Tracked House Bills – March 2018

Chris Schmenk.
Bricker & Eckler LLP.

State Activity:

State Capital Bill: A $2.6 billion State Capital Bill for FY 2019-2020 was introduced February 26 as HB 529 and SB 266 and is on a fast track to become law. It was passed by the House March 7 and had its first hearing before the Senate Finance Committee March 13. Hearings will resume there March 21. Under the bills, $222 million will be dedicated to addiction and other health and human services purposes, including a $20 pool of money to be made available through competitive grants for opioid community resiliency projects that focus on youth. The Ohio Department of Mental Health and Addiction Services will establish a program to distribute those funds.
Other major funding allocations in the bills are as follows:

• $600 million for school construction through the Ohio Facilities Construction Commission, successor agency to the former Ohio School Facilities Commission;
• $483 million for universities and community colleges;
• $514 million for local infrastructure projects through the Ohio Public Works commission, including $100 million for the Clean Ohio program;
• $234 million for parks, dams, trails, waterways and wildlife, and
• About $149 million for community projects.

A list of funded community projects can be found at: https://www.lsc.ohio.gov/documents/budget/132/capital/projectsbycounty-communityprojectsonly.pdf 

Bills Being Tracked: Changes from last month are noted below in bold
House Bills

HB 10 CROWDFUNDING (Arndt, S.) This bill was introduced in the House February 1 and would permit intrastate equity crowdfunding under certain circumstances. The bill would provide an exemption from registration under the Ohio Securities Law for certain crowdfunding initiatives. The bill passed in the House on June 21 and was referred in the Senate to the Transportation, Commerce & Workforce Committee. The Committee held its fourth hearing on the bill February 7, 2018.

HB 53 UNION DUES/RIGHT TO WORK (Becker, J.) This bill was introduced in mid-February by Representative Pete Becker from Clermont County. Co-sponsors include Representatives Hood, Brinkman, Dean, Thompson, Vitale, Goodman, Riedel, Roegner, Merrin, Antani, Zeltwanger and Keller. It would remove any requirement under the Public Employees Collective Bargaining Law that public employees join or pay dues to any employee organization, prohibit public employers from requiring public employees to join or pay dues to any employee organization and prohibit an employee organization from being required to represent public employees who are not members of the employee organization. The bill was referred Feb. 14 to the House Finance Committee. No hearings have yet occurred.

HB 69 TIF DISTRICTS (Cupp, R.) This bill, originally focused on Ohio’s TIF program was signed into law by Governor Kasich on December 22, 2017. It will be effective in 90 days.
The core provisions of the new law modifying TIFs will require reimbursement of certain township fire and emergency medical service levy revenue forgone because of the creation of a municipal incentive district tax increment financing district. The board of township trustees may, by resolution, waive the application of the reimbursement or negotiate with the municipal corporation that created the district for a lesser amount of payments in lieu of taxes. The reimbursement requirement only applies if:

• An incentive district TIF is being created;
• The affected township provides fire and emergency medical services to the territory of the TIF;
• The TIF is being created by a municipality by legislation adopted after the effective date of H.B. 69, and
• The levy in question was approved by voters on or after January 1, 2006.

Under the bill, the board of township trustees may, by resolution, waive the reimbursement or negotiate with the municipality that created the district for a lesser amount of payments in lieu of taxes.

A “TIF” refers to Tax Increment Financing, a mechanism that exempts some portion of increases in property value from property taxation. Instead, property owners make service payments in place of taxation that are directed to pay public infrastructure costs. Incentive district TIFs (the kind affected by this bill) are generally used for projects that involve single-family residential development, including condos. Commercial TIFs, on the other hand, are usually formed as what is known as a Parcel TIF, in which the territory includes specified, defined parcels. Most future commercial TIFs are therefore unlikely to be affected by HB 69.

HB 102 SCHOOL FUNDING (Brenner, A.) This bill, introduced March 1 and referred to the House Finance Committee, would replace locally levied school district property taxes with a statewide property tax and require recipients of certain tax exemptions to reimburse the state for such levy revenue lost due to those exemptions. It would also increase the state sales and use tax rates and allocate additional revenue to state education purposes; to repeal school district income taxes; require the Treasurer of State to issue general obligation bonds to refund certain school district debt obligations; create a new system of funding schools where the state pays a specified amount per student that each student may use to attend the public or chartered nonpublic school of the student’s choice, without the requirement of a local contribution; eliminate the School Facilities Commission; eliminate the Educational Choice Scholarship Pilot Program, Pilot Project Scholarship Program, Autism Scholarship Program, and Jon Peterson Special Needs Scholarship Program; eliminate interdistrict open enrollment; require educational service centers to transport students on a countywide basis, and permit school districts to enter into a memoranda of understanding for one district to manage another. It was referred to the House Finance Committee, and a June 20 hearing was continued. A second hearing occurred December 12.

