Columbus Supercharges Multifamily Projects with Recent CRA Changes: Pay One-Time Fee, No Agreements Required
Key Insight[i]
Market-Ready CRA Fee-in-Lieu ≈
3 years of upfront taxes → Unlocks 12 years of net abatement
No Agreement Required.
What’s New—and Why It Matters
The City of Columbus has fundamentally streamlined its Community Reinvestment Area (CRA) program for multifamily developers with the passage of City Ordinance 1907-2025. If your project is in the citywide “Columbus Housing Community Reinvestment Area” and you elect to pay a one-time fee in lieu of providing affordable units, you no longer need to enter into a tax incentive agreement to activate the tax abatement. This means faster closings, less negotiation, and more certainty for your capital stack.
How the New Fee-in-Lieu Path Works
Columbus’ CRA program still uses three area designations—Market Ready, Ready for Revitalization, and Ready for Opportunity—but each now provides a one-time payment option per required affordable unit, with an annual CPI-based escalator (+5%). If you elect fee-in-lieu for all required rental units, no incentive agreement is required.
Base fee amounts (before CPI adjustments):
- Market Ready: $32,000 per required affordable unit
- Ready for Revitalization: $16,000 per required affordable unit
- Ready for Opportunity: $5,000 per required affordable unit
If fee-in-lieu for all required rental units is elected:
Pay the fee for a number of units equal to 20% of total units—no incentive agreement required. (You can also blend: provide some affordable units and pay the balance.)
Heads Up: Owner-occupied (for-sale) configurations have distinct rules; the “no agreement” shortcut is keyed to rental projects paying the fee-in-lieu.
Annual Fee Updates: CPI + 5%
Each August 1, the fee is updated by the percentage increase in CPI-U (U.S. City Average, All Items, Not Seasonally Adjusted) plus 5 percentage points. The new figure becomes the base for the succeeding year.
2025 Fee-in-Lieu Amounts (per required affordable rental unit):
|
CRA Area |
2022 Base |
2025 CPI+5% Factor |
2025 Fee per Unit |
|
Market Ready |
$32,000 |
× 1.260983 |
$40,351.46 |
|
Ready for Revitalization |
$16,000 |
× 1.260983 |
$20,175.73 |
|
Ready for Opportunity |
$5,000 |
× 1.260983 |
$6,304.92 |
Why This Matters for Developers
- Speed & Certainty: Pay the fee-in-lieu for all required rental units and skip the incentive agreement—no negotiation cycles, fewer closing conditions, and reduced pre-closing risk.
- Budgetable Cost: The CPI+5% formula gives a predictable, calendar-based update, supporting underwriting and pro forma accuracy.
- Strategic Flexibility: Blend affordable units and fee-in-lieu to optimize yield, design, or mission goals.
How the Fee-in-Lieu Unlocks Capital Stack Value
Paying the one-time fee-in-lieu unlocks the full value of the CRA abatement—$571,509/year in avoided property taxes for a 220-unit Market Ready project located in the City of Columbus/Columbus CSD taxing district, totaling $8.57 million over 15 years. After factoring in the fee-in-lieu, that is a net 12-year 100% abatement.
The fee is a fraction of the total tax savings, allowing developers to “monetize” the abatement’s value up front and turn a regulatory requirement into a predictable investment advantage.
Example: 220-Unit Market Ready Project (Rental, Fee-in-Lieu for All Units)
|
Item |
Amount |
|
Units |
220 |
|
Market Value |
$22,000,000 |
|
Fee-in-Lieu (2025) (20% of total Units) |
$1,775,464 |
|
Assessed Value (35%) |
$7,700,000 |
|
Estimated Annual Tax (2024 effective rate for Columbus/CSD taxing district) |
$571,509 |
|
15-Year Tax Savings |
$8,572,641 |
|
Net Benefit |
$6,797,177 |
Result: Pay $1.78M up front, unlock $6,797,177 in tax savings over 15 years—no agreement required.
Have a site in Columbus? Practical next steps for multifamily sponsors
We’re already helping sponsors recalibrate pro formas and document election mechanics to hit 2025 closings under the streamlined CRA rules.
- Locate your project’s CRA area designation (Market Ready, Ready for Revitalization, or Ready for Opportunity) and run both unit set aside and fee in lieu underwriting cases. (We can help confirm the designation and model both paths.)
- Decide early whether to elect fee-in-lieu for all rental units to bypass the incentive agreement requirement—or blend units and fee. The election can be integrated into your entitlement and closing timeline.
[i] Source materials
- City Code Ch. 4565 (Amended Exhibit A to Resolution 1907‑2025) — blackline text establishing the fee‑in‑lieu option, CPI escalator, and “no agreement when paying all fee‑in‑lieu” rule (§§4565.07(B)(d), 4565.08(B)(d), 4565.09(B)(d)).
- BLS CPI‑U (U.S. City Average, All Items, Not SA) — August indexes used for the CPI+5% updates: August 2022 (296.171); 2023 (307.026); 2024 (314.796); 2025 (323.976). [inflationdata.com], [bls.gov], [bls.gov]
