Could This Grassroots Effort Change the Way Cincinnati Does Development Deals?

OTR's Peaslee Center is promoting a process it has designed that considers equity when recommending public subsidies for development projects

Dec 7, 2018 at 3:44 pm

A 2015 plan to turn city-owned land in Mount Auburn into high-dollar single-family homes spurred neighborhood groups to create the Equitable Development Rubric - Nick Swartsell
Nick Swartsell
A 2015 plan to turn city-owned land in Mount Auburn into high-dollar single-family homes spurred neighborhood groups to create the Equitable Development Rubric

A tussle three years ago over a proposed development on the border of Mount Auburn and Over-the-Rhine sparked an ongoing effort that, if successful, could change the way developers and the communities they build in work together.

In 2015, some OTR residents and neighborhood groups raised concerns about a plan to build $400,000 homes on 21 city-owned plots of land near Main Street north of Liberty Street, a part of the city where the median household income is roughly half the city’s as a whole.

The plans for those houses weren’t drawn up with much public input, critics said, didn’t include affordable housing and would have required the removal of basketball courts used by children in the neighborhood.

Eventually, a preferred developer agreement between the city and the developer expired, and the plan went by the wayside. But the experience with the city’s complicated development approval machinery got staff at long-running neighborhood advocacy group Peaslee Center thinking about ways to incentivize developments they say would be more equitable and transparent on the neighborhood level.

“I think that project was unique in some ways, but in others, it’s really indicative of how it all works or doesn’t work,” Peaslee’s Jenn Arens says of the 2015 development plan near Main Street. “That’s one project where we had more civic and public control over because it was happening on public land. And what was on the table was something where equity was the last concern — I think that’s indicative of failures along the way.”

The group started working on a project they’re now calling the Equitable Development Rubric, a set of recommendations for ways developers and the city’s community councils can better work together to ensure that development projects will be beneficial, not harmful, to residents in quickly-developing neighborhoods.

After a lot of tinkering, taking community input and redrafting, Peaslee and other supporters of the effort have begun to shop the idea around to community councils — neighborhood bodies where developers seeking public support for their projects are often required to go by the city to do community engagement.

The hope is that the rubric will catch on in some of these bodies and then eventually win support within City Hall, where Cincinnati City Council passes abatement deals drawn up by the city’s Department of Community and Economic Development.

Much of the rubric centers around the way the projects get awarded valuable city tax abatements, state tax credits and other public support.

“There is a lot of data and documentation that shows that lack of equity is a huge problem for Cincinnati,” Arens says. “It’s hard to pick one (policy) where you start on that. It seems logical that step one is to make sure we’re not subsidizing the kind of development that does harm to our communities. And you can’t really do that without measuring anything or without having any requirements.”

Like many cities its size and larger, Cincinnati faces a crunch when it comes to affordable housing. There is a roughly 30,000-unit gap between the number of units affordable to the lowest-income Cincinnati residents and the number of units available at that price point, data from the Ohio Housing Finance Agency suggests.

In OTR, where Peaslee is located, that shortage has manifested in the loss of 73 percent of housing units affordable to low income people between 2002 and 2015 — roughly 2,000 units.

Meanwhile, abatement deals on new construction and rehab projects have taken off, including deals on high-dollar luxury condo and apartment projects.

Hamilton County Auditor Dusty Rhodes in June said that more than 36 percent of property in the city is tax exempt, representing almost 10 percent of the city's total property value.

The city has followed roughly the same abatement policies since 1999, which are based on an agreement made with Cincinnati Public Schools. The district is funded in part by local property taxes and receives $5 million a year to offset tax abatement deals the city makes, as well as payments in lieu of taxes up to a certain point. In exchange for that deal, the city offers many projects tax abatements up to 15 years and up to 100 percent of the improvements on property developers make.

In some ways, the city can afford to be generous — under an unusual "property tax rollback," it caps its property tax receipts at $29 million a year. That means that the abatements technically don’t cost the city revenue, though they do place more burden on unabated properties to make up the difference.

