Posts Authored by Jeffry D. Harris

Lame duck results in energy-efficiency deductions for public buildings and airport development districts

New legislation enacted during the recent lame duck session of the General Assembly may alter the allocation of the federal income tax deduction granted for the design and installation of energy-efficient commercial building fixtures. Substitute Senate Bill 259, signed by Governor DeWine on January 9, 2021, requires public entities to allocate the energy-efficient buildings tax deduction to designers of public buildings upon such designers' requests. (Note that public entities are prohibited from accepting fees, payments, or any other consideration for allocating the deduction.) After receiving an allocation request, the public entity has 15 days to respond, otherwise, the request is treated as though it was approved. For more, read the full article.

Economic Development, Energy Efficiency, Financial Incentives, State Updates

New “transformational mixed use development” state tax credits

Taxpayers can now access a new, nonrefundable insurance premium tax credit for capital contributions to certain “transformational mixed use developments” (TMUDs). Amended Substitute Senate Bill 39, a piece of legislation finished during the recent lame duck session and signed into law by Ohio Governor DeWine on December 29, 2020, allows property owners or insurance companies to apply to the Ohio Tax Credit Authority for certification and preliminary approval of tax credits against taxes imposed on insurance companies under R.C. Section 5725.18 or R.C. SECTION 5729.03. The Tax Credit Authority is limited to awarding $100 million per year (with individual projects capped at $40 million each). Rural areas received a set-aside under the legislation of $20 million per year in available tax credits. Once awarded, the tax credits may be sold or transferred to raise capital for certified projects. To be eligible, projects must meet four requirements. For more, read the full article. See our post from January 7, 2021 for more on Senate Bill 39.

Economic Development, Financial Incentives, State Updates

Ohio General Assembly considering significant CRA law change during lame duck session

A new proposal in the Ohio legislature would render commercial and industrial Community Reinvestment Area (CRA) projects akin to “pre-1994” treatment. Ohio’s CRA program was initially created as a housing program in the late 1960s but quickly became a frequently used tool for addressing disinvestment in commercial and industrial settings. In 1994, after recognizing that the program was frequently being used to abate property taxes in commercial and industrial projects, the Ohio General Assembly made major revisions to the state’s CRA Program. As a result, the statutory provisions governing those CRAs designated before July 1, 1994, differ considerably from those governing CRAs designated after July 1, 1994. For more, read the full article

Economic Development, Project Finance

Little-noticed change to TIF law allows municipalities and townships to redirect up to 25 percent of their TIF funds to public safety, road and bridge maintenance during FY 2020 & 2021

This month, the Ohio General Assembly fast-tracked a school construction finance measure as a mini-capital appropriations bill. Amended Senate Bill (Am. SB) 4 was signed into law by Governor DeWine on July 24, 2020, after the measure was prioritized by leaders in the Ohio House and the Senate. A provision included in Am. SB 4 deserves attention among municipal and township officials and economic developers.

Am. SB 4 became the legislative vehicle of choice for state lawmakers to insert a key change in municipal and township tax increment financing (TIF) law. With this amendment, municipalities and townships can ostensibly “borrow” from their respective TIF funds to cover certain costs unrelated to underlying TIF projects.

Contained in so-called uncodified language (i.e., a legislative directive neither published nor otherwise to appear in the Ohio Revised Code), Section 17 of Am. SB 4 states that municipalities or townships may do either or both:

  • During their fiscal year ending in 2020. Appropriate and expend the sum of (1) up to 25 percent of the unencumbered moneys on deposit in the subdivision’s TIF fund as of October 12, 2020 (Am. SB 4’s effective date); plus (2) up to 25 percent of the amounts to be deposited during the remainder of the 2020 fiscal year. The legislative authority must act between Oct. 12 and the last day of its 2020 fiscal year.
  • During their fiscal year ending in 2021. Appropriate and expend the sum of (1) up to 25 percent of the unencumbered balance of the TIF fund as of fiscal year 2021’s first day; plus (2) up to 25 percent of the amounts to be deposited during fiscal year 2021. The legislative authority must act during the 2021 fiscal year.

