Council shows caution in tax exemption for high-cost apartments Downtown
Cincinnati administration is recommending a 15-year tax exemption for a Downtown housing development. Unlike most exemptions for the past few years, Council isn't going to vote on it right away.
The Budget and Finance Committee first heard the proposal Monday.
"I really appreciate the administration's updated approach to bringing these before not just us, but the community," said committee chair Greg Landsman. "Giving people the opportunity to understand what it is, [and] to let us do our job, which is to push and prod and to do that in a period of time that allows us to be really comprehensive and thoughtful before we vote."
The $18 million project is for 29 units in an existing building at 516 E. 4th Street near Lytle Park, plus about 1,700-square feet of commercial space. The developer is Eagle Realty Group, the real estate subsidiary of Western & Southern Financial Group.
City officials say the city would lose about $650,000 in property taxes with the exemption, but would get more than $2 million in return for public schools and the streetcar fund (about $1.5 million to Cincinnati Public Schools and about $695,000 to VTICA, or voluntary tax incentive contribution agreement).
The developer also promises to "use its best efforts" to have 30% of contractors be small businesses, at least 5% be minority-owned businesses, and at least 7% women-owned. And at least 25% of the 70 temporary construction jobs will be filled by Cincinnati residents.
"On the inclusion piece, it does seem small," Landsman said. "So the question I'd have is, what are the barriers to that being a much bigger number?"
Council members also questioned the calculations used to estimate the city's return on investment, like annual income tax for future residents.
"I'd also like to get a sense of the developer's relationship to the city and commitment to the city," said Council Member Reggie Harris. "In terms of how long they've been developing in the city, their range of projects, if they have an affordable component to their development organization."
Western & Southern recently announced a $5 million donation to the city's Affordable Housing Trust Fund. City officials say Eagle Realty Group has decades of development experience and Western & Southern has "a 30+ year history of supporting affordable housing and similarly important city initiatives," pointing to the Bracket Village housing project of the 1990s.
Rent for the Fourth and Pike Apartments will range:
- 1 bedroom: $2,800/month (six total units)
- 2 bedroom: $3,500/month (six total units)
- 3 bedroom: $4,200/month (15 total units)
- 4 bedroom: $5,800/month (2 total units)
Average rent for a two-bedroom apartment in Cincinnati is $1,250, according to the real estate company Zumper. Average rent in the Central Business District, where this development would be located, is $2,418 for a two-bedroom.
The proposed exemption is for 100% of improvements to the property, but is effectively a 52% exemption because of the payments to CPS and VTICA.
It became typical during the last administration and Council for development agreements to be submitted as emergency ordinances; an exemption like this could have less than a week between introduction and approval.
Landsman plans to hold this ordinance for two weeks. Staff from the Department of Community and Economic Development will be back next Monday for a full presentation and answers to council members' many questions.
The first vote is expected Monday, May 2.
This council, which took office in January with six new members, recently voted down a recommended tax abatement for a commercial development in Oakley.
See the full proposal from city administration below: