that is proposed for 2020.

The neighborhoods department is responsible for managing the 311 hotline (the city’s non-emergency help phone line), community relations through a commission in the department, and neighborhood liaisons who are tasked with advocating for the neighborhood.

Although the neighborhoods budget is relatively small, Giargandella, from the finance management department, noted that the mayor works to help neighborhoods in various budgets.

“If you look out throughout the city in different departments, almost all touch in some area on neighborhoods,” Giargandella said.

Building and Zoning Services- $25 million

The other development-related budget is the Department of Building and Zoning Services (BZS). It’s fairly large at $25 million, but it’s a mostly self-sustaining department, Giargandella explained. The department charges developers fees for services such as building inspections, which provides income for the department that goes into a special Development Services fund that then feeds back into the department.

The relationship between the Department of Development and BZS is pretty straight-forward: The development department creates plans and looks at development overall for the city, and BZS implements those plans and regulates development for specific projects.

Outside of Top 5 Expenses, remaining budget items get $170 million

All development-related categories — building and zoning services and neighborhoods — combined with the development category itself make up 6% of the total proposed 2020 budget.

Other top expenses include public safety, public service, finances city-wide and parks and recreation, with public safety taking up about two-thirds of the budget. Public safety covers things like the fire department and police, and it is consistently one of the biggest items in the budget year after year.

The other nearly $170 million in the budget includes departments and areas such as health, city-wide technology, education, civil service and paying city officials in offices like City Council and Office of the Mayor. Funding for the Department of Neighborhoods is included in that as well, with $6 million going toward it.

A brief look at development spending historically

The development budget has largely increased over time, with the biggest category on the rise being economic development.

Since about 2015, the actual spending for development has been around $40 million per year. The proposed total 2020 development budget comes to $29.8 million, but because of the way economic development is budgeted, actual spending will likely be much higher based on these past trends. As a reminder, that’s not including Neighborhoods or Building and Zoning Services.

Comparing Columbus to other cities

Columbus was one of the top 15 cities that gained the most people in the country in 2018, according to the U.S. Census Bureau, and it is the only Midwestern city to make the list. Every other city growing as fast as Columbus is in the South or the West.

Out of the cities with the highest population increases, several of them are similar sizes to Columbus, ranging from just over 700,000 to 960,000 residents. Among those include Austin, Seattle and Denver. Seattle saw the biggest increase of the three at 15,354 new residents in 2018. Comparatively, Columbus increased by 10,770 new folks.

Despite the similarities in growth and population size, Columbus, Austin, Seattle and Denver spend varied amounts on development, ranging from $60 million to $282 million per year.

Seattle spends the most with a whopping $282 million going toward neighborhoods and development in the 2020 budget proposal, which is 4.5 times what Columbus spends. That includes $124 million for housing.

Seattle’s housing crisis has been years in the making. In 2015, the mayor declared a state of emergency for homelessness caused by rising housing costs. The next year, he increased funding for housing for the crisis.

In more recent years, the affordable housing crisis has moved beyond affecting mostly lower-income residents to now affecting middle-income residents as well. Last month, KUOW — an NPR station out of Seattle — reported that a woman making $57,000 a year can’t afford to live in Seattle anymore. That’s $5,000 more than Columbus’ median income for a one-person household. More than 40 percent of middle-income folks in Seattle reported that housing costs were a burden, according to KUOW, and the median home price was “well above $700,000.”

Facing similar issues, Austin spends more than Columbus, but only about half of what Seattle is spending. Austin’s 2020 budget includes $49 million for economic development and $65 million for development services, totaling $114 million.

Denver spends less than Columbus at $66.7 million in the budget for 2020 for both the City and County, which includes economic development and community planning and development. They budgeted $49.2 million for the Department of Housing Stability and $533,057 for code enforcement.

To compare, Columbus alone budgeted $60.8 million for development, neighborhoods and zoning, and Franklin County budgeted $33 million. (That doesn’t include the separate “finances city-wide” budget that houses some development tax incentives). Denver’s population is close to Columbus’ but quite a bit less at 716,492 compared to 892,533 for Columbus.

Stephanie Karayannis Adams, director of budget management for the City and County of Denver, said spending on development has increased in the last decade, with much of that increase going toward affordable housing as Denver’s housing prices began to skyrocket. The city and county increased spending in development by about 44% in the last 10 years.

Austin has had similar issues with housing affordability and demand, and Denver has seen drastic increases in rents and home prices.

A quick look at regional comparison cities

Although Columbus is the only city in the Midwest to make the list of highest population increase, the City spends around similar amounts on development when compared to other regional cities such as Indianapolis.

For the City and County of Indianapolis, officials budgeted $91.5 million. The total for Columbus and Franklin County is $93.8 million. Indianapolis isn’t growing like Columbus, but the populations are similar in size at 872,680 residents.

However, Columbus spends much more than other major Ohio cities. Cincinnati budgeted $6 million for 2020, and Cleveland budgeted $2.5 million.

A city’s budget is only one show of how it delivers on promises and priorities, but it’s a pretty big financial display. Putting dollars behind major issues like housing affordability and equitable development can make all the difference between paying lip service to grand ideas versus fully addressing root issues.

For Columbus, the results will be put on display even more as officials pull back the curtain on their priorities by putting those dollars to use throughout the rest of the year.