By Ken Alltucker
The Cincinnati Enquirer

Mayor Charlie Luken today will appoint two high-profile Cincinnati corporate executives to oversee a new private, nonprofit group charged with sparking downtown's struggling economic development efforts.

Procter & Gamble chief executive officer A.G. Lafley and Federated Department Stores chairman James Zimmerman will assume leadership of the upstart private group, named Cincinnati Center City Development Corp.

The group will have access to $150 million in public and private money to spur development of new shops, housing, offices and arts from the riverfront through Over-the-Rhine.

In what is the city's most overt shift of development efforts out of City Hall, the group will hire and pay its own workers and negotiate deals with the goal of restoring vitality to the region's core.

"This is what we've been talking about for 20 years - getting a structure that removes this (development) from the bureaucracy of City Hall and into the hands of people who can make deals," Luken said.

Creating the group is one of three steps recommended this year by Luken's economic development commission seeking to stem the loss of jobs and residents from the city of Cincinnati.

Other efforts include a revamped Port of Greater Cincinnati Development Authority and an economic develop- ment "strike team" under the control of City Manager Valerie Lemmie.

New York consultants John Alschuler and Cooper, Robertson & Partners are concocting a strategic "Center City" plan for reviving an eight-block region ringing Fountain Square and Over-the-Rhine, a plan that the new private group will be expected to turn to action.

Longtime downtown observers say the selection of Lafley immediately restores an ingredient long absent in the city's development efforts: credibility.

Lafley "recognizes the need to recruit a staff with the level of knowledge and sophistication that simply is not present in the city at this time," said Towne Properties principal Arn Bortz, a major downtown developer and former Cincinnati mayor.

Census figures show that Cincinnati lost 9 percent of its population in the '90s, and the city's tax base has stagnated with a steady stream of downtown employers leaving for the suburbs, creating a soft downtown office market. What's more, the riots and economic boycott of downtown have revealed the city's struggling race relations to a nationwide audience.

"Clearly, some of the indicators were not good . . ." Charlotte Otto, P&G's global external relations officer, said. "This has been a wake-up call for the city and business community."

Luken expects Lafley and retired Federated chief executive Zimmerman to help raise $50 million over five years to pay for the group's operations.

Startup funding of $17 million will come the Cincinnati Equity Fund, which will be folded into the new development group under the direction of Western & Southern Financial Group chief executive John Barrett.

It will be up to the corporate executives to figure out specific details about the new private group, including number of employees, annual budget and board size. Organizers will launch a national search with the goal of hiring an executive director this fall.

Lemmie stressed that the private group, which will not be subject to the scrutiny of public meetings, won't have direct control of the $100 million in city money.

But the group will be expected to initiate deals for the city or Port of Greater Cincinnati Development Authority - and either entity could approve spending public funds or issuing bonds.

"Any decision made with public dollars requires a public review," Lemmie said.

The city's contribution of public funds will come from traditional municipal sources - tax increment financing districts, federal community development block grants and empowerment zone incentives.

Luken has advised City Council members of his plans to appoint the new group, but he said no formal approval of the city's elected body is necessary.

Other steps to better coordinate or streamline groups with a role in downtown development are in the works.

Downtown Cincinnati Inc., funded by downtown property owners, has been reorganized into a group with the primary goal of promoting a clean and safe downtown.

While Luken's task force recommended an overhaul of the port authority, the group continues to operate with its goal of creating a riverfront development known as the Banks as well as cleaning up abandoned or polluted industrial sites known as brownfields.

The city of Cincinnati also is working to establish a one-stop center to improve the city's cumbersome permit process.

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E-mail kalltucker@enquirer.com