On some prominent streets in Over-the-Rhine — like Vine Street, Main Street and their adjacent arteries — large-scale redevelopment projects are helping bring new vibrancy to the face of the dilapidated neighborhood.
Since 2004, the Cincinnati Center City Development Corp. (3CDC) has left its mark throughout the area in the form of vibrantly painted, structurally restored buildings along refurbished streetscapes that showcase a historic charm previously hidden beneath decades' worth of urban decay, or as some might call it, neglect.
But where the new cobblestone sidewalks end, there remain many more city blocks lined with vacant buildings, particularly north of Liberty Street in Over-the-Rhine’s fledgling Brewery District, where developers have yet to invest significant effort.
As a result, Liberty Street serves as an abstract boundary line that divides “OTR in the 21st Century,” as described on 3CDC’s Web site, from parts of the neighborhood that still resemble an Old West ghost town, waiting for their full potential to be realized.
In an effort to spark smaller-scale projects in Over-the-Rhine, the Owner Redevelopment Loan Task Force is working to find ways to close the “development gap” that typically blocks many people from trying to rehabilitate structures in the neighborhood due to inadequate lending options for vacant, historic building stock.
The development gap is the difference between the actual cost of rehabilitation and the market value of the completed project.
Redevelopment costs often are greater than the standard appraisal value of the completed project in Over-the-Rhine because buildings have been neglected for years, sometimes decades, and require significant stabilization costs. Appraisal value is also affected by the neighborhood’s current transitional state.
Formed in October 2009 by Vice Mayor Roxanne Qualls, the task force researched various funding options for bridging the gap. It recently drafted plans for a two-phase pilot project to redevelop seven vacant properties surrounding Findlay Market in hopes of laying the groundwork for a citywide redevelopment program.
“Even after you acquire a building in Over-the-Rhine and stabilize it, there will still be a development gap,” says Michael Morgan, an attorney and real-estate agent currently serving as the task force's chairman. “(But) if you start with a stabilized vacant property with no costs going into that property then you have eliminated the development gap after that point.”
Qualls adds, “It will provide a significant tool to allow owner-occupied and single-family projects — currently an underserved market — to complement the large-scale development that’s taking place now.”
The pilot program will involve six buildings that already are stabilized and owned by the city. Set to begin April 1, phase one encompasses three properties situated on Elm Street — a single family building, a residential building with a home office, and a vacant lot.
Estimated renovation costs for both buildings total roughly $350,000.
The Hamilton County Department of Community Development is the consortium’s lead agency on a grant application totaling more than $50 million.
Qualls notes the city has agreed to allocate $30,000 to get it started. An additional $70,000, however, is needed to complete both phases, prompting the task force to seek additional support from private grant sources not yet obtained.
“3CDC addresses the development gap with various forms of public subsidies, like Tax Increment Financing, new market tax credits and state tax credits,” Morgan says. “This is great, but it’s really complicated. It’s a scenario that the average individual who wants to rehab their own house cannot replicate.”
The task force structured the pilot program based on the successes and failures of two former citywide programs, known as Live Buy Design and Urban Homesteading. The new loan concept is distinguished from Live Buy Design by excluding the federal 203(k) loan program due to limitations that made it unworkable in many instances. The 203(k) program allows homebuyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in, but requires several conditions for eligibility, which many potential owners cannot meet.
Instead, the new loan concept is closely modeled after the Urban Homesteading program, which transformed hundreds of buildings in Cincinnati utilizing federal funds to stabilize properties and make them available to project buyers for $1 under a special redevelopment agreement.
“This new loan program corrects all of the shortcomings of Live Buy Design,” Morgan says. “It will end up looking a lot like Urban Homesteading because this model has worked and was diffused for political reasons, not due to subsidy reasons.”
According to Jeanne Golliher, executive director of the Cincinnati Development Fund, Urban Homesteading was abandoned several years ago when the program’s funding was distributed elsewhere in the city’s budget despite its proven success.
The Cincinnati Development Fund will provide construction financing that is comparable or better to typical home loans, with funding passing through the Brewery District Community Urban Redevelopment Corp. (CURC).
Once properties are developed, PNC Bank and additional lenders will offer existing loan products to permit refinancing of the properties. The Brewery District CURC and the Corp. for Findlay Market will jointly oversee the program.
“There’s nothing unique about the kind of lending that we have agreed to do for these two houses on Elm Street as part of the pilot program,” Golliher says. “What’s unique about the concept is rather than looking for huge subsidies, the buyer will invest sweat-equity.”
Under the guidelines, buyers of the properties will be required to participate in a sweat-equity component, where they must do part of the labor themselves. Supporters say the component will help keep the owners in their new homes, adding that Habitat for Humanity attributes its national foreclosure rate of less than three percent to its sweat-equity requirement.
Also, the new owners will be required to participate in an enhanced educational component intended to explain the development process, clarify terms of the purchase contract and other paperwork, and give instruction on proper methods for making repairs.
“The people will have a real stake in these properties,” Morgan says. “At some level, they’re going to work on these properties physically. Not only does that help to close the gap from a literal financial standpoint but it also does something a little more abstract in terms of building a community.”
Repopulating Over-the-Rhine is vital to Findlay Market's sustainability, according to Robert Pickford, director of the Findlay Market Corp. At the turn of the 20th century, the neighborhood was home to 45,000 residents; today, just 7,600 people live there.
As a result, there are an estimated 500 vacant buildings throughout Over-the-Rhine, which prompted Reason magazine a few years ago to call it “ground zero in inner-city decline.”
Findlay Market — which hosts more than 35 full-time, year-round merchants, 55 local farmers and cottage food producers selling directly to the public, and more than 70 seasonal and part-time vendors — represents the economic core of the Brewery District. It is the state’s oldest continuously operated public market and is the only remaining public market of nine that existed downtown during the Civil War.
“We believe it has survived because it was surrounded by a densely populated neighborhood, but that’s not the case today,” Pickford says. “Repopulating the neighborhood is vitally important to the market’s long-term health.”
If the pilot project is a success, Qualls says it would ideally be funded at a higher level and continue to work through local organizations in Over-the-Rhine, eventually branching out to other neighborhoods in the city. Potential sources of state and federal funding in the future include the Green Loan Fund and Livable Communities Act, although both remain in the conceptual stage.
The pilot project is currently on standby until proper funding is allocated, according to Morgan. Qualls is waiting on a follow-up report from the city administration, after which the proposal will be brought before City Council's livable communities committee.
“When it is funded, we will announce that these properties are available and people interested will be given a meeting date to learn about them,” Morgan says.Until then, the historic buildings continue to wither away like skeletons in an urban graveyard.