Norwood schools sue city, claiming 'irreparable harm' from tax reductions for developers
Norwood City School District says it will suffer "irreparable harm" if the city defines developments, including Factory 52, in a way that offers significant tax reductions.
The district's board of education filed a lawsuit against the city of Norwood on Monday in Hamilton County common pleas court.
According to the complaint, a 2024 city ordinance is outside the bounds of Ohio legislation and will cost the school district significant funding. The lawsuit stems from roughly three developments that are already using the ordinance to their advantage or in the process of doing so, said Norwood Board Vice President Brandon Atwood. One of those developments is Factory 52.
The lawsuit is rooted in the definitions of Community Reinvestment Areas. In Ohio, a city can define a blighted area as a Community Reinvestment Area, also known as a CRA, to encourage revitalization of that area. Property owners receive tax incentives to develop in these areas.
If an area is designated a commercial CRA, then the city can mitigate up to 75% of property taxes for up to 15 years for the property owner. Meanwhile, if an area is designated a residential CRA, then the city can mitigate up to 100% of property taxes for up to 15 years for the property owner.
While these tax incentives encourage development, they cut into school funds. Local property taxes are one of the primary sources of funding for schools.
The Norwood school district argues in the complaint that the city adopted an ordinance in December 2024 that violates the Ohio Revised Code because it permits a structure to be defined as both residential and commercial. This is the case even though Hamilton County would classify it as only commercial, Atwood said.
This applies to the current status of Factory 52. The developer of Factory 52 is working on a second development phase that will feature mixed-use space. Rather than defining the entire space as "commercial," and thus, the development receiving fewer tax reductions, the new ordinance would allow the developer to receive up to 75% of property tax abatement on the spaces that are used as commercial spaces and up to 100% tax abatement on the spaces that are used as residential spaces.
The school board said in the complaint the "District will suffer irreparable harm, damage, and injury" if the city continues to allow tax abatements in this fashion. It adds, "The District has no adequate remedy at law if the City is permitted to continue the same."
"This is precedent-setting in that it could impact every public school district in the state," Atwood said. "Think about if other developers got wind of this and then went to their city councils. ... Talk about significant loss of funding for education."
This article originally appeared on Cincinnati Enquirer: Norwood City School District files lawsuit that involves Factory 52
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