Tracked Senate Bills – December 2019

Chris Schmenk
Bricker & Eckler LLP

State News: 

House Breaks for Year: The House held its last legislative session December 12 before breaking for the year.  Among other bills passed by the House on its last day, HB 2 (the TechCred Program) was passed with the House approving the Conference Committee’s recommendations to resolve differences between the House and Senate.  The House also unanimously approved HB 264 which will help local governments refinance loans for water and wastewater infrastructure projects.

Report of Regional Study Committee: The Regional Economic Development Alliance Study Committee issued a report December 12 containing recommendations to the Administration and General Assembly regarding economic development programs in Ohio.  The report can be found at: http://gongwer-oh.com/public/133/reda2.pdf

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

Senate Bills:

SB 1 REGULATIONS  (McColley, R., Roegner, K.)  This bill would require each state agency to reduce the regulatory restrictions contained in its rules by 30% by 2022, according to a schedule and criteria set forth in the bill.  It also prohibits an agency from adopting new regulatory restrictions that would increase the percentage of restrictions in the agency’s rules and requires an agency that does not achieve a reduction in regulatory restrictions according to the required schedule to eliminate two restrictions before enacting a new rule containing a restriction.  It allows the Joint Committee on Agency Rule Review (JCARR) to lessen an agency’s required reduction in regulatory restrictions if the agency fails to meet a reduction goal and show cause why the agency’s required reduction should be lessened.  Effective January 1, 2023, it limits the total number of regulatory restrictions that may be in effect in Ohio. The bill passed in the Senate May 8 and has been referred to the House State and Local Government Committee, where a first hearing occurred June 12.

SB 8 OPPORTUNITY ZONES  (Schuring, K.)  This bill would authorize tax credits for investments in an Ohio Opportunity Zone.  As introduced, to qualify for the tax credit, investors must invest at least $250,000 during the taxable year, and the amount of the credit allowed shall be equal to one percent of the amount invested.  At a fourth hearing in the Senate Ways & Means Committee, a substitute bill was introduced March 12 which establishes an Opportunity Zone Investment Tax Credit program and a new opportunity zone fund that must be used exclusively for projects in opportunity zones. The new program creates a non-refundable 10% tax credit that that would be capped at $50 million over the course of a biennium. The revisions would prohibit a single entity from utilizing both the proposed program and the Invest Ohio program credit. The bill was passed by the Senate April 3 and referred to the House Economic and Workforce Development Committee, where a first hearing occurred May 8. The main provisions of this bill were included in the final Budget Bill (HB 166).

SB 37 TAX CREDIT  (Schuring, K.)  This bill would extend eligibility for and make other changes to the motion picture tax credit.  Among other changes, “Broadway theatrical productions” would become eligible for the credit, the types of expenses upon which the credit is based would be broadened to include post-production, advertising, and promotional expenditures, and the Director of Ohio Development Services Agency would begin awarding motion picture and Broadway theatrical production tax credit certificates in two competitive rounds each fiscal year. The first round of applications would be approved by July 31, and the second round would be approved by January 31.  The bill passed in the Senate May 8 and was referred in the House to the Finance Committee.  The main provisions of this bill were included in the Budget Bill. 

SB 39 INSURANCE TAX  (Schuring, K.)  This measure would authorize an insurance premiums tax credit for capital contributions to transformational mixed use development projects.  To qualify, projects must:

(a)        have a transformational economic impact within the project area approved by the director of the development services agency;

(b)       be a mixed use development that integrates some combination of retail, office, residential, recreation, structured parking, and other similar uses; and

(c)        include at least one building that is fifteen or more stories in height or has a floor area of at least three hundred  fifty thousand square feet.

The bill was assigned to the Senate Finance Committee, which passed it out of committee with two amendments:

• allowing projects involving two or more connected buildings to qualify for the credit as long as they collectively meet the program’s square-footage requirements, and
• establishing public reporting requirements regarding projects supported by the program.

The bill passed in the Senate June 26 and has been referred to the House Economic & Workforce Development Committee, where a fourth hearing occurred November 6.  A substitute bill was introduced December 11 which would:

• Limit the DSA director to approving only four TMUDs per fiscal year with a carryover provision (in lieu of a cap).
• Require ranking of applications by their economic value and transformational impact. Specific consideration will be given to the new state and local taxes generated from the project and its surrounding area. The project that has the most significant transformational impact and has a pro forma that shows the most expeditious schedule for the new state and local taxes to exceed the amount of the tax credit, will be the one that is approved.
• Require a project to go into construction no later than one year after the TMUD credit is approved by the DSA Director, and
• Increase the historic tax credit percentage from 25% to 35% for rural areas.

SB 89   CAREER-TECH EDUCATION AND ENTERPRISE ZONE TAX ABATEMENTS (Huffman, M.) This bill, introduced March 6, would make changes to Ohio’s career-tech education programs.  Of interest to economic development, it would modify the Ohio Revised Code sections relating to enterprise zone tax exemptions and require that if an agreement is negotiated between the legislative authority and the school district in which the project is located to compensate the district for all or part of the taxes exempted, the legislative authority must also compensate the joint vocational school district within which the property is located at the same rate and under the same terms received by the school district.  The bill passed in the Senate October 23 and has been assigned to the House Primary & Secondary Education Committee where a first hearing occurred December 10.

