From Ailing to Artisanal: The Transformation of a Cincinnati Neighborhood

Georgia Keith has seen everything from the segregation of the Civil Rights era to riots and violent crime over some five decades in Ohio's third-largest city.

After a corporate-driven revival of the Over-the-Rhine neighborhood just north of downtown, where Ms. Keith has lived since 1965, she says her greatest challenge today is simply staying in her home.

"I keep saying no to individuals who want to buy the house. There have been maybe five or six different ones, others keep putting mailings in the mail box," says Ms. Keith, 71 years old. "I don't respond."

Over-the-Rhine's transformation has largely been the product of a nonprofit development corporation armed with private capital, a unique concept that is gaining attention as other cities look to develop their most ailing, crime-filled neighborhoods. The success of this approach, however, can come at a cost to some longtime residents, who find themselves priced out or feeling alienated in neighborhoods they've called home for most of their lives.

Named for the Germans who settled here in the 1800s, Over-the-Rhine was among the country's most blighted neighborhoods in 2001, when riots erupted over the shooting of Timothy Thomas, an unarmed 19-year-old black man killed by a white police officer during an attempted arrest for a nonviolent misdemeanor.

Fearful that the neighborhood's decline would rub off on nearby downtown, the city's corporations -- including Procter & Gamble Co., Kroger Co., U.S. Bancorp and Macy's Inc. -- pumped capital into a nonprofit real-estate company that was formed in 2003 with a mission to buy up and repurpose abandoned buildings and vacant lots in the area.

Almost 15 years and over $1.1 billion later, Over-the-Rhine is now a mecca for trendy restaurants, loft apartments, cafes with home-cured meats and artisan doughnut shops. Modern condominiums have gone up and public spaces, including two parks and a neighborhood pool, have been revived.

The nonprofit behind the development, 3CDC, has won praise from the city and some local residents for revitalizing the neighborhood while maintaining some affordable housing, investing in homeless shelters and consulting with Over-the-Rhine's longtime residents. The experiment has inspired similar efforts in St. Louis and Atlanta, where 3CDC is consulting with groups trying to revitalize ailing neighborhoods that hug the downtown core.

In Atlanta, not-for-profit development company the West Side Future Fund is borrowing from Cincinnati's playbook, joining with corporations including the Chick-fil-A Foundation and Home Depot to reduce vacant housing units in neighborhoods west of downtown, implement a job-training program, and build mixed-income housing.

U.S. Bancorp Community Development Corporation is among the St. Louis corporate entities talking with developers about similar plans in the city's Near North Side neighborhood, which was awarded a $29.5 million federal grant last year to rehabilitate a housing complex and fund social-service agencies, including a community center, microloan program and homeowners assistance program. U.S. Bank CDC also helped fund development in Over-the-Rhine.

Still, some question the sustainability and impact of such efforts, driven by corporate goals and often lacking an economic plan to keep longtime residents, many of whom are low-income, in the area.

"In terms of the development model, what 3CDC did was phenomenal," said Nate Pelletier, executive director of Joseph House, a drug rehabilitation center for veterans in Over-the-Rhine. "But all the other parts of what makes this sustainable, that's falling apart exponentially, " he said, specifically citing economic opportunity for some of the neighborhood's original residents.

Stephen Leeper, 3CDC's president and chief executive since 2004, describes the neighborhood as "gone" when the company came in, and credits the corporate community with stepping up to the plate.

"There was no easy exit strategy, huge financial risk and potential reputational risk," he said.

Cincinnati companies put $1.2 million into 3CDC in 2003, which amounted to 92% of the company's operating budget that year. Corporate funding has remained steady since, but now only accounts for 15% of 3CDC's budget.

3CDC, which also taps other private capital and some government funds, has been part of redevelopment efforts in 25% of Over-the-Rhine. In the early stages, 3CDC courted new business owners with leases based on between 3% and 8% of gross revenue

Holtman's Donuts, a small family-owned chain, opened a shop in Over-the-Rhine in 2013, after getting a loan through 3CDC and its property development partners, the Model Group, the store's landlord.

"A lot of people thought we were crazy," said Katie Plazarin, who co-owns the shop with her husband, Danny Plazarin.

But the bet paid off. The store did so well that the Plazarins are now planning on opening a fourth location in West Chester, Ohio, about 22 miles north of Cincinnati. The couple credit the Over-the-Rhine store for cementing their brand and giving them greater visibility.

3CDC's investments have also helped local social-service agencies grow.

Shelterhouse, a homeless shelter in Over-the-Rhine, was able to sell its existing space and, with added funds from 3CDC, buy two new shelters about a mile away from the neighborhood, tripling the agency's footprint to 100,000 square feet.

It now offers health-care, case-management and employment services in addition to temporary housing to nearly twice as many clients as before.

"Obviously, the more money you put into a neighborhood, it is going to change and that may not be good for everyone," said Arlene Nolan, the shelter's director. "But for us and our people, it was a good thing."

Still, rising property values have driven dozens of families out of the neighborhood, and longtime residents like Ms. Keith say the mom-and-pop shops, laundromats and neighborhood grocery stores they frequented are long gone, replaced by more expensive options.

"The neighborhood has improved, I'm not saying it hasn't," said Ms. Keith. "But who has it benefited? The person with money."

Census figures from 2015 show shifting neighborhood demographics, with residents becoming whiter and wealthier. With landlords, especially those unrelated to 3CDC, able to charge more, affordable units have been lost.

Reginald Stroud, 56, lost his apartment, karate studio and corner store in 2014 when his landlord, who wasn't a 3CDC partner, sold the property, giving him 45 days to move.

"The store was my income and my business, so I basically lost my job," said Mr. Stroud, who now lives about 5 miles north of Over-the-Rhine. He recently found a new shop, which will open in October.

3CDC's Mr. Leeper said the issue of dislocation is "more perception than fact" and that his group is redoubling efforts build projects with both affordable units and market-rate units in the same building.

"There was a concerted effort to preserve this mixed-income atmosphere," he said, "and we hope our critics would say that there has been some effort and progress and success there."

--Cameron McWhirter contributed to this article.

Write to Shibani Mahtani at shibani.mahtani@wsj.com

(END) Dow Jones Newswires

August 22, 2017 08:14 ET (12:14 GMT)