Economic Incentives Realignment for Columbus, OH

HR&A guided a repositioning of Columbus’ incentive portfolio to promote equitable growth and enhance regional competitiveness.

Challenge

To spark economic growth and urban investment, many cities turn to economic incentives. But, as markets change over time, incentives can lose their effectiveness or fail to address new priorities or challenges. In Columbus, Ohio, the use of incentives supported investment in its downtown and surrounding core neighborhoods, and some questioned whether those incentives were still required. At the same time, some neighborhoods still struggled to attract investment, further compounding disparity; the Columbus region remains one of America’s most segregated metro areas by income.
 
In repositioning its incentive programs, the City saw an opportunity to address these challenges and advance its goals of promoting inclusive neighborhood development and enhancing its competitiveness as a business destination. The City engaged HR&A to assess previous program performance and examine new strategies for the use of incentives that could support equitable growth.

Solution

Working with the City’s economic development department, HR&A reviewed the effectiveness of existing programs. The team assessed the impact of incentives on development activity in neighborhoods across the city, examining how incentives affect the financial feasibility of development.
 
HR&A’s analysis showed that residential tax abatements impact development feasibility in market-ready neighborhoods differently than in persistently disinvested neighborhoods. This insight helped the City structure and refine its incentive offerings by neighborhood type to encourage development of mixed-income communities with affordable housing and public benefits.
 
The team also evaluated the relative competitiveness and commercial incentive portfolios of Columbus, its peer cities, and neighboring municipalities. This comparative analysis helped Columbus identify gaps in its offerings and identify opportunities to refine its commercial incentives to enhance its ability to attract and retain quality jobs.

Impact

In early 2018, the Mayor of Columbus announced progressive changes to the City’s incentive programs to drive the creation of new affordable housing in high opportunity neighborhoods, building from the recommendations of HR&A’s study. With a clearer understanding of the positioning and impact of its residential and commercial incentive portfolios, the City created different affordability requirements for three neighborhood types. In order to receive incentives, standard types of residential projects in neighborhoods with strong market conditions are required to provide affordable housing units, office space, or a payment to the Affordable Housing Trust for Columbus and Franklin County. The City also raised the minimum wage that jobs must offer to be eligible for job creation incentives from $12 to $15 per hour.
 

READ THE STUDY