Good News/Bad News: Incentives Work

The good news is that incentives work.  Human beings do what what human beings are paid to do.

Whenever I get the least bit cynical about my city, I think back to those darkest of days in the spring of 2001 when our problems exploded all over the international news. In the aftermath, we rose to the occasion and rolled up our communal sleeves.  Our Daily Bread didn’t have enough meals to serve to use everybody who volunteered.   Clumps of clothes and blankets littered Washington Park, dumped by people who cared and wanted to do anything.  City Hall did their best day after grueling, stress-filled day.  Preachers preached.  A federal judge stepped in to heal the divide between the police and populace.  Poets wrote poems.  We all did what we could.

But corporate Cincinnati did the heavy lifting, tackling the blight of more than 500 abandoned buildings in over the Rhine, the mud pit on the Banks, and an anemic city center all at one time. They formed 3CDC, the Cincinnati Center Development Corporation, committed to long-term oversight, and provided the capital for loans. City Council approved a strategy of lucrative financial incentives and today nobody can get enough of the miracle that is Cincinnati.

“I believe in free markets,” is an oft repeated refrain from voters.  It’s the American way, pure capitalism. We all understand that incentives  – the property tax abatement, tax incentive funding and the outright cash investments we’ve used to make it all happen – are the opposite of free markets.  But it would be hard to find anybody who lived in Cincinnati in 2001 who would dare argue that the incentives we invested in the wake of the riots were not a worthy intervention in the free market system.

Cincinnati has clearly reached the “critical mass of development” that was Steve Leeper’s objective when he took the lead at 3CDC.  Is the basin still a blighted area?   Can we reduce the size of the area we support?  Can we reduce the time period of abatement from 12 years to 10 or even 7?  How many restaurants do we need?  How many breweries?  Hotels?  Parking garages?  Office towers?  Have incentives worked too well?  If incentives work too well to the point we create excess capacity, we do everybody a disservice, especially the business-owners who have invested their lives in getting their operations off the ground here.

Luckily incentives are not a yes-no, binary equation.  We can continue to use them, but more strategically. Is there anything we need so desperately that it’s worth a 30-year free ride on property taxes?  If residents in the basin want dry cleaners and grocery stores, why not target those types of businesses for special treatment?

Incentives worked, Cincinnati .  Thank goodness.  And we should be so, so proud of ourselves.  But it’s time to take our foot off the accelerator in the urban core, let free markets go back to allocating capital where projects make financial sense in and of themselves, and take what we’ve learned to other parts of the city where they really need a helping hand to solve their problems before they explode.

2 thoughts on “Good News/Bad News: Incentives Work


    Wait! Don’t forget that there are poor people who have been displaced–my many elderly patients in the Hotel Metropole who lost their access to downtown never got over it. I hope the YWCA residents don’t lose their humble resources the same way! How can we forget what was done to the innocent elderly! Mary Anne Curtiss, M.D.

  2. executivedreamer Post author

    Hey Mary Anne Curtiss, I think about this a lot – the issue of gentrification. Your perspective is particularly valuable because when you write you are thinking of very specific lives while the rest of us approach the issue from a more abstract viewpoint. None of us are exempt from the economic reality of change, unfortunately not even the elderly. Maybe the best answer is for more of us to pay better attention, get involved, and let people know we care in very tangible ways when anyone is forced out of their homes. How do we promote that kind of exchange?


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