COMMUNITY REINVESTMENT AREA€¦ · the CRA award process. 5. PROPERTY TAX BREAKDOWN. PRE-IMPROVEMENT TA PAMENT. AAED AES NEW TA LIABILIT OARY A ICEIE CORIIO AREEME ICA SCOO OARD

COMMUNITY REINVESTMENT AREA

101COMMERCIAL CRA

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COMMUNITY REINVESTMENT AREAIndustrial, O�ce, Commercial, 4+ Residential Units

RESIDENTIAL CRA1–3 Residential Units

WHAT’S THE DIFFERENCE?

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HAVE A PLAN TO DEVELOP VACANT, BLIGHTED, UNDERUTILIZED PROPERTY?

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TAX INCREMENTFINANCING

COMMERCIALCRA

JOB CREATIONTAX CREDIT

RESIDENTIALCRA

LOANPROGRAMS

COMMUNITYCONNECTION

TECHNICAL ASSISTANCE &CITY FACILITATION

COMPETITIVEAFFORDABLE

HOUSING

NBDASSISTANCE

FEDERAL FUNDSMANAGEMENT

HOW CAN DCED HELP?

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WHAT EXACTLY IS AN “ABATEMENT”?

Abatements reduce or eliminate the property tax on the INCREASED VALUE created by an investment for a DEFINED PERIOD OF TIME not to exceed 15 years.

See Ohio Revised Code Sections 3735.65-3735.70

Commercial CRAs are reactive, not proactive. The State of Ohio and Cincinnati City Council policies direct the

Department of Community & Economic Development on the CRA award process.

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PROPERTY TAX BREAKDOWN

PRE-IMPROVEMENTTAX PAYMENT

NEW TAX LIABILITYABATED TAXES

VOLUNTARY TAX INCENTIVECONTRIBUTION AGREEMENT (VTICA)

SCHOOL BOARD

15%

25%

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NEW TAX LIABILITYABATED TAXES


SCHOOL BOARD

15%

25%


NEW TAX LIABILITY

ABATED TAXES


SCHOOL BOARD

15%

25%

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• Reduce current taxes being paid on a piece of property

• Require the City, County or Schools to pay money to a developer or property owner

• Last forever

• Have any value unless a developer/property owner invests money to build something new or refurbish an existing building

ABATEMENTS DO NOT:

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PROFORMA

REVENUE

YEAR 1

REVENUE

ADDITIONAL INCOME

$144,000.00

$1,100.00

TOTAL REVENUE $137,900.00

EXPENSES

MANAGEMENT $54,000.00

YEAR 2

$146,8800.00

$1,122.00

$140,658.00

$55,620.00

YEAR 3

$149,817.60

$1,144.44

$143,471.16

$57,288.60

YEAR 4

$152,813.95

$1,167.33

$146,340.58

$59,007.26

YEAR 5

$155,870.23

$1,190.68

$149,267.39

$60,777.48

YEAR 6

$158,987.64

$1,214.49

$152,252.74

$62,600.80

YEAR 7

$162,167.39

$1,238.78

$155,297.80

$64,478.82

YEAR 8

$165,410.74

$1,263.55

$158,403.75

$66,413.19

YEAR 9

$168,718.95

$1,288.83

$161,571.83

$68,405.58

YEAR 10

$172,093.33

$1,314.60

$164,803.27

$70,457.75

INSURANCE & UTILITIES $11,000.00 $11,330.00 $11,669.90 $12,020.00 $12,380.60 $12,752.01 $13,134.58 $13,528.61 $13,934.47 $14,352.51

TAXES $15,198.75 $15,654.71 $16,124.35 $16,608.08 $17,106.33 $17,619.52 $18,148.10 $18,692.55 $19,253.32 $19,830.92

TOTAL EXPENSES $80,198.75 $82,604.71 $85,082.85 $87,635.34 $90,264.40 $92,972.33 $95,761.50 $98,634.35 $101,593.38 $104,641.18

