New Market Tax Credits Key to City’s Revival

Cincinnati’s development coffers got a little fatter last week, as $125 million in federal tax subsidies flooded into the city. These subsidies, called New Market Tax Credits (NMTCs), incentivize local investors to funnel capital into low-income communities and have essentially bankrolled Over-the-Rhine’s entire revitalization.

For example, Washington Park — perhaps the most emblematic example of OTR’s rebirth — received nearly $14 million in New Market Tax Credits (NMTC) from the Local Initiatives Support Coalition (LISC) to help support its reconstruction. Several ongoing developments have also received some or all of their funding through NMTCs, including the Market Square and Ziegler Park projects.

Ziegler Park Aerial

New Market Tax Credits helped transform parts of Over-the-Rhine like the reconstruction of Ziegler Park (Photo by Travis Estell)

Developers often balk at the prospect of developing low-income communities because they fear their investment will be wasted. NMTC are the federal government’s attempts to allay these concerns. Congress first authorized the subsidies through the Community Renewal Tax Relief Act of 2000. Over the past fifteen years, the bill’s success has earned it bipartisan support. According to the program’s 2016 report, the tax credits have created 750,000 jobs and invested over $75 billion to businesses and revitalization projects in communities with high rates of poverty and unemployment.

Less than 25 percent of the applications submitted each year are awarded, but three major Cincinnati developers beat the odds this year: Cincinnati Development Fund ($65 million), Uptown Consortium (45 million), and the Kroger Community Development Entity ($15 million).

To win an NMTC grant, a corporation — in federal parlance, Community Development Entities (CDE) — must lobby the U.S. Treasury’s Community Development Financial Institution (CDFI) Fund on behalf of private investors like the Cincinnati Center City Development Corporation (3CDC). If the CDFI approves the application, then the investors who pledged money to the CDE will receive a seven-year tax abatement to support development.

3CDC, in particular, has secured a eye-popping $238 million since the program’s inception. Without this capital, it’s unlikely that OTR would have changed as drastically as it has. The community was a no-brainer for NMTC-driven development due to its extreme poverty. The neighborhood’s median household income during the 2010 census was a paltry $14,517. Six years and billions of dollars have certainly improved its lot, but its average income still pales in comparison to the city’s 2015 median income, $56,826.

While OTR will likely continue to receive the majority of NMTC-driven development, other distressed neighborhoods are receiving attention. According to Director of Development Thea Munchel, the Walnut Hills Redevelopment Foundation expects approximately $6.5 million in NMTC Equity for its expected revitalization of Paramount Square. “It is too early to know who all will participate in the deal,” she said. “But Cincinnati Development Fund received a huge award and has indicated that they will contribute some into the project.”

Neighborhood Development Strategies Focus of Niehoff Urban Studio Event

Cincinnati is a city known for its unique and dynamic neighborhoods; and over the past few years many of these neighborhoods have transitioned through the work and dedication of community development groups, active and engaged stakeholders and residents, and the assistance of leading experts in the field.

Successes like new developments, restoration of historic buildings, and implementation of placemaking strategies, however, have not come without challenges and lessons learned. Building healthy and resilient places, such as in some of the neighborhoods of Cincinnati, is the focus of this semester’s Neihoff Studio open house.

The Niehoff Urban Studio and UrbanCincy have invited several community development experts to gather for an in-depth discussion on creating success in several of Cincinnati’s great neighborhoods on Thursday, April 21.

Building on the second year of the Building Healthy and Resilient Places theme, the open house is the culmination of a semester-long effort by DAAP students working with six neighborhoods in Cincinnati and Covington to identify potential redevelopment opportunities in neighborhoods such as Roselawn, College Hill, Walnut Hills, East Walnut Hills, North Avondale, Price Hill, and downtown Covington.

Kathy Schwab, of LISC, will present awards to the winning student group.

“Our theme is Building Healthy and Resilient Places, and students are encouraged to make places that promote health in a number of categories,” Frank Russell, Director of the UC Niehoff Studio told UrbanCincy. “Above all students were challenged with how to make form and program that would make these NBDs ‘centers of activity’ in accordance with Plan Cincinnati.”

The event will culminate with a panel of experts moderated by UrbanCincy. Panelists include Phil Denning from the City of Cincinnati Department of Economic Development; Kathleen Norris, who is the Principal and founder of Urban Fast Forward, a real-estate consulting firm; and Seth Walsh with the Community Development Corporation Association of the Greater Cincinnati.

The event will kick off at the Niehoff Urban Studio Community Design Center on Short Vine at 5pm this Thursday, with the panel discussion starting at 6pm. The event is easily accessible by Red Bike with a station conveniently located across the street. It is also accessible via Metro Bus Routes #24, #19 and Metro Plus.