Tracked House Bills – July 2023
135TH GENERAL ASSEMBLY – PROPOSED & ENACTED LEGISLATION
(Changes from last month are noted in italics):
HB 1 PROPERTY/INCOME TAX (Mathews, A.) Introduced on February 15, 2023, this bill modifies existing law regarding property taxation and income tax rates. The bill is designed to flatten Ohio’s personal income tax by eliminating various brackets and instead impose a rate of 2.75% on income over $26,050.
Specifically, the measure makes an important change to Ohio’s real property taxation scheme: it would reduce taxable value to 31.5% of true value (under current law, all real property is taxed at 35%, known as its “assessed value”). (See proposed change to R.C. 5715.01(B)) Further, the Ohio Tax Commissioner is charged with making an annual calculation based a Gross Domestic Product (GDP) “deflator,” meaning that taxable value (i.e., assessed value) could be no higher than 31.5%, but could be lower, with no floor established.
On April 25, the House Ways & Means Committee held its seventh hearing on the measure.
HB 2 ECONOMIC GROWTH AND DEVELOPMENT (Cutrona A., Upchurch, T.) Introduced on February 15, 2023, this bill declares the intent of the General Assembly to direct state funds to projects across the state for economic growth and community development
HB 3 AFFORDABLE HOUSING (Mathews, A.) Introduced on February 15, 2023, this place-holder bill initially stated only that it is the General Assembly’s intention to authorize an affordable housing tax credit. On March 14, a substitute version of this bill was accepted by the House Economic & Workforce Development Committee.
Specifically, this measure will authorize a state LIHTC tax credit, up to $50MM, to piggyback off the federal credit, and it will incorporate OTAX-recommended language to address implementation hiccups.
Note the provisions of this bill were dropped into the state budget bill (Am. Sub. HB 33), described below, and signed into law.
HB 23 TRANSPORTATION BUDGET (Edwards, J.) Introduced on February 15, 2023, this is the State’s transportation bill, thereby appropriating $13.5B for programs during the State Fiscal Year (SFY) 2024 – SFY 2025 biennium.
An amended substitute cleared the entire House on March 1; on March 23, the Senate passed a substitute version of the bill adopted in its Transportation Committee. Differences between the two versions were hashed out in Conference Committee, with both chambers adopting the final version of the bill on March 29. The Governor signed the bill into law on March 31, 2023.
(Interestingly, the Senate’s substitute version removed the House’s approved language that would have created a $1B new Rural Highway Fund. The Senate viewed the $1B as needing to remain in the General Revenue Fund; analysis showed the Fund would only apply to a dozen or so projects across Ohio (OEDA provided in-person testimony and written support to restore this $1B appropriation). And the Senate version removed a provision that would have prohibited park district property from being included in SIDs.)
Appropriation line items of interest:
Among its provisions, this bill appropriates:
- $15.2MM/year to ODOD for 629 Roadwork Development Grants
- $124.6MM during the biennium to the Public Works Commission for the Local Transportation Improvement Program (LTIP)
- $10MM to Ohio’s six Regional Transportation Planning Organizations (RTIPs) for a rural transportation planning grant program
Substantive law changes of interest:
The enacted bill changes Ohio law as follows:
- ODOT Director (or designee) to serve as chair of the Ohio Rail Development Commission, not a Governor’s appointee; this change in board governance must occur by Oct. 21, 2025; Governor instead to appoint an additional member of the general public to the Commission
- ODOT must submit regular expense reports to the General Assembly leadership as to loans and grants (e.g., 629 Roadwork) issued by ODOT
- State Infrastructure Bank (SIB) loans made to a “small city” (i.e., 5,000 – 24,999 population, located outside of a metropolitan planning organization) must carry 0% interest. (Compare: current interest on SIB loans is 3%, with terms of up to 30 years.)