NOI $57,701.25 $58,053.29 $58,388.31 $58,705.24 $59,003.00 $59,280.41 $59,536.30 $59,769.41 $59,978.45 $60,162.09

RESERVES 0 0 $875.82 $880.58 $885.04 $889.21 $893.04 $896.54 $899.68 $902.43

NOI LESS RESERVES $57,701.25 $58,053.29 $57,512.48 $57,824.67 $58,117.95 $58,391.20 $58,643.25 $58,872.87 $59,078.77 $59,259.66

DEBT SERVICE $71,408.84 $69,408.84 $67,408.84 $65,408.84 $63,408.84 $61,408.84 $59,408.84 $57,408.84 $55,408.84 $53,408.84

CASH FLOW. ($13,707.59) ($11,355.55) ($9,896.36) ($7,584.17) ($5,290.89) ($3,017.64) ($765.59) $1,464.03 $3,669.93 $5,850.82

ACQUISITION

CONSTRUCTION

$80,000.00

$600,000.00

CONTINGENCY

TENANT IMPROVEMENTS

$38,760.00

$7,269.00

PERMITS

ARCHITECTURE & ENGINEERING

$7,592.00

$14,600.00

DEVELOPER FEE

MISC.

$25,000.00

$12,000.00

TOTAL USES $785,221.00

DEBT

EQUITY

TOTAL SOURCES

$628,176.80

$157,044.20

$785,221.00

SOURCES

USES

PROFORMA

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FINDING PROPERTY TAX INFORMATION

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HOW ARE PROPERTY TAXES CALCULATED?

Valuation of Property

Tax Statement/Collection

Millage, Levies, Assessment

TAX BILLTreasurer

TAX CALCULATIONAuditor

PROPERTY VALUE ASSESSMENTAuditor

“The new values are only one part of the taxing process. Taxes are based on the levies (millage) passed by the taxpayer multiplied by the assessed value (35% of the fair market value).” -Hamilton County Auditor’s website

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Fair Market Value $100,000Assessed Value $35,000

Tax Bill $3,272

Fair Market Value $600,000Assessed Value $175,000

Tax Bill $19,631

$1MInvestment

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PROPERTY TAX BREAKDOWN Example

$3,272 PAID TO COUNTY

$4,090 NEW REVENUE PAIDTO SCHOOL BOARD

$2,454 NEW REVENUE PAIDTO NONPROFIT PROGRAMADMINISTRATOR

$9,815 FORGONEABATED TAXES(NET 60%)


SCHOOL BOARD

FULLYCONTRIBUTING

YEARS 1–10 YEARS 11 +

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CONSTRUCTIONCOMMENCEMENT

APPLICATIONRECEIVED

Applicant provides completedapplication & supporting

documents to DCED for review.Process includes $1,250 non-refundable

application fee to DCED & $750 fee to ODSA.

APPLICATIONREVIEWED

Staff will review all applicationmaterials & review City Council’s

CRA policies.

INCENTIVE NEGOTIATIONDCED will negotiate with applicants

based on Council’s CRA policies.Once an offer is approved by DCED,

staff will inform applicant ofthe incentive the department

intends to propose to City Council.

LEGAL AGREEMENTS& ORDINANCE

Upon agreement of terms, DCED works with the City’sLaw Department to draft an ordinance to provide

to the City Manager or approval & to City Council for a vote.

COUNCILAPPROVAL

Once the City Manager approvesthe offer, the incentive package is

presented to City Council for a vote.This process generally takes about

four weeks from introduction to passage.

COMMERCIAL CRA TIMELINE

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COMMERCIAL CRA TIMELINE Application Received

{00165030-1} Pg. 1City of Cincinnati -- Revised 9/18

APPLICATION FOR COMMERCIAL TAX ABATEMENT

CITY OF CINCINNATI COMMUNITY REINVESTMENT AREA

COMMERCIAL, INDUSTRIAL, MIXED-USE, MULTI-UNIT (4+ UNITS)

Note: After review and recommendation by the Department of Community & Economic Development, all applications must be reviewed and approved by the City of Cincinnati Council before commencing construction. Any projects that start construction before City Council approval will be INELIGIBLE for a Commercial CRA Tax Abatement.

