CINCINNATI - Madisonville is likely to be among the first Cincinnati neighborhoods to benefit from a $7 billion batch of tax credits awarded by the U.S. Treasury Department last week.
Three local community-development organizations won a combined $125 million in the latest allocation of New Markets Tax Credits. The Ackermann Group is actively courting deals to complete its financing of its long-planned development of an eight-acre site at Madison Road and Whetsel Avenue.
“We don’t have firm commitments yet,” said Lassere Bradley, Ackermann’s vice president of development. But “we’re feeling very confident about where our project stands.”
The New Markets program allows investors to reduce their tax liability by purchasing federal tax credits from community-development groups, which then use the cash to close financing gaps and redevelop distressed neighborhoods.
The Madisonville Community Urban Redevelopment Corp. has been working for more than three years to revive its neighborhood business district. The latest plans include 185 new residential units 30,000 square feet of office and retail space.
Bradley said Ackermann is talking to several community-development organizations that won New Markets allocations.
“Our goal is to close on the financing by next spring and be under construction by mid-year,” he said.
What is a New Markets Tax Credit?
If you’ve listened to music at Washington Park, played broomball on Fountain Square or dined at the Mercer on Vine Street in Over-the-Rhine, you already know the impact that New Markets Tax Credits can have on a city.
This year, Ohio ranked fourth in the nation with eight groups securing $385 million in credits. Only California, New York and Illinois received more. Among the Cincinnati-based winners was the Kroger Co., which has been using New Markets money to finance grocery stores that eliminate food deserts in low-income neighborhood. Its $15 million award last week is not likely to be invested locally. Instead, the money is targeted to Georgia, Tennessee, Texas, Kansas and Nevada.
But this could be the first year in which the New Markets program has a big impact on Cincinnati neighborhood projects. That’s because the big local winners in this year’s allocation are the Uptown Consortium and Cincinnati Development Fund, both of which are actively pursuing neighborhood projects.
Uptown Consortium won a $45 million tax allocation last week, bringing to $130 million the amount of New Markets allocations it received since 2009. The nonprofit development company has been a catalyst for 357,000 square feet of office and retail space around the University of Cincinnati campus. But these days, it’s focusing a lot of its energy on the Martin Luther King interchange off I-71, where hospital expansion and research projects could create hundreds of new jobs.
“We have several potential projects in our pipeline but it’s too soon to announce,” said Uptown Consortium CEO Beth Robinson in a prepared statement. “We intend to invest in catalytic projects that bring jobs and services to the community.”
The Cincinnati Development Fund won its fifth and largest-ever New Markets allocation of $65 million last week. It has a pipeline of nine different projects that could receive funding, including a cluster of commercial development on Elm Street near Findlay Market and commercial developments at Peebles Corner in Walnut Hills, Westwood Town Hall and Ackermann’s mixed-use development at Madison and Whetsel.
“We made a promise to focus on neighborhood business districts,” said Jeanne Golliher, CEO of the Cincinnati Development Fund. “We’ve been actively working with several communities that meet that description.”
Golliher said the neighborhood flavor of this year’s New Markets allocations is a function of two things:
- Cincinnati was an early adopter of this financing tool, which means the Community Development Financial Institutions Fund – which administers the New Markets program – has confidence in its local development funds.
- Secondly, the success of New Markets projects in Downtown and Over-the-Rhine have driven up prices in the urban core, giving developers confidence that they can finance projects close to Downtown.
“I definitely think you’re seeing a trend,” said Bradley, with community development agencies “starting to push this type of activity out into the neighborhoods.”
For Ackermann’s project, the Cincinnati Development Fund win was very timely. It’s been talking to Fifth Third Bank about financing the Madison & Whetsel project. The bank has unique ties to the neighborhood, with its back-office “operations center” nearby. Among Ackerman’s goals is to convert a former Fifth Third Bank building into restaurants and apartment space. In addition, Fifth Third just announced a $2.5 billion increase in its Community Reinvestment Act commitments. It’s now pledging $30 billion in mortgage loans and commercial financing to low-income neighborhoods like Madisonville.
“It’s definitely big for our city, our local neighborhoods,” Bradley said. “We’ve worked with Fifth Third in the past. They are very familiar with this project and aware of it. They have a presence in Madisonville community already. So, we are actively working with them with respect to the lending piece.”