The city has invested nearly $5 million into downtown residential housing projects over the past 13 years to revitalize downtown as a residential, office and entertainment center, though there is concern about whether the projects will revitalize the remainder of the city.

City leaders say downtown is the economic hub that spurs citywide growth.

“Look, 40 percent of the city’s income tax comes from downtown,” said Shelley Dickstein , assistant city manager. Two-thirds of the city’s $151.3 million General Fund budget, which runs the city’s day-to-day operations, comes from the city income tax.

A Wright State University professor questions, however, whether the new housing downtown will benefit the city that has lost 14 percent of its population in the last census and whose neighborhoods have up to to 10,000 vacant structures.

The Great Recession saw the wholesale abandonment of residential properties throughout the Miami Valley, said John Blair , WSU professor of economics and an expert of revitalization finances. “The new theory holds that if you build more housing downtown, it won’t lead to abandonment in the neighborhoods.

“There is no good evidence to support that,” Blair said.

What is not in dispute is that downtown is the only area of the city that increased in population — a gain of 567 residents in the decade or a 17.2 percent increase from 2000 — according to the 2010 U.S. Census.

“If there is a strong, healthy, vibrant downtown, it benefits all the city’s neighborhood,” said Sandy Gudorf , head of the Downtown Dayton Partnership. “There is a strong demand for downtown housing.” Gudorf said the occupancy rate for downtown apartments and condominiums is over 90 percent. Downtown currently has 980 housing units — with more in the pipeline — en route to a goal of 2,500.

This year, the city has approved the site plan for 18 condominiums in a turn of the century laundry building in the Oregon District; entered a contract to purchase an East Third Street warehouse for $450,000 as part of a two-building conversion that could create 72 condos; and entered a $600,000 contract to purchase 5 acres on Wayne Avenue.

WSU’s Blair’s main worry is that cities are using too many resources downtown for too little to the detriment of struggling neighborhoods.

City leaders take a different view.

“It is a perception that more money is going downtown than elsewhere. But the majority of the development money goes into neighborhoods,” said Aaron Sorrell , city planning and community development director, said. It just doesn’t get as much attention as, say, the $32 million in bonds the city issued for a parking garage to supplement the $66 million CareSource headquarters in 2008. Instead, millions are spent in road improvements, housing development and housing demolition. The city has awarded nearly $11 million for residential street work and almost $2 million for housing demolition so far this year in the neighborhoods.

“We are spending millions on infrastructure and housing development in our neighborhoods,” Sorrell said. “Cities have been in the business historically for decades to spur redevelopment. The city has always been one of the catalysts for redevelopment, especially in down markets.”

In March, the City Commission entered a $600,000 contract to purchase 5 acres at 210 Wayne Ave. behind the 153-unit Cannery Lofts, a property the city hopes will entice a developer into a mixed commercial and residential project. City planners say the property eventually could form a bridge from existing and planned lofts on East Third Street with the Oregon District.

The city last year committed $1.4 million in federal funds to a 72-unit Lotz Building loft development on East Third Street, across the street from the Cannery. Last month, the commission entered a contract to purchase the neighboring McIntyre Building for $450,000 to push the project forward, a project that first started in 2005.

Also last month, the Plan Board approved a site plan for the conversion of the old Excelsior Laundry Building on East Sixth Street into the 18-unit Excelsior Condominiums, a project that goes back to 2006.

None is likely to move forward any time soon, partly because of Sorrell’s “down markets.”

“No. 1 is finding bank financing,” said Steve Budd , director of Citywide Development Corp., a public/private partnership involved in development throughout the city since 1972. “There has been little if any (financing) since 2008 for speculative projects. The lending available is usually with very well off developers who have the ability to provide good collateral.”

Instead, developers have to package tax credits, grants and loans, a process that is time consuming. Which is where the city and/or Citywide can step in.

A vacant lot on the corner of East First and Patterson Boulevard was transformed into an 18-unit complex that sold out in one year. Across East First, townhouses are being built and sold.

Blair worked for the U.S. Department of Housing and Urban Development as policy analyst during the Carter Administration. “There was a hold on construction of Interstate 675 at the time because of concerns on its impact on downtown. One of the first moves of the Reagan Administration was approving I-675.

“The federal government subsidized I-675 that led to the deterioration of downtown. Thirty years later the federal government is now using money to subsidize downtown,” he said with a gentle laugh.