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Tuesday, February 05, 2008

Cincinnati's Rejection Letter To Downtown Developer: Finally, City Hall Says No

CINCINNATI (TDB) -- Reprinted below is the full text of Cincinnati City Manager's Milton Dohoney's note that rejects a downtown real estate developer's attempts to squeeze more public funding out of the city. The city said it would not subsidize more than 27.5% of the project's cost -- a $100 million, 22-story condo at the corner of Fifth and Race streets. It appears that somebody at City Hall has learned how to stand firm in the face of pressure:

"I appreciate your courtesy call this morning informing me of your intention to communicate with the Mayor and City Council. I have also reviewed your letter and subsequent email. I too am disappointed with the current status of the Fifth & Race project.

"As documented in our executed letter on December 7, 2007 and supported by my subsequent letter of January 10, 2008, the City of Cincinnati is -- and has been -- committed to realizing the vision for retail space, over 250 condo units primarily geared towards the young professional demographic, and more than 700 new parking spaces as illustrated by our continued work with Eagle Realty Group over the past year and a half. This site and been under discussion for some time and the City has been both committed and patient throughout the process in pursuit of a landmark project in the very heart of our downtown. During the past year and a half, there have been many extensions grated to that end.

"In fact, the City demonstrated its deep commitment to this project by working with Eagle Realty Group to develop what we believe is a very generous development financing package for this project, including $13.5 million in Tax Increment Financing (TIF), a $2.0 million cash grant and giving -- at no cost -- the Fee Simple Title to the site to Eagle Realty, which has been appraised at $8.5 million (the County Auditor has listed it at $12 million) and which the City actually purchased from Western-Southern in preparation for this project to be realized.

"Given your calculation of a total project cost of $100 million, this financial subsidy constitutes between 24% and 27.5% in City funding pledged towards this project. We feel that this is an extraordinary commitment of the limited City resources, particularly given the fact that our own TIF policy provides for a maximum subsidy of only 15%.

"Therefore, as we have made clear that this is the City's last, best and final offer in terms of sudsidizing this project with public dollars, we would expect that these deal points be agreed upon as both final and acceptable to Eagle Realty Group prior to the January 31 deadline. As of your last correspondence there has been no such agreement, and therefore, no further discussions on this project would be fruitful at this point. We believe it is in the interest of both parties that we move forward with the realization of the vision for Fifth & Race that we have collectively shared, as has been represented by your company and generously supported by the City of Cincinnati."

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