HB 114 RENEWABLE ENERGY (Blessing, L.) This bill, introduced March 8, is very similar to last year’s HB 554 except it would: convert the renewable energy standards to goals indefinitely, rather than for a two year period; permit residential customers of a distribution utility or electric services company to opt out of any rider, charge or other recovery mechanism designed to recoup the cost of renewable energy; clarify that renewables are bypassable charges, rather than nonbypassable charges, and specify that the 12.5% renewable energy goal to be attained by 2027 will end at that time and not continue indefinitely. The bill passed in the House March 30 and moved to the Senate, where it was referred to the Energy and Natural Resources Committee. After stalling last fall, activity resumed on the bill January 10 with a fourth hearing featuring both proponent and opponent testimony.

HB 122 ECONOMIC DEVELOPMENT (Hambley, S., Rogers, J.) Introduced March 9, this bill would establish a Regional Economic Development Alliance Study Committee to study the benefits and challenges involved in creating regional economic development alliances. Senate Bill 97 is a companion to this bill and is the more likely bill to be approved by both chambers of the legislature. The bill is relatively simple in that it creates a study committee to look at the pros and cons to establishing regional economic development alliances. The committee is made up of 3 members of the House; 3 members of the Senate; the Governor, or his designee; 2 persons from academia engaged in a relevant field of study (appointed by the co-chairs of the committee); 2 economic development professionals (appointed by co-chairs of the committee); and the chair of the Regional Prosperity Initiative (or their designee) as a nonvoting member. Specifically the committee is charged with studying enhancing collaboration for successful regional economic development; shared services; and also the mobilization of resources among alliance members. The committee is directed to consult with county commissioners, township trustees, city councils and mayors, members of statewide and regional organizations that represent political subdivision, and members of chambers of commerce. The bill was reported out of House Committee May 10 and passed in the House September 13. It was referred to the Senate Government Oversight & Reform Committee, where a third hearing occurred March 7.

HB 155 COMMERCIAL VEHICLE TRAINING (Sprague, R., Howse, S.) This bill was introduced March 23 and would authorize a nonrefundable tax credit to be taken against either personal income tax or commercial activity tax liability for expenses incurred by an employer to train a commercial vehicle operator. Under the proposed program, employers would submit to the Director of the Development Services Agency, by December 1, eligible training expenses expected to be incurred during the next calendar year. The ODSA Director would then certify up to $50,000 per employer of such expenses as being eligible for tax credits. After incurring eligible training expenses, employers could then apply to ODSA for tax credits in amounts equal to one-half of the incurred eligible expenses. On May 1, it was referred to the House Ways & Means Committee, where a hearing with sponsor’s testimony occurred May 16.

HB 166 WORKFORCE DEVELOPMENT (Reineke, B., Cupp, R.) This bill would revise the laws governing the state’s workforce development system. On March 7, 2018, a substitute bill was adopted by the House Higher Education & Workforce Committee that would categorize technical centers as higher education institutions, making them and their students eligible for state grant money.

HB 173 TAX CREDITS (LaTourette, S., Patton, T.) This bill was introduced April 5, 2017 and would provide that compensation paid to certain home-based employees may be counted for purposes of an employer qualifying for and complying with the terms of a Job Creation Tax Credit. It was referred on May 1 to the House Ways & Means Committee, and a first hearing with Sponsor’s testimony occurred May 9, 2017.

HB 178 NUCLEAR ENERGY (Devitis, T.) This is a companion bill to SB 128 (see explanation there) and was introduced April 10. It was referred to the House Public Utilities Committee, where several hearings have occurred. Sponsors in both chambers are continuing conversations with interested parties in order to earn support for these bills. Representative Robert Cupp recently assumed the role as Chair of the House Public Utilities Committee and confirmed that talks are still ongoing. Additionally, House Speaker Rosenberg recently appointed members to an ad hoc House task force charged with studying this bill and other energy issues in the coming months (Speaker’s Task Force on Energy Policy).

