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Business News

Federal Reserve Data Reveals Cincinnati Economy is Out-Performing Regionally, Lagging Nationally

New data from the Federal Reserve Bank of Cleveland, which covers Ohio, western Pennsylvania, the West Virginia panhandle, and the eastern half of Kentucky, provides a glimpse into the recovery and transition of the region’s economy.

According to the newly released data, spanning from 2001 to 2012, this Federal Reserve region has weathered an incredibly tumultuous 11 years.

“Historically, much of the region has specialized in manufacturing, a sector that has been particularly hard hit over the past few decades,” noted Federal Reserve Bank of Cleveland research analyst Matthew Klesta in his data brief. “Since the end of the Great Recession in 2009, however, the decline in manufacturing employment has slowed. In some places, employment has even grown.”

Since the first year of recorded information in this data set, all 17 Metropolitan Statistical Areas (MSA) in the region, with the exception of Wheeling, WV, saw losses in manufacturing employment – the region’s historical economic stalwart. MSAs like Dayton and Steubenville posted losses of almost 50%. Cincinnati, meanwhile, saw its manufacturing sector decline by nearly 25% – a mark that is low by regional standards.

International trends in trade in the early 2000s, like China’s entry into the WTO and the increase of offshoring from developed to developing nations, combined with the Great Recession, dealt a critical blow to the area’s manufacturing sector. Excluding education and health services, every other industry in the region saw significant jumps in the annual percentage of jobs being lost during the Great Recession.

For example, between 2001 and 2007 the average loss per annum for the manufacturing sector was a little less than 3%; but from 2008-2009 it jumped to nearly 7%. Since the Great Recession, however, many MSAs in the area have posted modest gains in manufacturing employment, while still falling well below baseline levels in 2001.

While the manufacturing sector has declined throughout this Federal Reserve region, health and education sectors have grown. Despite a nationwide average of 1.2 health and education service jobs gained per 1 manufacturing job lost, only four MSAs in the region (Cincinnati, Columbus, Huntington, Pittsburgh) can boast an overall replacement of lost manufacturing jobs with health and education employment.

The replacement of manufacturing jobs with health and education employment does not bode well for the region’s workers. According to the data, the health and education sectors pay, on average ($44,000 in 2012), significantly less than manufacturing ($55,000 in 2012).

But while this changing economic landscape has meant a smaller presence for manufacturing in the region, this Federal Reserve Bank region continues to be highly specialized in that economic sector. Perhaps as a result, population loss continues to plague many MSAs within the region.

From 2001-2011, while the national population grew by 10% the regional population posted an average gain of only 1.6%. In fact, only five (Cincinnati, Huntington, Akron, Columbus, Lexington) of the 17 MSAs in the region saw their population rise over that time period. Of those five metropolitan areas, only two (Lexington and Columbus) posted gains in both population and private-sector employment.

Pittsburgh and Wheeling, meanwhile, managed to post positive gains in private-sector employment while still shedding population. The remaining 10 MSAs all posted losses in private-sector employment and population.

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Business Development News

Cincinnati Posts Population Gain for Second Consecutive Year

Cincinnati has added about 1,000 new people since the decennial census in 2010, according to new estimates released by the U.S. Census Bureau.

The modest increase comes from two consecutive years of population gains that followed an immediate downward revision after the 2010 Census. The increase also means that just Cincinnati, Columbus and Dayton were the only big cities (more than 50,000 people) in Ohio to post gains.

Columbus and Cincinnati, meanwhile, were the only big cities to post population gains for the past two years.

The population estimates are derived using the 2010 Census as a baseline and then factoring in new permitted residential construction and mobile homes, and subtracting out the estimated number of homes lost each year. As a result, all of the annual estimates should come with a grain of salt.

Ohio Cities Comparison

With that said, Dayton’s population gains appear to be an anomaly, while the increases in Columbus and Cincinnati appear to be more rooted. In any case, the news for Ohio’s big cities is not good as the rest all lost population, especially those in the northeastern part of the state.

Columbus continues to stand out from the rest of Ohio’s big cities in terms of its population trends. In this latest estimate release, Columbus posted the fifteenth largest numeric population gain of any municipality in America; and it comes on the heels of equally impressive gains in prior years.

Some observers, however, would attribute some of the gains in Columbus to its unusually large municipal boundaries that include what would be far suburbs in other Ohio regions.

While Columbus has been growing by about 1.5% annually over the past several years, Cincinnati has been growing annually by about 0.25%.

When compared with other peer cities, Cincinnati’s gains look even more tepid.

Peer Cities Comparison

Of fifteen other cities competitive with Cincinnati, the city bested only five of them in terms of population growth, while being significantly outperformed by most all others. In this comparison, even Ohio’s best performer – Columbus –fares only reasonably well against the field.