- ODOT must receive approval from the Controlling Board prior to spending any federal Infrastructure Investment and Jobs Act (IIJA) funds for EV charging stations
- Enable multiple regional transit authorities to collaborate in providing workforce transit among territories to and from economically significant employment centers
- Require ODOT to construct an interchange on I-71 near Brunswick-Strongsville (i.e., the Cuyahoga and Medina Counties’ line) – note Governor DeWine expressed concern with this item (although he did not line-item-veto the provision)
- Mandate that trains operate with two-person crews
- Analyze transportation links between Columbus and Sandusky as part of ODOT’s $10MM Strategic Transportation and Development Analysis, which must be completed by Dec. 31, 2024
- Allow for Amtrak to build and provide rail service along corridors identified by the state, which is studying the feasibility of two potential corridors, including (i) to connect Cincinnati, Dayton, Columbus and Cleveland, known as the “3C+D Corridor” and (ii) connection between Cleveland and Detroit with a stop in Toledo.
- Allows for the sale to Norfolk Southern of the Cincinnati Southern Railway, the only municipally owned railroad in America.
HB 33 OPERATING BUDGET (Edwards, J.) Introduced on February 15, 2023, this is the State’s biennial budget bill, for state fiscal year (SFY) 2024 ($27.9B in state General Revenue Fund (GRF) spending) and SFY 2025 ($29.4B in GRF spending). The entire budget appropriates $95B in spending for SFY 2024 and $95.7B for SFY 2025 (across all funds maintained by the State treasury).
On April 17, the House Finance Committees released a substitute version of the bill, and the Committee issued additional amendments to the bill on April 24, which received bipartisan approval in the entire House on April 26. The Senate Finance Committee accepted a substitute version of the bill on June 6, which version was met with considerable push-back from various interest groups. In response, the Senate Finance Committee reported-out a further-amended version on June 14, which was passed by the entire Senate on June 15 – strictly on a party-line vote. The 883 points of difference (reportedly a modern day record) in the House and Senate-versions were handled via Conference Committee, but during negotiations, legislators grew concerned the budget would not be signed (i.e., enacted) by the constitutional deadline of midnight on June 30. As such, a three-day interim budget added by the Senate to an unrelated measure (SB 31) was approved and signed June 30, extending the-then current biennial budget funding levels (HB 110, 134th General Assembly) through July 3. On June 30, the Senate first adopted the Conference Committee report on a 25-6 vote and then the House by a 67-30 margin; Governor DeWine signed the measure into law on July 3, having made 44 line-item vetoes.
Appropriation line items of interest:
- Creates the One Time Strategic Community Investment Fund for capital projects, appropriating $750MM, which includes:
- $500MM to ODOT in SFY 2024 for the new Connect4Ohio Fund, the rural highway fund that had been proposed in the state’s Transportation Bill (HB 23). The Fund defines eligible “rural” counties as those lacking a city with 55,000 population or more, using the most recent 10-year census (see uncodified Sec. 755.30).
- Creates the All Ohio Future Fund (R.C. 126.62), appropriating $40MM in SFY 2024 for site-readiness and preparation for large economic development projects, across so-called Tiers 1, 2, and 3; directed to site opportunities for projects similar to Intel.
- Ohio OBM also transferred $667MM in cash to the Fund created by R.C. 126.62, comprised of one-time surplus cash-on-hand from the State’s General Revenue Fund as of FYE 2023 (see uncodified Sec. 513.10).
- Governor DeWine line-item-vetoed House-added language that authorized cost recovery for electric distribution utilities and electric cooperatives for “planning, development and construction of utility infrastructure.”
- Otherwise, the Conference Committee expanded the All Ohio Future Fund, as to electric, natural gas, “and other infrastructure improvements”. Prohibits utilities receiving such Fund assistance from levying riders to customers for the same projects. Water or waste water utilities may not use Fund assistance for new or expanded WWTP or water treatment facilities.
