Watchdog, James Pilcher, spilled the beans on the interest free loans city government uses to encourage development in his excellent front page article, ‘Sweet Deals?’ from October 19. The bottom line: Cincinnati wrote interest-free loans totaling $11.4 million between 1991 and 2001, about $8.9 million of which is still outstanding. — Not a bad investment considering that the biggest chunk went to Towne Properties for Gramercy at Garfield at a time when no bank would consider financing residential projects downtown. That was the beginning of our residential renaissance in Cincinnati. Even so, Pilcher points out the need for fair standards in granting such incentives, contrasting Arne Bortz’s (partner in Towne Properties) interest rate right after he finished his 9 year stint on Council with the 13% HUD-backed loan issued to Verdin Co. around the same time for their project in Pendelton.
Perhaps the most interesting revelation is in the sidebar titled, “Churches Benefited from Loans for Shopping Center.” Four neighborhood churches wanted to redevelop Avondale Town Center and were granted two loans worth a combined total of $1.65 million in 1997 for 21 and 26 years.
Though unusual, everyone seems to agree that the project has been a success. “A key in a lot of these deals is finding the right organization to carry out what we’re trying to accomplish, which in this case was changing the area,” said Eric Denson, who manages the city’s loan program for the department of trade and development. “In this instance, we found a great organization. They took the steps to get the place fixed up, it is in much better shape than it was before, and the community is better for it.” According to Pilcher, the property is now worth at least $1.8 million and the loan was set up so that the city would be in line to receive any profits from a sale.
Is that fair?
How is it that 4 churches turn around a crime ridden-shopping center in one of the toughest neighborhoods in town with 20 years of hard work and they get nothing, but if the Great American Tower is sold after 4 years, Western & Southern stands to make somewhere between $35-$85 million?
I’d say that’s a policy that deserves some more thought.