Urban Infill Development Projects; Current Legal Issues

The past few years have seen an increase of urban infill redevelopment projects, primarily retail or housing developments that reutilize former industrial or housing sites located within the I-275 beltway. Recent examples include the City West development on public housing property in the West End, Carthage Mills, the Center of Cincinnati on the old Milacron factory complex, and Rookwood Commons, former LaBlond Machine Tool property in Norwood. More of these projects are on the horizon due to the demographics within our urban areas. As the region becomes more spread out, interstate congestion and travel time dictate that additional retail, housing and office choices be offered between the downtown core and the far suburbs.

These types of projects present fresh development and legal issues to suburban developers, including the adequacy of utility infrastructure, particularly older water and sewer connections, underground environmental contamination, zoning density variances to permit increased density, and parking adequacy issues. In addition, creative financing alternatives through public assisted financing and cooperation with the involved municipality to ensure adequate parking and necessary road upgrades to handle increased traffic should be addressed up front.

Underground contamination need not scuttle an infill development project. Instead, creative risk mitigation approaches are available that can actually benefit the economics of the project over the long term. The Ohio General Assembly enacted brownfields legislation several years ago that provides a 10 year 100% real estate tax abatement if adverse environmental conditions are mitigated by the developer in the process of redeveloping the site.

Another tool to consider is the reduction in tap fees that may be available if the project density is reduced. This has to be analyzed on a case by case basis, but a recent rule change (that we participated in) gives MSD the latitude to grant credits on new tap fees based on the pre-existing conditions.

Progressive municipalities will consider applying community development funds to infrastructure upgrades, such as sewer and water mains and rebuilding streets to assist a redevelopment project that, in the long run, will improve the real estate and income tax bases. Coupling community development fund requests with requests for enterprise zone or other tax abatements or incentives may foster the most positive economic impact of the project to the community.

Some municipal zoning codes exhibit a suburban bias when it comes to setback and density issues. The usual response is to develop the project as a planned unit development (PUD). However, we have experienced a fair degree of flexibility with local zoning officials where the benefits of the project clearly demonstrate that zoning variances of setback, height, bulk and other requirements were in the best interest of development. As the economy improves, there will probably be an increased demand for infill development projects so long as municipalities keep their tax rates competitive.