- Renews $350MM to Ohio’s Brownfield Remediation Program ($175MM during each SFY 2024 and 2025) and $150MM (SFY 2024) to the Ohio Demolition and Site Revitalization Program.
- During each year of the biennium, $1M in Brownfield Remediation funds will be set aside for each county, leaving $87MM/year available as first-come, first-served funding.
- During SFY 2024, $500,000 in Demolition funds will be set aside for each county.
- Ohio OBM also transferred $500MM in cash to the respective Funds, comprised of one-time surplus cash-on-hand from the State’s General Revenue Fund as of FYE 2023 (see uncodified Sec. 513.10).
- $30MM to the Rural Industrial Loan Park Fund ($15MM during each SFY 2024 and 2025). Loans are capped at $4MM/project (see uncodified Sec. 259.50).
- Increased appropriations to the 629 Roadwork Development Grant to $31.4MM in SFY 2024 and $25.2MM in SFY 2025, of which $10MM of each such year’s amount allocated to Licking County to improve local roads impacted by the Intel development, with $6.2MM in SFY 2024 allocated to Fayette County to improve local roads (Honda EV plant).
- $20MM to the Foundation for Appalachian Ohio.
- $1M during SFY 2024 for the Center for Advanced Manufacturing and Logistics.
Substantive law changes of interest:
The bill would change Ohio law as follows:
- Collapses the State’s income tax structure from four to two brackets, with the annual income threshold between the two tax brackets set at $100,000.
- Modifies the criteria as to “distressed area” for the Rural Industrial Park Loan Program (R.C. 122.23) and requires ODOD to update every 10 years – rather than annually – the list of counties and municipalities that qualify as such.
- Modifies the Ohio Residential Broadband Expansion Grant Program (R.C. 122.40 et seq.) to include the concept of “extremely high cost per location threshold area” in scoring grant applications and awarding funds.
- Alters Ohio Brownfield Program (R.C. 122.6511) and Ohio Building Demolition and Site Revitalization Program (R.C. 122.6512) setting forth singly named grant recipients – “lead entities” – to receive the respective funding: county land banks (if one is in operation) or ODOD-selected entities. Only lead entities are authorized to submit grant applications to ODOD, with further downstream recipients of those funds as “may include,” and therefore not limited to, local governments, nonprofit organizations, community development corporations, regional planning commissions, county land banks, and community action agencies; note that private entities are not explicitly identified as a potential grant recipient.
- For counties with <100,000 population (per the most recent 10-year census), county commissioners are to submit a recommended lead applicant to ODOD for approval.
- For counties with >100,000 population, county land banks are the lead applicant, and if such counties do not have a land bank, county commissioners are to submit a recommendation to ODOD for the entity that should serve as the lead applicant.
- Tweaks Ohio’s film tax credit (R.C. 122.85) to reserve $5MM of the annual $50MM available in tax credits for Broadway theatrical productions, with any such balance remaining each year to be carried-forward to the following state fiscal year.
- NEW R.C. 122.631 et seq. establishes within ODOD the Welcome Home Ohio grant and tax credit program. During each SFY 2024 and SFY 2025, ODOD directed to award, exclusively to land banks, $25MM in purchase-grant and $25MM in rehab/construction-grant funds, as well as award $25MM/year in tax credits to a limited set of eligible entities. These public financing tools are available for the development of single-family residential units comprising at least 1,000 square feet of living space. Bricker Graydon published an article summarizing this program at https://www.bricker.com/insights-resources/publications/welcome-home-ohio-county-land-banks-setting-the-table-for-affordable-housing-development.
- Authorizes up to $100MM in nonrefundable tax credits for investments in the development and construction of affordable single-family housing; this functions as a state-level low income housing tax credit (LIHTC) under NEW R.C. 175.16 et seq., which mirrors the federal LIHTC used by affordable housing developers.
- New Community Authorities, in R.C. Chapter 349, expanded to include certain townships as organizational boards of commissioners in creating NCAs. Similarly, the list of statutory developers, which current R.C. 349.01 includes municipalities and counties, now includes townships.