A simple mathematical example may be helpful. A municipal TIF fund with $500,000 on-deposit as of Oct. 12, of which $200,000 is unencumbered, and that receives another $500,000 during the remainder of fiscal year 2020 would have $175,000 in TIF fund moneys that could be redirected.

If it chooses to act during these periods, a municipality or township may use such TIF fund moneys “solely to pay current public safety expenses or road and bridge maintenance expenses” of the subdivision that are not eligible to be reimbursed by its CARES Act - Coronavirus Relief Fund payment (e.g., Ohio House Bill 481). 

Note, however, that moneys in the TIF fund to be redirected to public safety, road and bridge maintenance must be unencumbered. In other words, TIF fund moneys cannot be redirected if they are otherwise spoken for (i.e., encumbered) to pay debt service on TIF bonds or other contractual obligations. 

A key feature of this uncodified law change is that the redirected TIF fund moneys are treated as a (forgivable) loan. That is, a municipality or township must reimburse the TIF fund, but only so long as and to the extent that federal funds are received by the subdivision “that may be used to pay for or reimburse those expenses[.]” Put another way, a municipality or township that chooses to redirect its unencumbered balance of TIF fund moneys this year and/or next may not have to replenish its TIF fund by the amount of the loan if federal funds for public safety, road and bridge maintenance are not received before the TIF exemption period expires. 

Although initial reporting on this amendment to Am. SB 4 emphasized the loan nature of these redirected TIF fund moneys, payments from a TIF fund can be used for public safety, roads and bridges without need for repayment from the subdivision’s local revenue sources; any such repayment would be sourced from the federal government, if future Congressional legislation were to allow. Such repayment may not be required if the federal funds never materialize.

State Updates

Ohio Supreme Court upholds “expedited tax foreclosures,” allowing county land banks to acquire unoccupied, tax delinquent properties free of charge

In May 2020, the Ohio Supreme Court issued an opinion that carries importance for county elected officials and community and economic developers. Rejecting an activist effort to invalidate “expedited tax foreclosures,” the Court upheld the practice in Ohio by which county Boards of Revision may directly transfer unoccupied, tax delinquent properties to county land banks. Read more >>

State Updates

Updated Economic Incentives Toolkit available now

Bricker’s DevelopOhio blog is intended to serve as the go-to resource for economic development practitioners in Ohio. Arguably, the blog’s most valuable resource is the Economic Incentives Toolkit, first written in 2011 and updated several times since then. User-friendly by design, the Toolkit works best in the hands of the newly-minted economic developer asked to brief city council on how tax increment financing works. The Toolkit works equally well as a desk reference guide for the experienced economic developer who needs to remember that one JobsOhio funding program she heard about at a conference, as she prepares to meet with a business attraction prospect.

We’re pleased to release an updated and revised Toolkit. Our team of experienced attorneys sharpened their pencils and rewrote large segments of the guide for this year. We updated the Toolkit for new JobsOhio programs, such as the Ohio Site Inventory Program. We include a discussion on county land banks and how those entities compare to their older cousins, community improvement corporations. And the Toolkit now includes practical tips to consider when deploying local economic development incentive tools like Community Reinvestment Areas and Enterprise Zones. 

We know that the COVID pandemic has caused wide-scale disruptions in our business and personal lives. To aid these disruptions and ongoing change, our team has worked during the past several weeks to provide the most accurate, up-to-date resource manual available in the marketplace for Ohio’s economic practitioners.

Economic Development, Financial Incentives, State Updates

Ohio returns to funding spec-based commercial & industrial development

In 2020, Ohio’s development officials are again awarding large amounts of grant funding to commercial and industrial development projects that don’t have known end users. JobsOhio is now in the midst of launching a $50 million per year grant and loan program for spec-based opportunities. Such projects often originate from local communities or developers eager to prepare sites for future business use. These types of projects lack a business prospect waiting in the wings. They are pursued from a “if we build it, they will come” mindset. For more, read the full article.

Economic Development, Financial Incentives, Project Finance, State Updates