A federal judge ruled Friday that a group of Black Cincinnati homeowners can go forward with a lawsuit accusing the city of running a discriminatory tax break program.
The lawsuit, filed last year in U.S. District Court, claims Cincinnati is more segregated and its Black residents are poorer because of the way the city hands out tax abatements to homeowners who fix up their properties.
The suit seeks to overturn Cincinnati's residential tax abatement program and to award potentially millions of dollars in tax breaks to Black homeowners who may have been victims of discrimination.
City lawyers asked Judge Timothy Black to throw out the lawsuit, but the judge on Friday refused. In a 28-page ruling, Black said the city may not have intentionally discriminated against Black homeowners, but it's possible the city administered the program in a way that resulted in racial discrimination.
Black cited data from the lawsuit and from the city's own website that show predominantly Black neighborhoods receive significantly fewer dollars in tax breaks than predominantly white neighborhoods, perhaps as little as 20% of the total dollar value. One neighborhood, Hyde Park, received almost 30% of all tax abatement dollars.
"While available to every homeowner, the tax credits have gone disproportionately, and in very large numbers, to predominantly Caucasian neighborhoods," the judge wrote. "Given the scale of the program, the idea that such disproportionate distribution would cause the harms alleged is plausible."
City lawyers also had asked the judge to dismiss the case on grounds the city's tax abatement program could not be blamed for discrimination in the city because so many other factors contribute to the problem, from economic disparity to the 2008 housing market crash. But the judge said the homeowners suing the city don't need to prove the program is the exclusive cause of discrimination, only that it may be a significant contributor.
City officials did not immediately respond to requests to comment on the ruling.
Robert Newman, the Cincinnati lawyer who filed the lawsuit, said Black's decision was good news for his clients, who want to end the tax abatement program as it's currently designed.
"It's horribly unfair and discriminatory," Newman said.
An Enquirer review of city data for tax abatements granted over five years from 2014 to 2018 found a similar pattern to those described in the lawsuit. Hyde Park led the way with $11.7 million in abatements. Mount Lookout, Mount Adams, Columbia Tusculum, Oakley and Over-the-Rhine are the only other neighborhoods to top $3 million in abatements during the five-year period.
Two of the largest Black-majority neighborhoods, Avondale and Bond Hill, received less than $1 million each during the period, according to The Enquirer's review. Westwood, the city's largest neighborhood, received less than $300,000.
The lawsuit claims the requirements of the city tax abatement program are to blame for the disparity. The rule mandating homeowners spend at least $5,000 on a home improvement project to qualify for a tax break is especially problematic, the suit says, because that is a difficult threshold for poor homeowners to meet.
Now that the judge has ruled against the city's motion to dismiss, the case will proceed to trial. No trial date has been set.
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