The City requires that the Applicant provide the following documentation with this application: o A detailed breakdown of all Sources and Uses of Funds for the project (templates are available upon

request). A minimum of $40,000 in costs must be documented.o Supporting documentation for ALL sources of funding for the project. For instance, if a bank loan will

be obtained, a letter or term sheet from the bank specifying, among other things, the loan amount and term. A contact person must be identified for each funding source.

o A post-construction operating pro forma for the building and cash flow analysis. NOTE: Please submit a copy of the pro forma used to apply for any bank financing as required and a contact person considering the application for bank financing.

o A $1,250 application fee in the form of check, money order, or cashier’s check payable to “City of Cincinnati”. Note the application fee is nonrefundable.

o Corporate Resolution, Articles of Incorporation, and an Operating/Partnership Agreement for entity applying for abatement showing who is authorized to sign for the organization

o Copy of the Deed or other Legal Description of the Propertyo A copy of the proposed construction plans/rendering/etc.o Estimated pre-construction, and post construction real estate taxeso If this project is seeking LEED or Living Building Challenge (Full, Net Zero, or Petal [must include

“Energy Petal”]) Certification, provide confirmation of registration

SECTION I – Applicant/Project Information

Applicant Information:Legal Name of Property Owner Applying for Abatement: ____________________________

Form of business enterprise _____________________________________ (corporation, partnership,

proprietorship, LLC, non-profit, or other)

Is the Applicant affiliated with a larger developer or development entity? (Yes / No). If Yes, please provide the

name of this developer or development entity: ____________________________

Legal Address of real property owner: ____________________________

Federal Tax ID #(s): ___________________________

Applicant Contact Person: ___________________________________Title: _______________________

Phone:_________________ Main Contact email address: ______________________

Address of subject property_____________________________________________ Zip: 452_____

Hamilton County Auditor Parcel ID#: ____ - _______ - _______ (see page 3 if additional space needed

for multiple addresses or parcel IDs)

City of Cincinnati Neighborhood:

Is any other financial assistance being requested from the City of Cincinnati for this project? _______

If yes, please indicate the Development Analyst you are working with: __________________________

STAFF EVALUATES & VERIFIES:

Sources & Uses of Funds

Supporting Documents for ALL Sources of Funding

Post-construction Operating Proforma & Cash Flow Analysis

Application Fee

Corporate Resolution, Articles of Incorporation, and an Operating/Partnership Agreement

Copy of the Deed

Proposed Construction Plans/Rendering

Estimated Pre-construction, and Post-construction Real Estate Taxes

Confirmation of Registration for LEED or Living Building Challenge (if needed)

APPLICATIONRECEIVED


APPLICATIONREVIEWED

INCENTIVE NEGOTIATION


COUNCILAPPROVAL

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COMMERCIAL CRA TIMELINE Application Reviewed

APPLICATIONRECEIVED


APPLICATIONREVIEWED



COUNCILAPPROVAL

STATE LOCALOhio Revised Code 3735.65–3735.70

City Council Ordinance No.274-2017, 275-2017, & 339-2018

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COMMERCIAL CRA TIMELINE Application Reviewed

