Cincinnati City Council will soon vote on tax abatements worth more than half a million dollars for a controversial luxury hotel project undertaken by Eagle Realty at the former site of the Anna Louise Inn women’s shelter downtown.
Council’s Budget and Finance Committee voted to advance a Community Reinvestment Area tax abatement for the project at its Nov. 23 meeting. The tax deal on the nearly $36-million project would last 12 years. Developers with Eagle, the real estate arm of Cincinnati insurance giant Western & Southern, say the abatement is necessary because the project presents big risks and a lower-than-usual return on investment. But some council members questioned the need for taxpayer dollars.
Cincinnati Director of Trade and Development Oscar Bedolla praised the deal, calling the proposed 106-room upscale Mariott hotel and conference center “a phenomenal project.”
Councilman Chris Seelbach was the sole committee member opposed to the deal, though his fellow council Democrat Yvette Simpson supported it with some reservations.
W&S purchased the properties at 300 Lytle Place in May 2013 after a protracted legal battle with both former owners Cincinnati Union Bethel, which ran a shelter for homeless women there for more than a century, and the city of Cincinnati.
After Cincinnati Union Bethel refused to sell the property to W&S in 2011, the company challenged tax credits from the Ohio Housing Finance Agency that CUB was awarded for renovations of the shelter. The company also challenged the city’s issuance of permits for the Inn that allowed it to operate as a shelter in the neighborhood. After CUB’s tax credits expired during the litigation, it agreed to sell the Inn to W&S for more than $4 million.
Both Seelbach and Simpson stressed their questions about the deal had nothing to do with that struggle. The Anna Louise Inn moved to a newly constructed facility in Mount Auburn earlier this year.
“The Anna Louise Inn situation was tense and difficult for all of us,” Simpson said. “They’ve moved on. I’m going to move on. If there was a reason to exclude this project on any other basis, I would.”
Simpson did note that she would like to see these kinds of development deals extended to other neighborhoods outside the urban core.
“I believe we need to incent in areas that really need it,” she said, “instead of areas where, quite frankly, the market has already done what it needs to do.”
Seelbach had more pointed problems with the tax deal.
“This is really a tool to promote job creation, when if that tool wasn’t used, those jobs wouldn’t exist,” he said of CRA tax abatements. “How can you convince me that these jobs would not be created, that the project wouldn’t go forward, unless there was the maximum tax abatement possible to a company that’s worth $60 billion?”
Bedolla said additional burdens associated with the project, including its status as a historic building, necessitate the abatement.
“We thought the return here is less than what the market usually bears,” he said.
The hotel will bring about 80 jobs to the
city, according to Bedolla. Those jobs could generate nearly $500,000 in earnings taxes over the duration of the abatement, which will be worth almost $700,000.
Charterite Councilman Kevin Flynn defended the deal.
“Whether it’s a small developer or Eagle Realty, if the project doesn’t make sense, they have an obligation to their investors to invest their money where the best rate of return will be received,” Flynn said. “The rate of return on this, if this was being done in another city, I doubt it would be done. It’s being done because of love of the city, not for greed. If ever there was a project that deserved it, it’s this.”
But Seelbach shot back, pointing out that W&S committed to the property before any tax dollars were promised.
“I appreciate what all our corporate partners and small businesses contribute to Cincinnati every day,” Seelbach said. “That’s without question. But this group chose to invest $4.5 million before they knew there would be an abatement from the city. That suggests to me that they thought they could do this project without taxpayer money.”
City Council could give final approval on the deal as early as Dec. 2.