Columbus, Ohio like many growing mid-sized urban markets streamlined the process to develop projects in their Downtown. Downtown Columbus which is home to the Ohio Statehouse and corporate headquarters for Nationwide, Nationwide Arena, and many other buildings competes with not only suburbs for investment but areas of Columbus like Easton who has 80,000 jobs on the I-270 outer belt and Polaris that is home to 18,000 Chase Bank jobs. Based on the growing Central Ohio market and the need for additional housing, Columbus developed a streamlined process for projects in their Downtown, and Montrose Group recommends a development strategy in eight basic steps to promote residential development in Downtown Columbus.
- Property Identification. A developer needs to first identify the property in question in Downtown Columbus that is a prime spot for residential development and gain control of the property in some legal form. A due diligence period needs to be established that is long enough that permits the developer to negotiate a development agreement with the City of Columbus, gain needed land use entitlements, and gain approval of economic development incentives.
- Development Agreement. Once a developer gains control of the property for residential development in Downtown Columbus, the developer needs to reach a development agreement with the City of Columbus, Ohio that outlines the land use, economic development incentives and public infrastructure needs that the developer and city agree are needed for the site to successfully develop. The development agreement acts as a framework for both parties to understand what is required
- Zoning. Following the developer gaining control of the property in Downtown Columbus, the developer needs to gain land use entitlements associated with the project that permitted the use envisioned for the site. The City of Columbus created an expedited land use entitlement process for Downtown Columbus to ease the efforts to develop the Central Business District through the creation of a special zoning process for Downtown Columbus. First, Columbus created the Downtown Columbus Commission to review all land use issues in Downtown Columbus. The Downtown Commission was formed in 1997 with the adoption of the Downtown District chapter (CC 3359) of the Columbus Zoning Code. Adoption of the code resulted in all of Downtown’s 4,000 plus parcels being combined into a single zoning district where most uses are permitted pending design review. A major update to the district and a set of companion Design Guidelines were adopted by City Council in July 2013. The Downtown Commission functions as the district’s development review body-serving as the Development Commission, Board of Zoning & Adjustment, and Graphics Commission for the downtown. The Commission evaluates applications based on their compliance with the provisions of CC 3359 and the Downtown Design Guidelines. The Commission also considers city-adopted plans and policies for the downtown and related applicable regulatory requirements. The City of Columbus Downtown District DD zoning covers all Downtown; thus, no rezoning for transitioning existing office into residential is required. Instead, companies seeking to transition an existing use need to seek a change of use permit provided by the Columbus Building and Zoning Services. The Downtown Commission will review any exterior modifications to the building or site plan, as well as graphics and lighting. I have attached an application and a meeting schedule. The City of Columbus is undergoing the development of a Downtown Comprehensive Land Use Plan as well as is in discussion to determine how tax incentives can best be used to foster the development of affordable housing. However, the Downtown Columbus CRA does not currently assess any affordable housing fees or mandate any level of affordable housing rates for a residential project’s potential residents. Other regions in Columbus do not have this advantage; however, the City of Columbus is likely to propose contributions to the Columbus Housing Fund or mandate a percentage of affordable units for new Downtown Columbus projects.
- Downtown Columbus Tax Incentives. A Downtown Columbus residential project is eligible for a CRA property tax abatement for the tax gain that results from new investment at the site, and a developer of a Downtown Columbus residential project should seek that CRA tax abatement. Downtown Columbus is in a Pre-1994 CRA which provides a 100%, 15-year property tax abatement for residential projects based upon the new capital investment without negotiating a compensation agreement or needing approval from the Columbus City School Board or paying into a Columbus Housing Trust Fund.
- Public Infrastructure. Public infrastructure such as parking and other improvements needed for the successful Downtown Columbus residential development should be sought from the City of Columbus. Downtown Columbus has had TIF districts since 2008 that capture future property tax growth from a 735-acre district in Downtown Columbus that funds the development of publicly owned parking garages and other public infrastructure in strategic locations in Downtown Columbus. Two new TIF districts were created in 2020 within the Downtown around the underutilized PNC Plaza located at 155 and 195 East Broad Street. The development will include new Class A office space, residential units, public greenspace, and improvements to the above-ground pedestrian walkway for residents and employees traversing downtown. The adjacent Gilbert Building will be converted to residential, with 20% of the building’s units designated for affordable housing. If public infrastructure improvements are needed, a TIF agreement can be negotiated that captures the growth in property tax not abated.
- Construction Materials Sales Tax Exemption. A Downtown Columbus residential project should seek a construction materials sales tax exemption from the Columbus-Franklin County Finance Authority that can provide a construction materials sales tax savings generally around 40-50% of the project’s construction costs. The Franklin County Commissioners must approve of the sales tax exemption award and a sales-leaseback agreement will need to be negotiated with the Columbus-Franklin County Finance Authority.
- Downtown Columbus SID. A Downtown Columbus residential developer should be aware of potential assessments certain sites may have to fund the operations of one of two Downtown Columbus SIDs. Capital Crossroads and Discovery SIDs were created by property owners in Downtown Columbus to provide services that support a safe, clean, vibrant, and welcoming downtown. Property owners in each SID fund the program through assessments, and the board of trustees determines the focus. Capital Crossroads SID focuses on safety, cleaning, landscaping, homeless outreach, economic research, Downtown C-pass, and the Pearl Market. Discovery SID focuses on safety, homeless outreach, economic research, first-floor graffiti removal, and creative placemaking. Each SID employs ambassadors to patrol the streets and provide assistance, information, and a reassuring presence in Downtown Columbus.
- State of Ohio Incentives. If a Downtown Columbus residential project involves the redevelopment of a historic structure, the building may be eligible for substantial funding opportunities from federal and state historic preservation tax credits or through the creation of a Downtown Redevelopment District program. In addition, if the development involves a substantial mixed-use development, the project may be eligible for the Ohio TMUD tax credit. Other state economic development incentives may be of interest to urban residential developers as well.
Downtowns in small and big cities offer important housing opportunities that can serve as prime spots for the development of residential projects that are attractive to a new generation of worker as well as the retiree looking to downsize from the house in the suburbs. Columbus, Ohio like other cities offers a clear process by which these residential projects can be developed in Downtown.
Please contact Dave Robinson at [email protected] if you have any questions about Downtown residential development or other economic development matters.