APPLICATIONRECEIVED


APPLICATIONREVIEWED



COUNCILAPPROVAL

{00165030-1} Pg. 8 City of Cincinnati -- Revised 9/18

CITY OF CINCINNATI COMMERCIAL TAX ABATEMENT TERMS Applications for projects located within the Streetcar VTICA Area (as depicted on the following page) are eligible for a net abatement of up to 75% (less any VTICA contributions, if any) for up to 15 years. Such abatement will be determined based upon job creation, VTICA contributions, project need and other factors that the Department of Community and Economic Development may consider. If the project will be certified LEED Silver, Gold or Platinum or will obtain Living Building Challenge (LBC) Net Zero, Full or Petal (must be “Energy Petal”), the project will not be subject to gap financing analysis. Applications for projects located outside the Streetcar VTICA Area will be scored in accordance with the below point values: “But For” Analysis – 0-3 points (determined by Department of Community and Economic Development Non-LEED, LEED Certified, or Non-LBC Qualified – 0 points LEED Silver – 2 points for new construction; 3 points for renovation LEED Gold/LBC Net Zero – 3 points for new construction; 4 points for renovation LEED Platinum/LBC Full or Petal (must include “Energy Petal”) – 5 points for new construction; 6 points for renovation VTICA – 8 points for 15% VTICA contribution; 1 point for any payment up to but excluding 15% VTICA contribution

Points Term (years) Net Rate*

0 3 25% 1 4 30% 2 5 35% 3 5 40% 4 6 40% 5 6 45% 6 7 45% 7 7 50% 8 8 60% 9 9 60%

10 11 60% 11 12 60% 12 13 60% 13 14 60% 14 15 60% 15 15 60% 16 15 60% 17 15 60%

* Abatement applies to improved value only. The Net Rate of the abatement takes into account Cincinnati Public Schools PILOT Agreement pursuant to which the Applicant must contribute 25% of the gross amount of the abatement, as well as VTICA contributions, if any.

GOVERNING RULES & REGULATIONS

• Environmental, LEED

• Neighborhood

• Financial Need

• Historic, New Construction

• VTICA/No VTICA

• Community Support

NEIGHBORHOOD SCORE CARD

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HAVE A PLAN TO DEVELOP VACANT, BLIGHTED, UNDERUTILIZED PROPERTY?

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$ GAPDEVELOPERFINANCING

(Equity + Bank + Other)

PROJECTCOST

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PRE-DEVELOPMENT PROCESS Multi-Year, “At-Risk”

$3,272 PAID TO COUNTY

$4,090 NEW REVENUE PAIDTO SCHOOL BOARD

$2,454 NEW REVENUE PAIDTO NONPROFIT PROGRAMADMINISTRATOR

$9,815 FORGONEABATED TAXES(NET 60%)


SCHOOL BOARD

FULLYCONTRIBUTING

YEARS 1–10 YEARS 11 +

Sourcing Capital is a critical priority throughout pre-development. 20

PROFORMA

REVENUE

YEAR 1

REVENUE

ADDITIONAL INCOME

$144,000.00

$1,100.00

TOTAL REVENUE $137,900.00

EXPENSES

MANAGEMENT $54,000.00

YEAR 2

$146,8800.00

$1,122.00

$140,658.00

$55,620.00

YEAR 3

$149,817.60

$1,144.44

$143,471.16

$57,288.60

YEAR 4

$152,813.95

$1,167.33

$146,340.58

$59,007.26

YEAR 5

$155,870.23

$1,190.68

$149,267.39

$60,777.48

YEAR 6

$158,987.64

$1,214.49

$152,252.74

$62,600.80

YEAR 7

$162,167.39

$1,238.78

$155,297.80

$64,478.82

YEAR 8

$165,410.74

$1,263.55

$158,403.75

$66,413.19

YEAR 9

$168,718.95

$1,288.83

$161,571.83

$68,405.58

YEAR 10

$172,093.33

$1,314.60

$164,803.27

$70,457.75

INSURANCE & UTILITIES $11,000.00 $11,330.00 $11,669.90 $12,020.00 $12,380.60 $12,752.01 $13,134.58 $13,528.61 $13,934.47 $14,352.51

TAXES $15,198.75 $15,654.71 $16,124.35 $16,608.08 $17,106.33 $17,619.52 $18,148.10 $18,692.55 $19,253.32 $19,830.92

TOTAL EXPENSES $80,198.75 $82,604.71 $85,082.85 $87,635.34 $90,264.40 $92,972.33 $95,761.50 $98,634.35 $101,593.38 $104,641.18