- NEW R.C. 715.693 regarding JEDZs (R.C. 715.691) and Joint Economic Development Review Councils (R.C. 715.692), and changes to Community Improvement Corporations (R.C. 1724.11), collectively allow these entities to hold remote (i.e., interactive video or teleconference) meetings otherwise prohibited under Ohio’s Sunshine Laws.
- Changes R.C. Chapter 2329 to allow for the use of private selling officers, or PSOs, to sell foreclosed property, rather than county sheriffs, and requires that selling officers provide notice to land banks of pending sales.
- Amends current OAQDA law (R.C. Chapter 3706; and see NEW R.C. 503.59) to enable townships and municipalities with ESIDs to levy special assessments on real property in the context of OAQDA-financed projects, upon request by the property owner.
- Extends by 15 years the continued authority of JobsOhio to receive the State’s spirituous liquor distribution revenues.
- Changes to Ohio’s tax increment financing (TIF) law as follows:
- “Restart the clock” changes to municipal TIFs (R.C. 5709.40) and township TIFs (R.C. 5709.73): legislative authority may remove TIF exemption from any “nonperforming parcels,” which are TIF’ed parcels for which PILOTs are required to be made, but for which no such payments have been remitted since the TIF commenced. And once removed from the previous TIF, those “nonperforming parcels” then can be included in another TIF. The amending legislation must list such nonperforming parcels and their value history since the original enabling legislation had been approved.
- “Residential Incentive District extension” change: allow municipalities to extend, by another 15 years, the exemption period of certain incentive district TIFs – approved prior to January 2006 – beyond the 30-year cap under current law (R.C. 5709.40(C)); the extension may be by amending the original enabling ordinance.
- “Super-long TIF” change: R.C. 5709.51 modified to enable up to 60-year TIFs (with years 31-60 treated as “non-school,” meaning schools are to receive their entire millage amounts as if no exemption were present) as to any “parcel” TIF (i.e., municipal TIFs under R.C. 5709.40(B), R.C. 5709.41, township TIFs under R.C. 5709.73(B), and county TIFs under R.C. 5709.78(A)) whereby either $1.5M has been collected in annual service payments in lieu of taxes (PILOTs) or the legislative authority projects such amount of PILOTs will be collected.
- “Robin Hood TIF” change: ODOD-listed impacted cities (R.C. 1728.01) are authorized through SFY 2024 for “remote” use of parcel TIF revenues under R.C. 5709.40(B), whereby PILOTs from one TIF project may be deployed for “urban redevelopment” needs elsewhere in the impacted city without regard to parcels directly benefitting such TIF-funded improvements (i.e., removes the nexus heretofore required when using PILOT revenues in and around TIF projects) (see uncodified Sec. 757.70).
- Changes Regional Transportation Improvement Projects (RTIPs) to authorize their governing boards to create county-wide transportation financing districts (R.C. 5709.48) that allow up to 100%, 30-year real property tax exemptions related to transportation improvements and “opportunity corridor improvements” (i.e., transportation improvements within 2,500 ft. of rights-of-way to make for economic development opportunities). Such districts exclude residential and already-TIF’ed parcels. (And see R.C. 5595.01 et seq.)
- NEW R.C. 5709.56 creates new tax exemption authority for “pre-residential development property.” Exempts unimproved land that has been subdivided for residential development. Exemption available by right, for up to eight years, or until construction begins or the land is sold. (Does not apply to land already subject to a TIF.)
- Extends the statutory sunset date for Qualified Energy Projects R.C. 5727.75(E) to 2029.
- NEW R.C. 5739.093 authorizes certain counties and municipalities to designate a convention center headquarters hotel and divert its respective lodging tax revenue to fund projects related to such hotels and convention centers. Such redirected lodging tax revenue may be paid directly to convention facilities authorities, port authorities, or agents of the counties and municipalities.
