Tuesday, March 16, 2004

Condos subsidy close to final OK


Committee approves, council set to vote

By Ken Alltucker
The Cincinnati Enquirer

Cincinnati City Council on Monday took a major step toward approving a plan to spend $2.5 million to build 25 condos at the doorstep of Over-the-Rhine.

In a 2-1 vote, council's finance committee endorsed a modified deal that would split profits generated by the project between the city and the private interests that are paying for most of the development's $7.6 million cost.

infographic Committee Chairman John Cranley and Councilman Jim Tarbell approved a city subsidy of $100,000 a unit to build 25 condos abutting the city-financed $12 million Kroger parking garage at Vine Street and Central Parkway. Two other finance committee members - Sam Malone and Vice Mayor Alicia Reece - abstained from Monday's vote, but Malone said he was "leaning toward" supporting the project.

Councilmen Christopher Smitherman and David Pepper both said they expect to vote for the deal when the full council votes Wednesday. That would give council majority approval if Malone votes for the project.

"We're either stuck with a surface parking lot or we build the condos," Pepper said. "It's an investment worth making."

Finance Committee member David Crowley voted against the deal. He cited the project's subsidy, lukewarm support from Over-the-Rhine leaders and the fact that other neighborhood developers have built condos without city money.

Monday's vote followed weeks of debate on the size and look of the so-called Gateway project.

Several Over-the-Rhine leaders say the condos and garage won't be a good fit for the historic neighborhood. They also worry that the project would drain $2 million of the $2.75 million remaining in the city's Over-the-Rhine development fund.

But city development officials say the new condos will deliver more than new urban housing to one of the city's poorest neighborhoods. They promise a revitalized Vine Street with housing and retailers spurring even more homes and shops in the neighborhood.

Tom Blinn, interim director of Cincinnati Center City Development Corp., said the plan is an example of his agency's plan to aggressively push development from the riverfront through Over-the-Rhine.

The public-private financing package for the condos calls for $2.5 million in city funds and nearly $5 million in private financing. The Cincinnati Development Fund will lend $1.9 million, and a Cincinnati Center City Development Corp. controlled equity fund will lend $2 million. Kroger will donate nearly an acre of land valued at $860,000.

The development fund loan would be repaid first, followed by the equity fund. If the condos sell for a higher price than the projected $170,000 a unit, the city and the development corporation would split the profits, with each entity dedicating proceeds to future Over-the-Rhine development.

Developer Rick Kimbler said the subsidy is needed because of the high cost of developing the site, and he said it will yield a payoff beyond bringing homeowners to a neighborhood with an ownership rate of less than 5 percent.

"This will drive development north on Vine Street to 13th and 14th streets," Kimbler said. "I've had conversations with a couple of property owners who have said that if this project goes forward, they're willing to renovate their buildings."

Low interest rates and a strong market for first-time buyers have sparked a condo renaissance along Main and Walnut streets as well as in the adjoining Pendleton neighborhood. Downtown Cincinnati Inc. counts at least 30 projects that are under construction or are seeking financial backing in or near downtown.

But condo development has not reached Vine Street. Two years after Mayor Charlie Luken declared it the most important street in Cincinnati, Vine remains troubled with crime, poverty and drug activity.

Some businesses are counting on the city's investment in the Kroger garage and condos to revitalize Vine. "I keep thinking $15 million across the street. It's gotta help, right?" said D. Lynn Meyers, producing artistic director for the Ensemble Theater of Cincinnati.

For 16 years, the Ensemble has operated a 191-seat theater on Vine across from the Kroger garage site. But questions about available parking, street safety and the desire for a larger, 300-seat venue prompted the Ensemble to consider a move to Covington's Odd Fellows Hall.

Last week, the theater committed to at least one more year in Over-the-Rhine.

But the theater hasn't ruled out a move to Covington next year or beyond.

"We want to expand here or elsewhere," Meyers said.

Other builders, too, are closely watching the city's Kroger condo decision. While some acknowledge that new condos could spur interest in living in Over-the-Rhine, they worry that the city subsidy could give the Kimbler/Al Neyer development team a competitive edge.

"It's a real strong subsidy," said Mark Krone. "I'm starting to feel not so smart. There's a lot of money being thrown around here."

Krone and his partners at Central Park Properties have spent more than $2 million to buy and renovate the American Building two blocks east of the Kroger garage site. They're building a 39-unit condo project without city money.

But Kimbler said the subsidy is needed for his project because it will cost an estimated $400,000 to rid the site of environmental contaminants. And unlike Walnut and Main streets, Vine is still unproven ground for condo development.

A 2003 study by Downtown Cincinnati Inc. predicted more than 100 condos can be sold each year downtown and in Over-the-Rhine. So far, sales for Krone's project have been brisk. Buyers have committed to purchase one-third of the units, including high-priced units on the upper floors.

Other developers on Vine Street are lining up to build projects. Chris Frutkin, who built the Crawford Lofts condo project on Main Street, plans to renovate two Vine Street buildings one block north of the Kroger garage site. The project should yield 25 apartments of student housing, Frutkin said.

Frutkin is timing the project for the 2005 opening of the Cincinnati Art Academy, which is moving nearby to 12th and Jackson streets.

Jeanne Golliher, who directs the Cincinnati Development Fund, believes there's momentum on the first two blocks of Vine north of Central Parkway - the border between downtown and Over-the-Rhine. That could change, however, if the city killed the Kroger condos.

"You have to go block by bock," Golliher said. "The garage is a done deal. It would be such a shame to have nothing there next to it."

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E-mail kalltucker@enquirer.com




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