HB 203 SUMMER JOBS (Barnes, J.) This bill was introduced May 9, 2017 and would require the Director of Development Services to establish a youth summer jobs pledging initiative to increase access to summer employment opportunities for high school and college youth. It was referred to the Higher Education and Workforce Development Committee, where the second hearing with proponents’ testimony occurred September 20. On March 7, the Higher Education and Workforce Development Committee accepted an amendment that clarifies that the Development Services Agency director can accept grants and other contributions to assist with the effort.

HB 281 BROADBAND EXPANSION (Carfagna, R.) This bill, introduced June 20, would establish the residential broadband expansion program within the Development Services Agency to award matching grants for last mile broadband expansion in municipal corporations and townships and to make an appropriation. It was referred to the House Finance Committee, which adopted a comprehensive substitute bill December 12 that would offer more ways to fund the projects and remove funding ratio requirements. It also would reduce the speed of internet that must be available for an area to be considered “underserved” from 25 MBbs upload speed to 10 MBbs. A fourth hearing occurred January 9 with five amendments accepted that would: clarify that satellite broadcasting and wireless internet service providers are included in the bill; ensure that areas receiving Connect America funds aren’t eligible for the program; enable providers to use letters of credit to demonstrate financial assurance; specify that broadband facilities must be operated for an unlimited period of time; and adjust language regarding the ability of a provider to provide broadband services as described in the proposal. The Bill passed in the House January 31 and was assigned to the Senate Finance Committee.

HB 292 OHIO RESIDENCY (Scherer, G.) Introduced June 27, this bill would modify the test for determining an individual’s state of residence for income tax purposes. The bill would add to the requirements to prove out-of-state residency by requiring a showing that the applicant did not: 1) claim a federal depreciation deduction (which is available only for property used in business or held for the production of income — e.g., as rental property) for an abode located outside the state, which the person was required to have for the entire taxable year under current law; 2) hold a valid Ohio driver’s license or identification card; 3) receive the benefit of an Ohio homestead exemption or 4. receive a tuition discount based on residency for attending an Ohio institution of higher education. The bill passed in the House November 1 and the Senate Ways and Means Committee amended the bill at its fourth hearing February 21 with two changes that were accepted without objection. The first, which was described as “largely technical,” changes the filing deadline for the homestead exemption from September of the impacted tax year to December of the year before. The second was described as a “belt-and-suspenders” amendment to clarify that the aggregation of common law domicile criteria only applies to that section of state law. A fifth hearing occurred February 28.

HB 371 PROPERTY TAX (Merrin, D.) This bill, introduced October 4 would exempt from property taxation the increased value of land subdivided for residential development until construction commences or the land is sold. The bill would benchmark an “ascribed taxable value” of the newly subdivided parcel, and any increase in taxable value would be exempt from taxation until either (1) Construction of a residential building on that property commences, or (2) Title to the property is transferred for consideration by a qualifying owner to another person. The construction of streets, sidewalks, curbs, or driveways or the installation of water, sewer, or other utility lines on a subdivided parcel would not cause construction of a residential building to commence for purposes of the bill. A sixth hearing in the Ways and Means Committee occurred January 9, with continuing opposition expressed by numerous local government representatives, and a seventh hearing occurred January 16. On February 28, this bill was informally passed by the House, which reserved a place for it on the House calendar.

HB 378 BROADBAND GRANTS (Smith, R., Cera, J.) This bill, introduced October 10, would create the Ohio Broadband Development Grant Program to provide funds to extend broadband service to unserved areas of the state. The program would be administered by the Ohio Development Services Agency. The following entities could apply for a grant: (1) private businesses, (2) political subdivisions, (3) nonprofit entities organized to provide telecommunications services, and (4) co-ops organized to provide phone and Internet services. Grant amounts cannot exceed the lesser of: (1) 50% of the total project cost, or (2) $5 million. Recipients could use funds to construct broadband infrastructure to serve unserved areas, including installing middle-mile or last-mile infrastructure, grant-project planning, obtaining construction permits, constructing facilities, purchasing equipment, and installing and testing the service. The bill would appropriate $50 million per year for FYs 2018 and 2019 through the Third Frontier Research and Development Fund, to be used to award grants under the Program. It would require $1 million of the appropriation in each fiscal year to be used to contract with one or more independent organizations that have experience working with Ohio broadband providers to collect and analyze state broadband data and do other activities regarding broadband service. Eight hearings have occurred in the House Finance Committee and on March 20, the committee accepted a substitute version and reported out the bill. The substitute version revises a wide range of provisions, including provider eligibility, the definitions of internet service and broadband entity, and provides that the grant funds are to be used for construction of infrastructure, not grant project planning; removes a provision relating to satellite companies, saying they are covered under the private business definition; removes the requirement for evidence of community support for the project; requires that if an applicant is a political subdivision, the application must include evidence that not later than six weeks before submission of the application, the applicant contacted all Internet service providers providing Internet service in the proposed project area to ask for each Internet service provider’s plan to provide broadband service in the project area, as well as any responses by Internet service providers, and requires an applicant to own the infrastructure installed and to be responsible for maintaining and upgrading it.

