New State Budget Enacts Significant Changes to Economic Development Policies, Programs, and Tools
In the late evening of Wednesday, June 30, Governor DeWine signed the budget bill into law. The final enacted version had elements of particular interest to economic developers.
Below you can find a synopsis of these changes from Bricker & Eckler. Please note OEDA will be hosting a complimentary webinar in partnership with Bricker & Eckler on the new budget and its impacts on economic development later this month.
The date will be finalized soon and a save the date notice sent out shortly. Be sure to check your e-mail and the website in the next few days so you don’t miss this important webinar.
Substantive Law Changes of Interest to OEDA Members
- ODSA reverts back to its historic Ohio Department of Development name;
- Transfers compliance responsibilities from the Ohio Attorney General to the Auditor of State as to recipients’ compliance with state economic development awards (new R.C. 117.55);
- Creates within ODOD a Brownfield Remediation Program (new R.C. 122.6511), with project eligibility to be set via administrative rules issued by the Director; funds may cover up to 25% of a project’s total cost to remediate brownfield conditions; program must be operational and accepting application within 90 days of budget bill’s effective date (September 29, 2021), with $350MM appropriated for SFY 2022 to support the program statewide ($1M reserved for each Ohio county for one (1) year; all remaining funds awarded by ODOD on a first-come, first-served basis; authority to re-appropriate any unencumbered balance of funds in the program to SFY 2023);
- Creates within ODOD a Building Demolition and Site Revitalization Program (new R.C. 122.6512), for the demolition of commercial and residential buildings and adjacent, non-brownfield properties; project eligibility to be set via administrative rules issued by the Director; funds may cover up to 25% of a project’s total cost; program must be operational and accepting application within 90 days of budget bill’s effective date (September 29, 2021), with $150MM appropriated for SFY 2022 to support the program statewide ($500,000 reserved for each Ohio county for one (1) year; all remaining funds awarded by ODOD on a first-come, first-served basis; authority to re-appropriate any unencumbered balance of funds in the program to SFY 2023);
- Changes the ODOD’s Rural Business Growth Program (R.C. 122.151) eligibility criteria and investment requirements (e.g., referencing participating companies in the state’s border counties), bifurcating program funds as to before / after the effective date of these HB 110 changes, and requiring the new types of applications to be accepted by ODOD within 30 days of the budget bill’s effective date (on or after July 31, 2021);
- Inserts new “megaproject” designation in the state’s Job Creation Tax Credit program (new R.C. 122.17(A)(11) and (D)(2)(c)), allowing tax credits for very large projects (i.e., at least $1B in capital investment or $75MM/year in new payroll, average wages at least 300% of the federal minimum wage) for up to 30 years, as well as allows JCTC recipients to include work-from-home employees in their job creation calculations (new R.C. 122.17(T));
- Includes a new rank-ordering of Job Retention Tax Credit application priorities (new R.C. 122.171(C)(2)).
- Changes elements of the state’s Opportunity Zone tax credits (R.C. 122.84) to increase to $2MM the limits on credits awarded to individual taxpayers each budget biennium;
- Removes production contractors from those which may claim the state’s film and theater tax credit (R.C. 122.85);
- Drops in the provisions of proposed HB 174, which authorizes an income tax deduction for capital gains received by investors in certain Ohio-based venture capital operating companies (new R.C. 122.851);
- Extends the availability of the state’s Transformational Mixed Use Tax Credit (or TMUD, at R.C. 122.09) from 2023 to 2025 and sets at $100MM the maximum annual credit allotment during those two extra years (given that no TMUD credits were issued during 2020 to 2021, this amendment shifts those years’ allotments into the extended time period);
- Changes to JEDD law (new R.C. 715.72(A)(10) and (11); and (J)(2)) as to the means of creating a new or amending an existing JEDD (to add area) to require new notices, new JEDD Agreement terms, and exclusions of land from JEDDs that are in close proximity to, or subject to water / sanitary sewer service agreements by, a municipality which is not party to the JEDD Agreement. Unless an owner signs the JEDD Petition, such land must be excluded from the JEDD District;
- Changes to TIF law by adding language to “Public Infrastructure Improvement” definition (R.C. 5709.40(A)(8)): general use of TIF funds may now include off-street parking facilities, including those with reserved spaces (i.e., nonpublic);1
- Cleans-up language in urban redevelopment TIF (R.C. 5709.41) to specify that exemptions commence after the effective date of the municipality’s enabling ordinance, as well as to make explicit that TIF exemptions commence upon certain value being created or on a parcel-by-parcel basis, once improvements are made (rather than an entire urban redevelopment TIF’s exemption commencing based on improvements to a singular parcel); 1
- Inserts new R.C. 5713.083 to require owners of exempt property to notify their respective county auditor (on a to-be-developed OTAX form) as to the property’s ceasing to be exempt from real property taxes, with charges imposed for an owner’s failure to notify;
- Extends by two years (to December 31, 2024) the deadline by which renewable energy operators may apply to ODOD for a Qualified Energy Project tax exemption (R.C. 5727.75);
- Inserts “megaprojects” into the Community Reinvestment Area (CRA) program (new R.C. 3735.65(E)), authorizing local jurisdictions to award additional 15 years of tax exemptions to megaprojects.
Appropriation Items of Interest
- Restores appropriation levels for the Ohio Rural Industrial Park Loan Program ($15MM in SFY 2022 and SFY 2023), expands eligibility beyond distressed areas by including rural areas, which are any county not within a statistical metropolitan area (MSA), as well as transfers $20MM in unencumbered funds to SFY 2022;
- As to ODOD’s Residential Broadband Expansion Grant Program (i.e., enacted HB 2):
- Modifies the current law’s provisions of OPERS contributions to members of the Residential Broadband Expansion Program Authority;
- Strips out the Senate’s proposed limits on existing and future municipal broadband networks;
- Replaces the Senate Finance Committee’s zeroed-out appropriations by providing $230MM in SFY 2022 and $20MM in SFY 2023 to ODOD for the new broadband expansion program;
- Earmarks $1M/year to the Lucas County Land Bank for its Commercial Site Clean-up Pilot Program to demolish vacant commercial or industrial buildings in the county, with $1:$1 local match required;
- Earmarks $250,000/year to Fulton County Land Bank to demolish vacant commercial or industrial buildings in the county;
- Creates a Main Street Job Recovery Program ($250,000/SFY) in ODOD for business and employment opportunities among LMI and prison re-entry populations;
- Directs ODOD to make available grants during SFY 2022 – in amounts of $10,000, $20,000, and $30,000 – for entertainment venues, bars and restaurants, and lodging industry businesses, based in-part on demonstrated losses of revenue from COVID-19, but now sources the funding from the ARPA – State Fiscal Recovery Fund;
- Directs to ODOD to make available grants during SFY 2022 – in amounts of $10,000 – for new businesses having commenced operations after January 1, 2020, but now sources the funding from the APRA – State Fiscal Recovery Fund;
- Appropriates $10MM in SFY 2022 in Sports Event Grant Program funds awarded under R.C. 122.12 and R.C. 122.121;
Creates a new Meat Processing Program Fund in ODOD, to provide up to $250,000 grants to meat processing plants for facility improvements and equipment purchases.
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