In one of Cincinnati's smartest deals in decades, the city partnered with three top banks to put together a $100 million revolving loan fund to create new market-rate housing that can attract more residents to the city.
It could serve as a model for other public-private partnerships. Homeowners and small developers should benefit the most from it, along with the city's tax base and struggling neighborhoods. The fund is designed to spur new and rehabbed housing in neighborhoods hit by population loss, disinvestment or blight. That includes downtown.
Cincinnati Housing Development Fund leverages $15 million in city money into $33.3 million each from Fifth Third Bank, Provident Bank and U.S. Bank for a total of $100 million available for loans below prime rate. The city's $15 million will be held in reserve as a guarantee of up to 15 percent on each loan, and will be returned to the city, with interest, at the end of 10 years.
Councilman Pat DeWine, chief architect of the plan, and Finance Committee Chairman John Cranley helped shepherd it through council. DeWine credits the banks and City Manager Valerie Lemmie for closing the deal in two months, astoundingly fast by Cincinnati standards. It would not have happened without the city's $15 million which council wisely set aside from the Anthem stock sale, a $54 million "windfall" from when the health care insurer converted to a for-profit company. In this case, council used the one-time bonanza to leverage long-term private investment in neighborhoods. As two to three-year construction loans are paid back and the money loaned out several times over a period of 10 years, the plan could finance as much as $250 million in housing. DeWine estimates each dollar of city investment will leverage at least $18 of private investment.
DeWine and Cranley argue public-private partnerships are the most responsible use of public investment dollars. Certainly superior to the city's grant to the Empire Theater fiasco. "If people in the real world won't put their money at risk," DeWine said, "we shouldn't be risking the taxpayers' money."
The fund is already open for applications. Cincinnati Development Fund, Inc., a nonprofit lending institution, will manage it, and the banks also will do their own screening. Contact Jeanne Golliher at the fund at 513-721-7211.
Housing loan fund: $100 million
Library gift: Good for Clifton
Job fair: Opportunity for educators
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