CINCINNATI - A restructuring of the Fourth and Race apartment project could produce up to $7 million in taxpayer savings that would be reinvested in other downtown projects, Cincinnati Mayor John Cranley said.
Two early candidates for that cash are residential towers that could bring more than 300 new apartment units to the central business district. One is a long-planned tower that would bring 168 apartment units to a high-rise over Macy’s Inc.’s Downtown department store. The other is a 150-unit building that North American Properties wants to build on top of a city-owned garage planned on Sycamore Street between Seventh and Eighth streets.
“Every dollar we save is going to be used for something else to encourage revitalization of the city,” Cranley said. “I think there’s a boom of residential housing Downtown. I don’t know if we’ll use that money for those projects or not, but I’d like to see those projects happen.”
The city has been negotiating since early March with Indianapolis developer Flaherty & Collins about restructuring its $77.8 million apartment tower and grocery store at the northwest corner of Fourth and Race streets.
Flaherty & Collins declined to comment for this story.
The project was initially proposed as part of a larger plan to sell city-owned parking assets to the Port of Greater Cincinnati Development Authority. Cranley campaigned against the deal, which was downsized dramatically by city council in February.
A WCPO analysis last November found the Fourth and Race project was more heavily subsidized than any other Downtown residential project. Beyond the $12 million forgivable loan, the city agreed to a 30-year tax-increment financing arrangement worth $18.5 million and a land lease worth $8 million to the developer.
Cranley asked the Cincinnati Center City Development Corp., or 3CDC, to review the feasibility of the project. That led to a re-negotiation, which is not yet completed. But it’s far enough along that Cranley was able to outline the following expectations:
- The project will be downsized from 300 apartment units to between 200 and 220.
- A grocery store won’t be required as part of the deal.
- Direct city subsidies in the project will be reduced by $2 million to $3 million.
- The city will build and operate the garage, which allows it to use other capital sources instead of cash from federal urban redevelopment grants, as originally planned. That could free up an additional $3 million to $4 million for investment in other Downtown projects.
“That cash is very valuable to us,” Cranley said. “It’s rare. And we want to make sure that money is only used for things that can’t be paid for by any other source.”
The city’s original deal called for the developer’s loan to be forgiven if operates a grocery store on the site for at least five years. Flaherty & Collins retained a grocery industry veteran to operate an independent store on the site. That made the project more popular with Downtown boosters, who have long argued a Downtown grocery is needed to serve a growing residential base in the urban core.
Cranley said a grocery store could still be part of the Fourth and Race project, but it’s not something he wants the city to require or subsidize.
“The most important thing is making sure they can accomplish what they say they can accomplish,” he said. “If they don’t have a grocer and they’re not in the grocery business, we don’t want to force somebody to do something they’re not good at. But if they’re able to bring a real grocer to that site it would be fantastic.”
The Kroger Co. recently signaled a renewed interest in a Downtown Cincinnati grocery store , but hasn’t narrowed its focus to any particular site.
Cranley said the cash that could be freed up from a Fourth and Race restructuring comes from federal grants that restrict spending.
“It can only be used for limited purposes and it can only be used Downtown,” he said.
Residential developer North American Properties is among the developers ready to put that cash to work, as part of a larger project in the city block bordered by Seventh, Eighth, Sycamore and Broadway. Fort Mitchell, Ky. –based Rolling Hills Hospitality wants to build a 115-room Holiday Inn & Suites hotel next to a 610-car parking garage to be built by the city.
A May 1 report to city council about the Holiday Inn project said the city would solicit developer proposals for "the new garage as well as structural support for a residential component to be placed on top of the garage."
Downtown-based North American Properties confirmed it is talking to the city about a 150-unit apartment tower on the site.
“That’s something that’s of great interest to us,” said Tony Hobson, a partner in charge of the Cincinnati region for North American. Its properties include the Water's Bend apartment community in South Lebanon and an apartment tower now under construction at Seventh and Broadway. “They need to build the parking and we have the current exact experience to deliver parking
and residential. So, it makes all the sense in the world.”
Hobson stressed his talks with the city are at a preliminary stage. He said he hasn't talked to the city about whether Fourth and Race subsidies could be re-deployed to his new project on Sycamore Street.
But he’s convinced the project would fetch renters based on the feedback he’s getting for the Seventh and Broadway building.
“We’re not even trying” to attract tenants yet, he said. “We’re getting phone calls all the time.”