For Cincinnati’s peer cities, national trends appear to hold true. Southern cities continue to grow at the fastest clip, but their growth rates are leveling off. In our comparison, Austin, Atlanta and Tampa have all experienced significant declines in annual population growth since the 2010 Census. Charlotte has also experienced a similar trend, but appears to be holding steady more so than its Sun Belt peers.

Meanwhile, while many Midwestern cities continue to lose population, they are doing so at a slower rate or have stopped the losses entirely.

As we previously examined on UrbanCincy, the Cincinnati region continues to grow by about 0.4% annually. The City of Cincinnati’s 2013 gain represents approximately 12.5% of the total regional population growth, and half of Hamilton County’s increase last year.

In a nutshell, Cincinnati is over performing regionally, but under performing amongst its peers. If Cincinnati were growing as fast as Charlotte or Austin, the city would be adding around 9,000 new people every year.

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Development News Politics

Report: Cincinnati’s five-year outlook for building demolitions may approach 8,000

Home demolition photograph provided by Price Hill Will.

In September, city officials stood in Price Hill alongside state officials to announce plans to demolish up to 700 vacant and blighted buildings in Cincinnati. The funding for the ongoing effort comes from a state-wide program called Move Ohio Forward, which gives demolition funding to cities from money the state won in a settlement with large banks last year over the home foreclosure process and lack of property upkeep by the banks.

City officials estimate that there are currently 1,300 vacant and blighted properties awaiting demolition. The $5.84 million grant, when matched with $5.34 million from the Hamilton County Land Reutilization Corporation and $3.49 million from the City, will provide enough funding to cover just over half of the total amount of demolitions mandated its own ordinances. The final amount of demolitions, officials say, will vary from neighborhood to neighborhood.

“The Moving Ohio Forward Grant Program provides unprecedented blight abatement opportunity for the City to clear dangerous, obsolete buildings from neighborhoods, make way for redevelopment, and eventually raise property values,” Edward Cunningham, Property Maintenance & Code Enforcement Division Manager, told UrbanCincy.

In an effort to further control what happens with the cleared sites, the City of Cincinnati will work with Hamilton County’s new Land Reutilization Program in order to acquire tax delinquent properties. Once the buildings are demolished, the City will determine if the land can be used as parks, community gardens or rehabilitated into new housing. So far, however, only enough funding for lot restoration on 200 parcels has been identified.

In cases where the lots are private properties, and are not able to be acquired, it will be up to the property owners of the vacant lots to decide the future of their property. According to Cunningham, property owners will be allowed to maintain the lots, create parks, parking or new infill construction.

More Comprehensive Plan for Demolitions Needed
Property demolition has been used by many cities including Cincinnati as a method of addressing problem vacant buildings that have been condemned because they are hazards to human health and unsafe to occupy. While the debate on the impacts of foreclosure and vacant property is far from over, some of these buildings are “too far gone” in the eyes of building inspectors that they legitimately need to come down. And according to Cunningham, the buildings being demolished under this program are buildings that are beyond repair.

Once the demolitions are completed, one-by-one, it will create more land between occupied houses thus negatively impacting the completeness of the neighborhood’s form. Without a strategic plan, vacant and unmaintained lots could end up degrading neighborhoods in the same manner as blighted homes; however, vacant lots tend to be easier to maintain and do not pose as much of a risk as a standing structure.

Furthermore, demolitions made through this program on private land will place the cost burden on the property. Should the property owner not pay the assessment for the work, then the property could be foreclosed by Hamilton County, which would then open the land up to redevelopment. This process, however, does take a considerable amount of time and offers no guarantee of redevelopment.

Projected Housing Units in Five Year Demolition Pool by City for Ohio’s “Big Eight” Cities. Source U.S. Census Bureau.

The challenge of increasing amounts of abandoned and blighted housing is not symptomatic of Cincinnati alone, as many older industrial cities are facing the similar problems. A recent report from the Brookings Institute found that Cincinnati might have close to 8,000 buildings eligible for demolition in the next five years. The report also stated that while the demolitions have the potential to stabilize neighborhoods, excessive regulations and costs prevent cities from demolishing the amount of housing that should be demolished on an annual basis.

To overcome these hurdles the report makes a series of recommendations for cities to devise their own strategic demolitions plan.

“Planners, urban designers, and residents must together evaluate how demolishing a particular building will affect the texture of its block or area,” the Brookings Institute stated in Laying the Groundwork for Change: Demolition, urban strategy, and policy reform (2012).

Cities such as Cincinnati need to have a level of transparency in place that allows for neighborhood input on the reuse of the newly created vacant lots. It is not merely enough to encourage neighborhoods to help identify future uses for vacant lots as the city is doing now, it should be required.

As previously profiled on UrbanCincy, Cincinnati’s population decline is systemic and although vacant building demolition is more a testament to the large supply of housing versus demand, absent a strategic demolitions plan, the city should be mindful that stabilizing neighborhoods relies heavily on preserving existing housing or building new housing capacity and offering incentives or neighborhood upgrades that would attract new residents.