Nick SwartsellCincinnati officials have zeroed in on six neighborhoods where millions in federal tax credits for affordable housing grants could land. Next, they'll need to pick one to get the final award.



The grants, part of a program by the Ohio Housing Finance Agency, could provide $3 million in financing for more affordable housing in Cincinnati as the city struggles with a big deficit in housing options for low-income residents. That money, in the form of tax credits, could bring 10 times as much in private investment. But there are some tradeoffs the city will have to accept if it wants those benefits.

OHFA administers federal Low-Income Housing Tax Credits here in the state. Usually, it doles out about $26.5 million a year in those credits, which are approved by the Internal Revenue Service to be awarded for affordable housing creation.

Lately, Cincinnati hasn’t been as competitive as Cleveland and Columbus when it comes to applying for and winning those credits. But the new OHFA program, called the FHAct50 Building Opportunity Fund, could help the city attract as much as $30 million in affordable housing investment over a three-year period by letting Cincinnati, Cleveland and Columbus pick developers who receive extra credits above and beyond OHFA’s usual awards.

Cincinnati opted into the program in September. The city's Department of Community and Economic Development has picked six neighborhoods it feels are eligible for the new program — Avondale, CUF, Evanston, Over-the-Rhine, Roselawn and Walnut Hills. DCED scored each neighborhood based on a number of criteria, including population, median household income, ratio of renters to homeowners, rent increases since 2013, eviction rate, demographic makeup and a number of other factors. OTR, which saw its rents increase more than nine percent between 2013 and 2016, ranked highest on the list, followed by Walnut Hills, CUF, Avondale and Roselawn. But that's not the end of the process. Over the next month, DCED will work with a team of consultants to undertake community engagement efforts and seek proposals from developers for specific projects in each of the six neighborhoods. After that, Cincinnati City Council must approve DCED's choice, which will then be presented to OHFA. In a departure from OHFA’s normal competitive process, in which the agency weighs applications from across the state using a large number of criteria, the city — along with Cleveland and Columbus — will get almost total say over which developers receive the credits under the new program. That’s as long as they present a transparent plan for picking the developers and as long as the picks are overseen by a board or commission that includes low-income residents. The downside: the cities will have to forfeit an advantage they have in OHFA’s regular scoring process for the rest of the credits it doles out for those three years. Each city can also only use the credits awarded through the FHAct50 program in a single neighborhood in order to maximize the impact of the program. And, because OHFA has set its sights on creating mixed-income communities, each city must demonstrate that for every unit of affordable housing created with the special credits, a unit of market-rate housing has been newly constructed in the same neighborhood.