WASHINGTON — The U.S. Department of Housing and Urban Development on Tuesday named Hamilton a renewal community, a federal designation that enables the city to offer tax credits and other incentives for economic development.

        The city, 20 miles north of Cincinnati in Butler County, will not receive any specific federal grant money with the designation but can use the tax and other incentives as leverage during the next eight years to keep existing businesses and lure new developers.

        HUD also selected Youngstown in northeast Ohio as a renewal community.

        “It gives us a leg up,” said Timothy Bigler, director of the department of economic development in Hamilton.

        The incentives will target a section on the city's east side, an older industrial area where poverty and unemployment rates are higher, Mr. Bigler said.

        Republicans in Congress created the idea of renewal communities in 2000 in part to counter the Clinton administration's empowerment zones. In empowerment zones — including Cincinnati — the federal government initially promised $10 million in federal money for 10 years along with a variety of tax incentives.

        But Congress has consented only to about $3 million in annual spending on many of the zones, and some have had difficulty making progress, including one that covers nine Cincinnati neighborhoods.

        A renewal-community designation does not come with any federal money but offers different types of tax breaks designed to encourage development.

        HUD selected 40 renewal communities from more than 100 applications across the country.

        “These tax incentives will help businesses grow in some of our country's most challenging communities,” said Joseph Galvan, HUD's Midwest regional director.

        Sen. Mike DeWine, R-Ohio, who appeared Tuesday in Youngstown, said the designation would bring renewed hope to the two Ohio communities.

        “By working together, we can transform the economic landscape of not just Hamilton, but the entire southwest Ohio region,” he said.

        Renewal communities will be eligible to share in about $6 billion in federal tax incentives and $11 billion in federal low-income housing and new market tax credits.

        Hamilton, which has lost about 3,000 jobs in the past few years as companies closed or moved away, is expected to offer tax incentives and improved social services for businesses interested in the east side.

        Companies will be eligible for wage credits of up to $1,500 for newly hired or existing workers who live on the east side. Companies will receive credits of up to $2,400 off federal tax liability for hiring workers from social groups with traditionally higher unemployment rates or special needs.

        Companies hiring people leaving welfare will be eligible for credits of up to $3,500 in the first year of employment and $5,000 in the second year.

        Companies also will be able to expense an additional $35,000 a year in equipment and machinery and enjoy a zero-percent capital-gains tax rate on assets or property purchased on the east side and held for at least five years.

        Developers can receive a federal tax credit on 5 to 6 percent of an investment in a renewal community, and home builders can obtain tax credits for new or renovated rental housing.

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