Thursday, May 6, 2004

Downtown to get $50 million boost

Federal tax credits promote development

By Carl Weiser and Ken Alltucker
The Cincinnati Enquirer

The federal government today will hand Cincinnati a $50 million gift to help it revitalize its downtown, U.S. Rep. Rob Portman announced Wednesday.

The private Cincinnati Center City Development Corp. will get $50 million in what are called New Markets Tax Credits that can be used to help pay for shops, homes, office space and other private development from Fountain Square through Over-the-Rhine. Leaders of the private group now must decide how to dole out tax credits to private investors.

"The city needs a shot in the arm, and this is it," said Portman, a Terrace Park Republican whose district includes part of downtown.

"Development begets development," he said. "If there's a successful economic development program going on between Fountain Square and Over-the-Rhine, it will make it more attractive to other investors to come in."

The Treasury Department notified Portman and U.S. Rep. Steve Chabot, R-Cincinnati, as they were joining President Bush for a campaign rally Tuesday night at the Cincinnati Gardens. The credits would mostly be used to offer low-interest loans to developers in high-poverty areas in downtown and in Over-the-Rhine, the notification said.

"Everything north of Fifth Street is eligible," said Tom Blinn, interim director of the development agency. "What we've got to do is take a look at our specific development priorities and determine how best we can make this opportunity work."

The agency's working agenda includes a Fountain Square overhaul that's expected to include a redesign of the square's public space and recruitment of new shops, restaurants and entertainment to the square and its surrounding blocks. The group's jurisdiction also includes Over-the-Rhine and the planned riverfront development known as the Banks. The Banks will not be eligible for the credits.

The private group is still gathering ideas for the square redesign, so it doesn't know how much the project will cost.

Congress created the New Market Tax Credit program in 2000 as a way to lure private investment and jobs to struggling low-income urban and rural areas that are overlooked by investors and lenders.

"I think this is exactly the kind of project we were envisioning," said Portman, who as a member of the House Ways and Means Committee helped write the legislation.

The program offers investors a 39 percent tax credit over seven years - not a direct cash grant.

"It is a right to raise $50 million that is eligible for 39 percent tax credits," said Craig Greenberg, a Frost Brown Todd lawyer in Louisville who helped prepare the Cincinnati group's application. "It's really worth about $20 million."

The private development group and the Cincinnati Equity Fund applied for $90 million in tax credits, but competition for them was stiff. The national program had $3.5 billion to give out - but it received 271 applications seeking over $30 billion in credits.

This is the second round of tax credits granted under the program. Cincinnati didn't get any in 2003, though groups in Portsmouth, Columbus, Waverly, Cleveland, Lorain and Granville won them.

When the development group formed last year, it promised to raise $50 million in private dollars with an expected match of $100 million from public sources. Companies that pledged to invest millions in distressed city neighborhoods include Procter & Gamble, Western & Southern Financial Group, Fifth Third Bank, U.S. Bank, Convergys, Kroger and others.

Mayor Charlie Luken said the federal tax credits would be an important part of the city's revitalization.

"I thought we would get something, but I didn't think it would be this much," said Luken, a Democrat.

The Treasury's Community Development Financial Institutions Fund made the decisions on the applications.

The former head of the federal tax credit program, Tony Brown, recently moved to Cincinnati to head a development group, Uptown Consortium, that seeks to revitalize neighborhoods around the University of Cincinnati.

Portman, who is close to the White House and a member of the House GOP leadership, doubted Brown played any role in Cincinnati's success.

"All along, I told the folks from Cincinnati this was going to be on the merits," he said. "Neither Rob Portman nor George Bush nor Steve Chabot nor Mike DeWine could determine who would prevail in this."

Chabot said the federal awards were "just wonderful for the city."

Brown said he was hopeful that Key Bank, which won a $150 million tax credit in last year's round, would invest in neighborhoods ringing the University of Cincinnati. Brown will meet soon with Key Bank officials to discuss potential development in Clifton Heights, Corryville and other neighborhoods near UC.

"We've had extensive conversations," Brown said. Key's "community development president will come down (from Cleveland) and walk the site."


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