HB 85 LAND BANKS (Patton, T.) Introduced on February 28, 2023, this bill seeks to expand the methods by which land banks can acquire delinquent property. The bill grants political subdivisions and land banks at foreclosure sales the right of first refusal to purchase occupied delinquent land within the respective subdivisions’ boundaries; the intention is to keep eligible tenants or land contract vendees in their homes. By design, the political subdivision or land bank, within three business days after a foreclosure sale, could provide written notice of its intent – and then can buy – the property for the highest-bid amount. (This is intended to address situations in which absentee landlords, having failed to pay real property taxes on occupied homes, are continuing to collect rent payments from tenants; a similar program operates in Michigan through Detroit’s Make it Home Program.)
Specifically, the bill does the following:
- Changes R.C. 5721.191 as to how tax-foreclosed properties are advertised and sold; inserts county Boards of Revision (BOR) as appropriate venues for tax foreclosure cases; and, requires that advertisements for the sale of tax-foreclosed property state that land banks have right of first refusal to match the highest bid offered
- Creates new R.C. 5722.032 to provide an alternative way to send abandoned property to land banks – via sale to such land banks without advertisement, so long as the amount they pay is the greater of the amount of delinquent taxes or the property’s FMV; those with interests in the property may claim any excess proceeds from such sale (i.e., the potential “taking” of home equity), and if nobody claims any interests in the property, the land bank may buy the property for only the amount of the delinquent taxes due
- Creates new R.C. 5722.033 to provide land banks with the right of first refusal in any sheriff’s sale of tax-foreclosed abandoned property, whereby the land bank is empowered to match, within 30 days, the highest bidder at such sale
On May 9, 2023, the bill had its second hearing in the House State & Local Government Committee, during which the Cuyahoga County Land Bank provided support testimony to allow land banks to acquire properties by paying the full amount of the taxes, or the value of the property, and affording the tax-delinquent owner the right to require the property to be exposed to a sale.
HB 96 MINIMUM WAGE (Jarrells, D., Mohamed, I.) Introduced on March 7, 2023, this bill seeks to increase the state’s minimum wage.
HB 121 MUNICIPAL INCOME TAX (Robb Blasdel, M., Mathews, A.) Introduced on March 21, 2023, this bill allows businesses with remote workers to use a modified municipal income tax apportionment formula. Specifically, the bill allows for an opt-in method by businesses in Ohio to consolidate and simplify tax filings for remote workers.
On May 16, the House Ways & Means Committee reported-out an amended version of the bill, which removed any requirement for employers to notify municipalities in which work-from-home workers are living and working. On June 14, the measure passed the House by unanimous vote.
HB 153 ABANDONED LAND (Hillyer, B.) Introduced on April 18, 2023, this bill seeks to limit which “abandoned land” – as defined in Ohio’s land banking statutes (R.C. Chapter 5722) – may be subject to certain expedited foreclosure proceedings. Specifically, this bill changes land banking law in response to complaints winding through federal and state courts asserting that land banks are engaging in “takings” under the Fifth Amendment to the U.S. Constitution; that direct transfers to land banks of abandoned land are “taking” any pent-up equity in property value still held by the tax delinquent land owner.
On June 20, the House State & Local Government Committee held its second hearing, during which it heard from the Pacific Legal Foundation, which was the organization that successfully challenged tax foreclosures by the State of Minnesota in the US Supreme Court case, Tyler v. Hennepin County.
HB 211 PUBLIC MEETINGS (Gross, J.) Introduced on June 13, 20203, this bill requires a public body to permit members of the public to comment or testify about matters of public concern before the public body at its public meeting. Under Ohio’s current Open Meetings Act (R.C. 121.22), public bodies are not required to hear comments from members of the public (the law guarantees the right to observe a meeting, but not necessarily the right to be heard; see Forman v. Blaser (3rd Dist., Seneca County, Aug. 8, 1988).
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