Tracked House Bills – June 2023

Jun 24, 2023 | Advocacy

Jeffry D. Harris
Bricker Graydon LLP

(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.

Rep. Pavliga said the federal incentive includes a 9% credit and 4% credit. The former is awarded competitively, while the latter is financed in part through tax-exempt bonds.  The sponsor noted the latter’s allocation of volume cap bonds (approx. $120MM) for multi-family development often goes unused due to a lack of interest by private developers.

On June 13, the House Economic & Workforce Development Committee held its fifth hearing, during which a substitute bill which was accepted without objection.  The substitute version incorporates housing-related components from the House’s HB 33 budget provisions, with two changes of particular note: (1) the Ohio Tax Commissioner would be authorized to request records from OHFA related to such a state Low-Income Housing Tax Credit (LIHTC); and (2) makes several changes to the proposed formula for appraising federally subsidized residential rental properties, including expanding from one or two years to three years the lookback in operating income to be reported from owners (currently, different counties can use different equations). 

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 SFY 2024 – SFY 2025.

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 differences in the House and Senate-versions are expected to be handled via conference committee; the budget must be signed and enacted by midnight on June 30.

Appropriation line items of interest (with changes indicated in red italics as those made by the Senate’s approved Amended Substitute version of the bill):

Among its provisions, this bill appropriates:

  • The House Finance Committee adjusted the Governor’s proposed $2.4B for the All Ohio Future Fund, to be funded via “accumulated one-time GRF,” by divvying-up that initial figure as follows:
    • $500MM to the All Ohio Future Fund for site-readiness and preparation for large economic development projects, similar to the recently announced Intel project.
      • The Senate expanded the purposes for the use of the All Ohio Future Fund to include natural gas, sewer, and water infrastructure projects, while also prohibiting any 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.
    • The Senate altered the $350MM to Ohio’s Brownfield Remediation Program during SFY 2024 and 2025 and $150MM to the Ohio Demolition and Site Revitalization Program during SFY 2024 to identify county land banks (if one is in operation) or ODOD-selected entities to serve as the ODOD’s singly named grant recipients of each respective funding program. Such singly named recipients – “lead entities” – are the only entities authorized to submit grant applications to ODOD, with further downstream recipients of those funds to include local governments, nonprofit organizations, community development corporations, regional planning commissions, county land banks, and community action agencies; note that private entities are still not explicitly identified as a potential grant recipient. 
    • $40MM to the Rural Industrial Loan Park Fund during SFY 2024 and 2025
  • $267MM to ODOD of the State’s ARPA allocation for “Capital Projects.”
  • The Senate increased appropriations to the 629 Roadwork Development Grant by adding $16MM in SFY 2024 and $10MM in SFY 2025, and earmarked $10MM of each such year’s amount to local roads impacted by the Intel development.
  • The Senate removed the proposed $1B to ODOT’s Connect4Ohio Fund, the new name of the proposed rural highway fund (which had been proposed in the state’s Transportation Bill (HB 23), but had been removed by the Senate), and defines eligible “rural” counties as those lacking a city with 65,000 population or more.
    • The House appropriated $24MM under ODOT’s Connect4Ohio program in total funds in SFY 2024 for local road construction, in Licking County and the Cities of Newark, Johnstown, and Heath
  • $20MM to the Foundation for Appalachian Ohio.
  • The Senate removed the House’s appropriation of $500,000 during SFY 2024 for the Center for Advanced Manufacturing and Logistics.

Substantive law changes of interest:

The bill would change Ohio law as follows:

  • The Senate modifies the criteria that establishes a “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.
  • The Senate 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.
  • 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, which any balance remaining each year to be carried-forward to the following state fiscal year. The Senate increased the annual cap from the House’s $40MM.  And the Senate delays the effective date of the Broadway theatrical production change to SFY 2025, as well as prescribes the syndication of issued tax credit certificates.
  • The Senate drops-in aspects of SB 118 (described below) to enact NEW R.C. 122.631 et seq. that establishes within ODOD the Welcome Home Ohio grant and tax credit program. County land banks may apply for grants to offset the costs of acquiring real property to be used for the construction of new single-family housing, as well as to offset the costs of such construction.  Tax credits are available to county land banks and private developers for remodeling or construction of the same.
  • The Senate de-funds OHFA and repeals its authority under R.C. Chapter 175 to operate as an independent agency. Moves OHFA’s housing development fund to the state treasury and its programming responsibility to the Governor’s Office of Housing Transformation, which such office will subsumed into ODOD (thereby reversing the spin-off of OHFA from ODOD that occurred in 2005).
  • Drops-in provisions of HB 3 (described above), which authorizes a state LIHTC tax credit under NEW R.C. 175.16.
  • The Senate authorizes a nonrefundable tax credit for investments in the development and construction of affordable single-family housing under NEW R.C. 175.17.
  • 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, includes townships.
  • The Senate dropped in provisions of proposed SB 25 (described below), which 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) 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.
  • The Senate extended, by 15 years, the continued authority of JobsOhio to receive the State’s spirituous liquor distribution revenues.
  • Modifies current natural gas utility law (R.C. 4929.161 and .165) that authorizes riders on customer bills for economic development projects to prohibit PUCO from approving such riders after Oct. 1, 2029, to cover investments to certain sites
  • Tax increment financing law (municipal TIFs under R.C. 5709.40, and township TIFs under R.C. 5709.73) tweaked to remove exemption status 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 received since the TIF commenced. And once removed from the previous TIF, those “nonperforming parcels” then can be included in another TIF.  The Senate added that the amending legislation must list such “nonperforming parcels” and their value history since the original enabling legislation had been approved.
  • TIF law further tweaked to 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.
  • TIF law further tweaked (R.C. 5709.51) 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 there has been $1.5M in collected annual service payments in lieu of taxes (PILOTs) or the legislative authority projects such amount of PILOTs to be collected.
  • TIF law further tweaked to clearly authorize so-called Robin Hood TIFs within ODOD-listed impacted cities (R.C. 1728.01); that is, to allow “remote” use of parcel TIFs under R.C. 5709.40(B), whereby PILOTs from one TIF project may be deployed for “urban redevelopment” needs elsewhere in the municipality, 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).
  • Creates new tax exemption authority for “pre-residential development property” (NEW R.C. 5709.56), by exempting unimproved land – subdivided for residential development. Exemption available for up to eight years, or until construction begins or the land is sold. (Does not apply to land already subject to a TIF.)
  • The State’s “bare minimum” notice requirements (R.C. 5709.83) are tweaked to remove references to in-person meetings between a CRA housing officer and impacted school districts.
  • Alters the Ohio Rural Industrial Park Loan Program to allow developers which had previously received such assistance (during past budget biennia) to apply for and receive additional assistance; caps all loans under the program at $4MM.
  • Eliminates the authority of local governments to levy replacement property tax levies, beginning with elections held on or after January 1, 2025.
  • The Senate modified the House’s changes to Qualified Energy Projects under R.C. 5727.75(E), extending the statute’s sunset date to 2029; the House had proposed a longer extension – to 2032.
  • Inserts into lodging tax law (NEW R.C. 5739.093) an authorization for certain counties and municipalities to designate a hotel associated with a convention center and divert their respective lodging tax revenue therefrom in order to fund projects related to those 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 13, the House State & Local Government Committee heard sponsor testimony during its first hearing, during which Rep. Brett Hillyer (R-Uhrichsville) overtly called out the notion of “equity theft” as the basis for the proposed legislation, with his stated intention of ensuring subject properties are exposed to judicial sales.

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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