YOUNGSTOWN HUD picks city for tax incentives

The practical effect of the new federal designation remains to be seen because there is no track record.
By ROGER G. SMITH
CITY HALL REPORTER
YOUNGSTOWN -- Big federal tax breaks are coming that could be worth millions of dollars to businesses and spark job growth and economic development in the city.
The U.S. Department of Housing and Urban Development named Youngstown one of 40 renewal communities across the country today.
The official announcement was to be made this afternoon at city hall by Roy Bernardi, HUD assistant secretary for Community Planning and Development, U.S. Sen. Mike DeWine, R-Ohio, and Mayor George M. McKelvey.
"This is really good news," said Bill D'Avignon, city deputy director of planning. "The tax incentives might spur developers to take a chance."
Businesses that operate or locate downtown, in a segment of the North Side along U.S. Route 422 and the Smoky Hollow neighborhood will be eligible for major tax credits, deductions, capital gains benefits and other incentives.
The practical effect of the federal designation, however, remains to be seen.
This is the first round of renewal community awards so there is no track record. The benefits -- the tax incentives and breaks -- are quite technical, D'Avignon said.
"It will be interesting to see if it's enough or not," he said.
The city's successful economic development partnership with area banks and U.S. Small Business Administration, which is becoming a national model, should strengthen the renewal community benefits, D'Avignon said.
The areas: Combined, the three designated areas make up the city's worst economic profile. The areas had a 65 percent poverty rate, 45 percent unemployment and 89 percent of households considered low income in 1990. The government used the 1990 census and those types of numbers to decide which cities got renewal zones.
City officials were confident they would become a renewal community because the areas they picked were so downtrodden, D'Avignon said.
Originally, the city figured it would include in its request most of the 13 census tracts that qualify.
Based on the competition, however, the city could make its strongest case only by limiting its application to the absolute worst tracts. Downsizing the potential renewal area was a concern to some, but it was a winning strategy.
Expansion: Federal officials have indicated the program could be expanded. Youngstown would ask the government to expand the boundaries to a few other nearby neighborhoods. Also, the city would ask that the developing Ohio Works Industrial Park along Route 422 be included. The old U.S. Steel site along the Mahoning River has no residents so it couldn't be in the application.
Census tracts for renewal communities have to be contiguous, so Youngstown and Warren couldn't join as they had for empowerment zone applications.
The renewal program is an outgrowing of the federal empowerment zone program, which gave big cities $100 million over 10 years.
Many smaller cities including Youngstown and Warren complained that politics, not need, were behind empowerment zones.
rgsmith@vindy.com