LIMA — The next few months will be the start of some major changes in Lima’s downtown.
Rhodes State College’s Borra Center for Health Sciences, located on the southeast quadrant of Town Square, is expected to be completed in June. Mercy Health-St. Rita’s Medical Center’s Graduate Medical Center Education Center is scheduled for completion in the spring. Meanwhile, the Greater Lima Region Park & Amphitheater just a block away is almost 100% funded thanks in part to a recent influx of state capital dollars.
The big question is: Is it time for further private investment to capitalize on downtown’s momentum?
Consider a breakdown of downtown buildings. According to county appraisal data, roughly 86% of the downtown buildings located in the 16 blocks surrounding Lima’s town square intersection are owned by private companies or individuals. At the same time, private buildings make up 58% of downtown’s total property valuation.
While there’s been a healthy group of business owners dedicated to downtown, there’s also been plenty of empty lots and vacant buildings. Is there potential for something more?
Solving a legacy problem
While there are plenty of moving parts that have affected how Lima’s downtown has evolved, the underlying problem Lima and other legacy cities have is actually pretty simple. Without proper maintenance, things fell apart.
From 1980 to 2010, the United States lost 8 million jobs in manufacturing due to changes in international markets and the use of automation, and Lima saw its industrial base squeeze down accordingly. Such a hit to jobs, incomes and the region’s physical infrastructure — leading to blight, abandoned factories and aging retail spaces — now plague redevelopment efforts today.
Mayor David Berger said renovating such brownfield parcels can sometimes be very difficult, and it’s part of the equation why some investors, especially those that need the space, have relied on expanding outward onto greenfield sites instead of moving closer to the city’s core.
Meanwhile, every year a property isn’t maintained, the costs of renovation just goes up. After a few decades, it becomes a money lending problem.
“I think a huge problem is that because of (cities) have declined for so long you can’t get additional financing,” Alison Goebel, executive director with the Greater Ohio Policy Center, said. The Columbus-based group focuses on creating policy fixes for legacy cities like Lima.
“The banks cannot lend. They are federally constrained against taking on certain types of risk. It’s not just them not wanting to. They are constrained in some situations,” she said.
As a result of such shortfalls, public and private solutions to mitigate financial risk have been some of the best ways to re-invigorate investment. Goebel pointed to a hodgepodge of such efforts throughout Ohio’s rust belt.
In Bellefontaine, a group of dedicated younger people relied on sweat equity to hammer out spaces in downtown to create additional market energy. In Hamilton, Goebel said public and private entities went a different route by spreading out the financial risk among its partners. The city helped form the Consortium for Ongoing Reinvestment Efforts, or CORE fund, that focuses on providing capital. Both efforts have seen solid results.
Admittedly, these solutions have all been mirrored by various groups throughout Lima. Bellefontaine’s idea, for example, has been co-opted by Lima’s Legacy Arts Collective, which is currently rehabbing the Alter Ego Comics building and just finished renovating a sizable space at The Meeting Place a few blocks away. Similarly, Hamilton’s idea of a public/private fund is somewhat reflected in undertakings pushed forward by Greater Lima Region Inc., which has started donating funds to kick-start development projects.
Another way to address the risk problem is to offload it onto public entities. In an effort to create “business-friendly” environments and kick-start economic development, governments often offer tax abatements, grants and low-risk loans. Locally, Allen County and the City of Lima currently have 47 such tax abatement agreements on the books.
A recent effort on the federal level have also made opportunity zones available. Established back in 2017 by the Tax Cut and Jobs Act, the new tax code allowed investors to decrease the amount they paid on federal taxes if they were to invest in projects directly in neighborhoods deemed opportunity zones by the federal government. The City of Lima applied and portions of the city — including the downtown area — were approved for the program.
In the subsequent two years since, there’s no data on how many investors have used such tools to lower their financial risks, but Berger and GLR’s President/CEO Doug Olsson are now working in concert to energize opportunity zone use by showcasing Lima’s business opportunities to a national firm specializing in opportunity zone investments.
“We submitted a joint proposal in late August. In the fall around late October, we basically were informed we made the first cut. They had about 40-some communities around the country that initially participated,” Berger said.
Neither Olsson nor Berger wanted to publicly name the Boston-based firm quite yet. There’s also no current timeline on when the final determination will be made, but Berger said the city could see an estimated $50 to $70 million in private investment if it were to go through.
“The attractiveness of this is these national firms,” Olsson said. “They have investors all around the country. It’s significant if we can get their commitment to bring their investor’s money into our market. Of course, that’s the ultimate goal.”
Where the investment dollars would go exactly is also up in the air, but the national firm is interested in getting plenty of community input into where residents would like to see the money invested throughout the city.
“We had a list of 25 projects in the opportunity zones. They want to know in the local community, how do you prioritize these projects from one to 25?” Olsson said.
City administration and GLR are now working in concert to figure the specifics of the potential deal.
“The momentum is turning. One project leads to other projects meaning you get a benefit. When something like the Rhodes State project is going in, the entire neighborhood becomes very attractive in terms of investment opportunities,” Olsson said. “Some investment dollars have been sitting on the sidelines, but I’m seeing the momentum is turning and recognizing that investment is happening. And that opens up a whole world of opportunity.”
Reach Josh Ellerbrock at 567-242-0398.