Posts Authored by Jeffry D. Harris

Application deadlines for ARPA broadband funding: August 13 and August 20

The American Rescue Plan Act of 2021 (ARPA) provides billions in direct assistance to the State of Ohio and its metro cities, with additional funds to other cities, villages, townships and counties for broadband infrastructure investments, but time is almost up to apply. The deadline for the Emergency Connectivity Fund included in ARPA, a $7.17 billion program to help schools and libraries support and facilitate remote learning, is August 13, 2021. School districts may also apply for the ARPA Elementary and Secondary School Emergency Relief (ESSER) $4.5 billion fund for broadband infrastructure projects by August 20, 2021.

Bricker’s step-by-step guide to ARPA resources for expanding broadband connectivity can be found here.

Federal Updates, Project Finance, State Updates

You just caught that purple unicorn – now what? Ohio’s operating budget appropriates $500 million in grant funds for brownfield remediation and (commercial) building demolition

For many observers tracking the state budget bill, the General Assembly’s change in the name of the state’s development agency – reverting back to the Ohio Department of Development – was breathtaking in and of itself. However, two new funding lines inserted into the measure (H.B. 110), representing $500 million in total grant funds available during state fiscal year (SFY) 2022, have lassoed the purple unicorn. That is, an answer now exists to the question, “how will Ohio fund clean-up and demolition of legacy commercial and industrial sites?” For more, read the full article

Economic Development, Financial Incentives, Project Finance, State Updates

Other people’s money: Certain use of federal stimulus cash by land banks “presumed” eligible

During the past decade, county land banks ramped up operations across Ohio largely employing one-time cash. The Hardest Hit Fund (HHF), sourced from Ohio’s share of mortgage industry settlement payments related to the Great Recession, was a catalytic funding source for demolishing thousands of vacant and abandoned residential structures throughout the state. HHF served its purpose, and served it well. However, as the remaining program dollars are drawn down, many county land banks are facing existential funding questions. For more, read the full article

Economic Development, Financial Incentives, Project Finance

Ohio Senate Committee chefs baking economic development morsels into their version of the state budget bill

On June 1, 2021, the Ohio Senate Finance Committee released its version of the state’s biennial operating budget (HB 110), which must be signed into law by June 30, 2021. As often happens, there are millions of dollars in appropriated funds across state government, and then there are actual, no-kidding changes to unrelated elements of Ohio law also inserted into the bill. There are two such changes that should be noted by Ohio’s economic development practitioners. For more, read the full article

Economic Development, Financial Incentives, Project Finance

Ants arriving at the picnic: U.S. 6th Circuit Court of Appeals finds merit in federal “takings” claim filed against county land bank

In May 2021, the federal 6th Circuit Court of Appeals in Cincinnati sent a county land bank case back to the district court in Dayton for reconsideration. Rejecting the winning argument at the lower level—that the owner of an abandoned property had her chance to raise objections earlier in a tax foreclosure process, which she didn’t—the appeals court held that new U.S. Supreme Court precedent does, in fact, allow the owner to raise a federal “takings” argument under the Constitution once a property is deemed abandoned and titled to a county land bank. For more, read the full article

Economic Development, Financial Incentives, Project Finance

Much more than just “drug houses”; State grants to fund commercial building demolition would propel county land banks as key drivers of Ohio’s economic development

In late April 2021, a legislative committee in the Ohio House held its second hearing to consider creating a $100 million grant program, exclusively for county land banks, to fund commercial building demolition. Ohio’s land bank statutes are recognized as a national model, uniquely providing an opt-in for county commissioners to direct tax collections to fund their county land banks’ activities. That revenue model, coupled with allocations from the state’s Hardest Hit Fund, allowed land banks to grow in number during the past decade and thrive in addressing so-called nonproductive land in their communities. For more, read the full article.

Economic Development, Financial Incentives, Project Finance, State Updates

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
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