CINCINNATI — The city of Cincinnati has taken steps to reclaim some of the tax breaks General Electric received for building — but never filling — a 12-story office tower at The Banks.
In fact, City Manager Sheryl Long took the first step in June — four months before GE announced it would vacate the property by early next year.
Long sent a notice of default to Matthew Griggs, global facilities leader for GE Aviation, saying the company violated two tax incentive agreements by failing to maintain 1,800 jobs and $140 million in annual payroll at 191 Rosa Parks Street.
“These failures are of significant concern to the city,” Long wrote. “If GE fails to respond timely and accordingly, the city may exercise its rights under the agreements including but not limited to termination of the agreements and requiring repayment of foregone taxes.”
It’s one of two surprising twists that the WCPO 9 I-Team discovered as it tried to unravel the impact of GE’s departure from The Banks. Public records from the state of Ohio show GE modified its state agreement for tax credits in 2017 to reduce the number of jobs it was required to maintain at The Banks. Those changes were approved by the Ohio Tax Credit Authority in December 2017 but weren’t publicly disclosed until now.
A spokesman for the Ohio Department of Development said GE has received tax credit certificates from its deal with the state but wouldn’t reveal the value of those credits and whether the state will seek repayment.
“General Electric Company will be required to file an annual report by March 1, 2024, for the 2023 reporting year. This report will be used to determine if the company is in compliance with the tax credit agreement,” spokesman Mason Waldvogel wrote in an email response to I-Team questions.
GE said it has brought more than 600 jobs to the building by subletting four floors at The Banks and it's now finishing construction on two floors while engaging in "active discussions" with additional tenants.
"GE has invested more than $70 million to develop The Banks as a modern business space," a company spokesman wrote. "In addition, we are committed to providing another $5 million to support local needs like education and mental health in Cincinnati."
Tax breaks never panned out as planned
GE’s 2014 decision to build a global operations center at The Banks was celebrated as an economic development coup for the city and county, which offered up to $66 million in tax breaks and parking discounts to go with an Ohio tax credit agreement that was said to be worth $51.6 million at the time.
The local incentives included city earnings tax credits worth up to $38.8 million, a property tax break estimated at $12.5 million and a 30% discount on employee parking that was expected to cost Hamilton County about $15 million. It’s the property tax that city officials are most likely to claim now, since GE never created enough jobs to qualify for tax credits and the parking discounts came from a separate contract with Hamilton County.
The city estimates GE has so far received $15 million in reduced property taxes from its 2014 property tax abatement deal.
“The city has been in active negotiations with GE” since June, spokeswoman Mollie Lair said. “These negotiations are ongoing and we are seeking a mutually beneficial arrangement to resolve the defaults under the agreements.”
Tax credit deals are ultimately worth a percentage of income taxes paid by employees after companies meet employment and payroll goals established by the agreement. Ohio’s deal called for GE to receive an 85% refund on state earnings taxes for up to 15 years if GE created 1,400 new jobs and an annual payroll of $140 million. Cincinnati’s tax credit deal offered the same terms, except that its job creation goal was 1,800 and the city was prevented from declaring GE in default if it met 85% of that goal — or 1,530 jobs.
Annual reports from the city’s Tax Incentive Review Council show GE’s employment at The Banks peaked at 1,398 in 2019, well below the level required for GE to claim any of the $38.8 million in tax credits it was eligible to receive in its 2014 agreement with the city.
State records show GE claimed to have 1,441 jobs and a $155.6 million payroll at The Banks in 2018, which was high enough to claim state tax credits. But by that time, GE’s tax credit deal had been quietly downsized in a contract amendment approved by the Ohio Tax Credit Authority on Dec. 4, 2017.
Instead of an 85% refund, GE agreed to a rate of 3.3% for two years, followed by eight years with a rate of 3%. The agreement’s original 15-year term was reduced to 10 years and its job goal declined from 1,400 to 974 full-time equivalent employees.
The revision happened two months after WCPO broke the news that GE was cutting jobs at The Banks amidst a corporate review of the company’s cost structures. That review led a 2021 decision to split the company into three parts, a transition that won’t be finalized until next June.
In hindsight, the state’s 2017 tax credit revision was a clear signal that GE no longer expected to fulfill the job-creation goals it agreed to in 2014, but the change was never announced by the company or the state. Instead, it was ratified in the Ohio Tax Credit Authority’s last public meeting of the year, packed with an agenda of 15 new projects and 36 items of “other business.”
