Flats East Bank

A rendering shows the completed Flats East Bank project on Cleveland's riverfront.

(file photo)

CLEVELAND, Ohio -- Developers of Cleveland's Flats East Bank want the authority to raise taxes in the district for 30 years to pay for future improvements and maintenance.

City administrators brought legislation to City Council Monday on behalf of the developers, The Wolstein Group and Fairmount Properties, that would authorize the council clerk to sign and submit a petition asking the state legislature to create a new community authority -- essentially declaring the Flats East Bank a special tax district.

Doing so would empower the developers to impose a one-and-a-half percent sales tax, a two percent bed tax and a two percent parking tax in the district beyond the city's normal tax rates.

The downtown Cleveland waterfront project has entered its $146 million second phase of development, which will feature restaurants, bars, a handful of retail stores and 200 apartments near the Cuyahoga River.

The $275 million first phase included the 18-floor Ernst & Young Tower, a 150-room Aloft hotel and a riverfront boardwalk.

The taxes would raise about $30 million over three decades. A draft of the petition circulating among council members provides a broad outline of possible uses for the money, including advertising of the district, festivals and other community events, insurance, security, associated operating costs, consultant fees, and legal and financial advising.

Council was expected to approve the legislation Monday night. But the piece was routed back to council's Finance Committee when it appeared that the measure wouldn't garner enough votes to suspend the rules and bypass a third reading required by state law.

Some council members were concerned that the legislation did not adequately specify how the developers could spend the money.

Others, including Councilman Zack Reed, worried that the sales and parking tax would be regressive in nature and disproportionately affect minimum wage workers employed in the district.

Tracey Nichols, the city's director of economic development, told council that the developers anticipate that visitors and tourists, rather than locals, would bear the brunt of the tax increase.

Councilman Joe Cimperman, who sponsored the measure, said other major cities across the country have used similar taxes for capital improvements in targeted districts, though it has never been done before in Cleveland.

The Finance Committee is expected to take up the ordinance again on Monday.