The abatements also have an impact on a developer’s profit margin and ability to gather capital for a project. That makes them a good way to incentivize developments neighborhoods want to see, some who want to reform the abatement process argue.

Some city officials defend the policies in place now, saying they keep buildings from standing vacant and incentivize the creation of new housing and other development.

“Unquestionably, we can say this agreement is still every day spurring development, growth and generating jobs,” Community and Economic Development Department Director Phil Denning said at a June meeting about renegotiating the deal between the city and CPS, which expires next year.

Though the agreement hasn’t changed much in the past 19 years, Denning said the department has gotten somewhat more conservative about how it structures abatements.

Meanwhile, Peaslee wants to approach the abatement debate from the ground up, starting with community councils.

The group’s rubric seeks to influence city abatement awards by issuing points on development plans in four main categories: housing affordability, wages for labor associated with a development project, how much community input a project received and the overall impact on the surrounding community a project will have.

While there is no hard-and-fast number of points that community councils should look for, its designers say, they look at 75 percent or higher as a good score.

Its supporters envision a process in which developers use the rubric — including a developer questionnaire designed as the first step — to engage with community councils early in their planning process, before they’ve spent lots of time and money paying architects to draw up renderings.

The detailed questionnaire includes a section asking how many residential units a developer will build at three levels of affordability — at 30 percent of the area median income, which works out to about $441 a month for a one-bedroom apartment, up to 60 percent AMI, or up to $882 a month for a one-bedroom unit, and above 60 percent AMI.

The questionnaire also asks a developer what kinds of subsidies they’re seeking, from city Community Reinvestment Area abatements, state awards like New Market Tax Credits and other public help like zoning changes and city land sold below market value.

Developers are also asked about a number of labor-related practices, including whether they’ll agree to use local labor and contractors who pay prevailing and living wages.

From there, the rubric recommends a period of community engagement that would take at least three months, with developers appearing at three monthly community council meetings and holding at least one separate community engagement forum in between the first two. The developer would present their plan at the second meeting and be present for a vote by the council — informed by the rubric — at the third.

Peaslee has recently begun presenting the rubric to a few community councils, including those in Over-the-Rhine and Northside.

The rubric has also gotten a test run of sorts in Walnut Hills, where the first developer took the developer questionnaire recently.

Katy Dietz sits on the Walnut Hills Area Council’s Planning and Development Committee. She says the council has voted to send a letter of endorsement for the process to the city.

“Right now, we’re using the rubric in the planning and development committee to inform residents on different projects coming in,” she says.

While the rubric is straightforward, the way community councils work — and how the city weighs their input — is murkier.

For one thing, councils operate by different rules. In councils like OTR’s, for example, those voting on projects must be neighborhood residents. That’s not the case in Walnut Hills, where a recent development plan that didn’t score high on the rubric was voted through the area council with votes from non-residents.

On top of procedural differences, neighborhoods will have different priorities, a fact that Arens acknowledges.

“It’s a different fit depending on the kind of development they’re seeing,” Arens says, pointing out that development projects popping up in denser places like OTR aren’t the same as ones in neighborhoods like Northside that have more single-family homes.

And of course, community councils aren’t the end-all be-all. Developments sometimes get the green light on zoning variances, tax abatements and infrastructure spending from the city despite opposition from community councils, as recent development battles in the West End, OTR and other neighborhoods have shown.

Still, there is at least some interest at City Hall in changing the way the city does development deals.

During a city council committee meeting Dec. 3, council member Greg Landsman pushed back on two abatement deals worth more than $15 million over 15 years for two coming downtown hotels. Some of those abatements came because the projects meet federal Leadership in Energy and Environmental Design standards. Projects meeting LEED standards are often awarded longer abatements or are discounted a higher percentage of the improvements to a property.

Landsman said the city should offer similar abatements for things like paying living wages and housing affordability.

“At some point, I have got to stop voting for these until we have a game plan to update this process,” he said. Landsman’s fellow Democrat Tamaya Dennard echoed that sentiment in the meeting, though other council members expressed concerns about slowing otherwise attractive development projects with new regulations.

Could the grassroots effort currently underway at Peaslee be that plan? That picture is still developing.