The idea of offering tax abatements for new economic development projects is not a new idea. Local governments use tax abatements to encourage new development by freezing property taxes at pre-renovation levels for a set amount of time.

Tuesday’s city council meeting made it painfully clear that the city is in need of set standards on what projects qualify for the abatement and how the abatement periods are set. Currently it appears to be a willy-nilly process, where tax abatements seem to be approved, rejected or amended depending on the mood of the council at the time.

On Tuesday, the city council approved at least its third tax abatement in less than two years, granting Chris Clabby, who is renovating the old Columbus Inn and Suites across the street from the Magnolia Bowl, a two-year abatement on a capital investment estimated to be between $3.5 million and $4 million. When completed, the facility, renamed My Home Columbus, will serve as an extended stay hotel.

The council approved the tax abatement for two years, meaning the developers will continue paying roughly the present property taxes for two years, at which point the property will be reassessed at its post-renovation value.

That sounds like a decent deal for the developer until you compare it to two previous tax abatements.

In 2022, the city approved a 10-year tax abatement for Chris Chain’s renovation of the old Stone Hotel, a $3.3 million investment that would create jobs for nine retail spaces in the building, along with 18 apartments.

Earlier that year, the council approved an 8-year tax abatement for Jim Mauldin’s renovation of the old Fred’s Dollar Store, a capital investment of $800,000 for a climate-control storage facility that would create, at most, two jobs. The 8-year term was set after Mauldin was asked how long he expected it would take for him to break even on his investment, something that was never mentioned as a consideration in Chain’s or Clabby’s tax abatements.

We believe both of the abatements were justified since they turned vacant and deteriorating properties into something new and useful. There’s a real benefit to that.

Even so, awarding these abatements without set standards is a lousy way to do business. How much capital investment is required? How many jobs must it create? How long do the abatements run? There are no clear answers to any of those questions.

Clabby’s projected capital expenditure is similar to Chain’s, yet Clabby’s abatement period is ⅕ the length of Chain’s.

As it has been said, good policy, like good art, consists of where the lines are drawn. There has to be some objective criteria to determine both qualification and abatement length.

Without those standards, the perception that these agreements are based on who you know rather than what it does for the city is on the table. The most effective way to prevent that is to establish clear criteria and demand that those who are granted tax abatements make good on their promises.

At some point in the future, another developer will approach the city seeking abatement. Before then, the council would be wise to set a more objective rubric.

The Dispatch Editorial Board is made up of publisher Peter Imes, columnist Slim Smith, managing editor Zack Plair and senior newsroom staff.

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