HB 381 ZERO EMISSIONS (DeVitis, A.). This is a third bill to propose the creation of a zero-emission nuclear credit program to benefit Ohio’s nuclear plants and is very similar to HB 178. However, one of the major differences is new language capping a residential customer’s monthly nonbypassable charge at $2.50 and capping a nonresidential customer’s monthly charge to be the lesser of $3,500 or 5% of the total bill. It also downsizes the lifespan of the ZEN program – terminating the credits after 12 years on Dec. 31, 2030, unless extended by the General Assembly. HB178 would terminate the program after 16 years. Other changes include requiring the Public Utilities Commission to conduct an inquiry in 2029 to determine if continuing the program is in the public interest, and removing language from HB178 requiring a PUCO evaluation during years six and 11 of the program. It has been referred to the House Public Utilities Committee, where a first hearing occurred December 12.

HB 469 TAX CREDIT (Schuring, K., Patton, T.) This bill, introduced January 17 and referred to the House Government Accountability & Oversight Committee would authorize a nonrefundable insurance company tax credit for contributions of capital to transformational mixed use development projects. The bill defines “transformational mixed use developments” (TMUDs) as multiple-purpose developments in which (1) the estimated development costs associated with the project exceed $400 million, (2) have a development plan that includes at least one building that is 20 or more stories high, (3) are on a site upon which is seven acres or less, and (4) more than one intended “use” associated with the project site is proposed. The bill directly names retail, office, residential, hotel, recreation, and structured parking as potential uses that could be incorporated into a TMUD, but none of those uses is required and they are not the only uses that would qualify a project for the credit. Under the bill, the Development Services Agency Director must review and certify projects as eligible. In doing so, the Director also must consider the potential impact of the project in terms of “architecture, accessibility to pedestrians, retail entertainment architecture, retail entertainment and dining sales, job creation, property values, connectivity, and revenue from sales, income, lodging, and property taxes.” If the project is certified, the property owner may sell or transfer the rights to “preliminarily approved” tax credits to one or more insurance companies in order to raise capital for the project. Once the TMUD is complete, the Director must issue tax credit certificates to the property owner or to the insurance companies that acquired the rights to the credit.
Five hearings have occurred with the most recent on March 20.

HB 500 TOWNSHIP LAWS (Carfagna, R.) Introduced February 13, this bill would make changes to various township laws. Of particular interest to economic development professionals is a proposed change to township laws regarding the formation of new community authorities (NCAs) to remove the requirement that NCA areas be at least 1000 acres in size. HB 500 would also require 100% compensation for any post 2006 Township fire and EMS levy effective rates for any new Township incentive district TIFs (tax increment financing) enacted after the effective date of HB 500, but only if the Trustees choose to require that 100% compensation. Three hearings have occurred in the House State & Local Government Committee with the most recent on March 20.

HB 512 EDUCATION DEPARTMENT (Reineke, B.) Introduced February 14, this bill would combine the functions of the Departments of Education and Higher Education and the Governor’s Office of Workforce Transformation to create the Ohio Department of Learning and Achievement. The new agency would be headed by a director appointed by the governor and confirmed by the Senate. The bill also includes language to limit the State Board of Education’s authority to making quasi-judicial decisions on licensure, disciplinary actions and school charters. Members would also still have the authority to hire a superintendent of public instruction to lead their work. The bill was referred to the Government Accountability & Oversight Committee where five hearings have occurred. Support has been voiced by the Governor’s Administration, Ohio Chamber of Commerce, educational service centers and proponents of workforce development, while various home school representatives, unions, school associations and current State Board of Education members have voiced opposition.

HB 519 TRANSPORTATION TECHNOLOGY (West, T., Kick, D.) This bill, introduced February 21 would create the Ohio Council on Transportation Technology to make recommendations regarding state policies related to autonomous technology. The Council’s role would be to examine and evaluate methods and changes in state policy that will ensure that the state is the world leader in autonomous, driverless, and connected vehicle technology. They will also be charged with issuing a report with their recommendations no later than 1 year following the effective date of the bill. The bill was referred to the House Transportation & Public Safety Committee.