Civic space renovation a national model
A Partnership Approach to Financing Iconic Square
The historic location of Cincinnati’s iconic Tyler Davidson Fountain, Fountain Square is the public space where Cincinnatians gather, celebrate and connect as a city. A 2005 renovation of the Fountain Square North parking garage and the above-grade public plaza was critical to reinvigorating this premier public gathering space.
Fountain Square, LLC, a subsidiary of the Cincinnati Center City Development Corporation (3CDC), leased Fountain Square and the underground parking garage at Fountain Square from the City of Cincinnati. 3CDC, a non-profit real estate development organization, began the $48.9 million renovation of Fountain Square in 2005.
To finance the acquisition of the facilities lease and the subsequent improvements, Fountain Square, LLC issued its adjustable rate taxable securities and also entered into loan agreements with the Cincinnati Equity Fund, the Cincinnati New Markets Fund and the State of Ohio. In July 2009, The Port served as conduit issuer for $16.4 million in bonds to refinance the senior debt of Fountain Square, LLC. The 2009 bonds are backed by the gross revenues of the garage, a debt service reserve fund, a first leasehold mortgage on the facilities lease, an assignment of leases and rents on the garage and a security interest in certain additional collateral of Fountain Square, LLC.
The 2009 refinancing of the senior debt allowed Fountain Square, LLC to significantly lower its interest rate and increase funds available to the subordinated debtholders. The bonds were issued in two series, a tax-exempt Series A and a taxable Series B.
The bonds took advantage of the temporary changes in law regarding bank qualified transactions authorized by the American Recovery and Reinvestment Act (ARRA, or the Stimulus Act).
In 2011, The Port re-issued and refunded the 2009 Series A and 2009 Series B bonds in order to help Fountain Square, LLC refinance at a lower interest rate. Also in 2011, The Port issued $8,928,000 principal amount of Port Authority Bank Qualified Facilities Revenue Bonds (Series 2011) constituting conduit revenue bond obligations. The proceeds were lent to Fountain Square, LLC to assist in refinancing a portion of its obligations owed to the Cincinnati New Markets Fund LLC that were used to redevelop Fountain Square in downtown Cincinnati.
3CDC estimates that Fountain Square renovation has resulted in the investment of nearly $403 million in additional private dollars in the Fountain Square District and Backstage District; the improved civic space continues to serve as a catalyst for new residential, retail and restaurant venues.
"The revitalization of Fountain Square is the silver bullet for Cincinnati’s CBD. Without it, no energy would exist today for the continued growth in downtown residency and office occupancy. The new tenants and activities on the square have given office workers a reason to get out of their offices during lunch and stay downtown after work, while giving young professionals a reason to live downtown."
Douglas Bolton, Managing Principal of Cushman and Wakefield