NOI $57,701.25 $58,053.29 $58,388.31 $58,705.24 $59,003.00 $59,280.41 $59,536.30 $59,769.41 $59,978.45 $60,162.09

RESERVES 0 0 $875.82 $880.58 $885.04 $889.21 $893.04 $896.54 $899.68 $902.43

NOI LESS RESERVES $57,701.25 $58,053.29 $57,512.48 $57,824.67 $58,117.95 $58,391.20 $58,643.25 $58,872.87 $59,078.77 $59,259.66

DEBT SERVICE $71,408.84 $69,408.84 $67,408.84 $65,408.84 $63,408.84 $61,408.84 $59,408.84 $57,408.84 $55,408.84 $53,408.84

CASH FLOW. ($13,707.59) ($11,355.55) ($9,896.36) ($7,584.17) ($5,290.89) ($3,017.64) ($765.59) $1,464.03 $3,669.93 $5,850.82

ACQUISITION

CONSTRUCTION

$80,000.00

$600,000.00

CONTINGENCY

TENANT IMPROVEMENTS

$38,760.00

$7,269.00

PERMITS

ARCHITECTURE & ENGINEERING

$7,592.00

$14,600.00

DEVELOPER FEE

MISC.

$25,000.00

$12,000.00

TOTAL USES $785,221.00

DEBT

EQUITY

TOTAL SOURCES

$628,176.80

$157,044.20

$785,221.00

SOURCES

USES

PROFORMA

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PRE-DEVELOPMENT PROCESS

$$$$ $$

$$

$$

$$

$$ $$

$$ $$

SITE SELECTION

DUE DILIGENCE FEASIBILITY STUDY REQUIRED REPORTS

PROFORMA

PURCHASE CONTRACT

SECURING FINANCING

HIRINGARCHITECTS, ENGINEERS, CONSULTANTS

COMMUNITY OUTREACH& COMMUNICATIONS

MUNICIPALITY SUBMITTAL& REVIEW

CITY PROCESSZONING, PLANNING, UTILITY APPROVALS

PRE-CONSTRUCTIONCOORDINATION

CONSTRUCTION DRAWING/PLAN SUBMITTAL

FINALIZE BUDGET

$$$$ $$

$$

$$

$$

$$ $$

$$ $$

SITE SELECTION

DUE DILIGENCE FEASIBILITY STUDY REQUIRED REPORTS

PROFORMA

PURCHASE CONTRACT

SECURING FINANCING(SHORT TERM > LONG TERM)

$$$$ $$$$$$ $$

SECURING FINANCINGSECURING FINANCING(SHORT TERM > LONG TERM)

ENTER CRA PROCESS

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PROJECT FEATURES Intake to DCED

Example: Nation Restaurant & Bar (Westwood)

• Small

• Vacant

• Blighted

• Distressed

Example: Burke Expansion (West End)

CHARACTERISTICS:• New Construction

• Transformative

• High-competition Factors

CHARACTERISTICS:

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CONSIDERING MARKET CONDITIONSCORRECTING MARKET INCENTIVIZING

STANDARD COMMERCIAL

HIGH RISE

INDUSTRIAL

AFFORDABLE HOUSING

MARKET

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NEHEMIAH MANUFACTURING LOWER PRICE HILL

RECENTLY COMPLETED

50 New Jobs

$12M Total Investment

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CINCINNATI SCHOLAR HOUSE WALNUT HILLS

UNDER CONSTRUCTION

44 Affordable Residential Units

$12.8M Total Investment

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CROSLEY BUILDING CAMP WASHINGTON

CANDIDATE PROJECT

331,958 sq ft

Industrial History

Residential & Commercial Real Estate Unproven in Neighborhood

27

COMMERCIAL CRA

QUESTIONS?

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