SB 95 BUSINESS INVESTMENTS  (Peterson, B., Kunze, S.) Introduced as SB 309 in the last General Assembly, this bill would lengthen the maximum term of the job creation tax credit available under ORC 121.171 from 15 to 30 years for businesses making substantial fixed asset and employment investments (and meeting the definition of “megaprojects” as set forth in the bill) and for their suppliers, authorize commercial activity tax exclusions for receipts of those suppliers from sales to such businesses, and authorize local governments to grant longer term (up to 30 years) property tax exemptions (enterprise zones or community reinvestment areas) for such businesses or suppliers.  To qualify as a “megaproject”, projects must involve unique sites, extremely robust utility service, and a technically skilled workforce;  the megaproject operator of the project must compensate the project’s employees at an average hourly wage of at least three hundred per cent of the federal minimum wage under U.S.C. 206, exclusive of employee benefits, at the time the tax credit authority approves the project for a credit under this section; and the project must satisfy either of the following by the metric evaluation date applicable to the project : (i) The megaproject operator makes at least one billion dollars in fixed-asset investments in the project, or (ii) The megaproject operator creates at least seventy-five million dollars in Ohio employee payroll at the project.  The bill passed in the Senate June 12 and was referred to the House Ways and Means Committee where a second hearing occurred November 19.

SB 109  TAX CREDITS  (Schuring, K.)  Introduced on March 13, this bill would establish a Workforce Scholarship Program and authorize the Chancellor of Higher Education to designate five public or private institutions to participate in the program.  It also authorizes the granting of scholarships and tax credits to students who pursue and complete the training programs for in-demand jobs at these designated institutions.  The bill was referred to the Finance Committee, where a second hearing occurred October 8.

SB 132 GAS TAX ALLOCATIONS  (Williams, S.)  This bill would modify the amount of revenue derived from any increase in the motor fuel tax rate that is allocated to local governments and to change the manner in which that revenue is divided between municipal corporations, counties, and townships. It was referred to the Senate Transportation, Commerce & Workforce Committee on May 1.

SB 153 TAX CREDITS (Dolan, M.)  Introduced May 21, this bill focused on assisting manufacturers and entities with significant corporate administrative functions in Ohio by amending the state’s Job Retention Tax Credit program under ORC 122.171 to expand eligibility based on new capital investment rather than payroll or employee count.  Manufacturers that invest the lesser of either $50 million or 5% of the book value of their tangible personal property used at the project site over a 3 year consecutive period would be eligible.  If such manufacturers receive the credit, they must commit to maintain an agreed-upon number of full-time equivalent employees during the term of the credit.  Entities with significant corporate administrative functions are eligible if: 1. They are either located in a foreign trade zone, employ at least five hundred full-time equivalent employees, or have an annual Ohio employee payroll of at least thirty-five million dollars; and 2.  They make a capital investment of at least $20 million at the project site over 3 consecutive calendar years. Such entities must commit either: 1. To retain at least 500 FTEs at the project site during the term of the credit, or 2. Maintain an annual Ohio employee payroll of at least $35 million for the term of the credit or remain in a foreign trade zone for the entire term of the credit. The bill’s provisions were included in the final Budget Bill (HB 166), and the program should be available soon.

SB 180 DEVELOPMENT BONDS (Schaffer, T.)  Introduced August 5, 2019, this bill would authorize the issuance of industrial development bonds by a township and would authorize counties, townships, and municipal corporations to issue industrial development bonds without requiring the county, township, or municipal corporation to designate a community improvement corporation as its agency for industrial, commercial, distribution, and research development.  On September 10, the bill was referred to the Senate Finance Committee where a first hearing occurred October 1.

SB 212 NEIGHBORHOOD DEVELOPMENT AREAS (Schuring, K.)  Introduced October 7, this bill would authorize townships and municipal corporations to designate areas within which new homes and improvements to existing homes are wholly or partially exempted from property taxation.  The designation would be done by a resolution or ordinance that includes the following:

(a)        A description of the boundaries of the neighborhood development area;  

(b)        Identification of the municipal or township officer or           employee who will accept applications;

(c)        Findings to demonstrate that the designation of the area will encourage the construction of new single-family dwellings, or the improvement of existing single-family dwellings, that in either case would be unlikely to occur in the absence of such a designation;         

(d)        The number of years during which the area will be designated as a neighborhood development area or that the area will be designated as such for a continuing period of time;   

(e)        A description of how the designation of the neighborhood development area would (i) improve the overall quality of life in the township or municipal corporation and (ii) cause additional property tax revenue to be generated once exemptions     no longer apply than if the area had not been designated;

(f) The percentage of value that will be exempt from taxation which shall be seventy per cent of assessed value or, if the approval of the         board of education of each school district within which parcels in the area are located is obtained,  one hundred per cent .

The legislative authority or board may not include in the designated areas any parcel that is already subject to an exemption authorized under a community reinvestment area (CRA) or tax increment financing (TIF).

If the intended exemption if 100%, written notice must be provided to the board of education of the affected school district, which may approve or disapprove the designation of the neighborhood    development area not later than 14 days prior to the date intended for the proposed municipal or township action.  If the board of education fails to timely certify a resolution to the board of township trustees or the legislative authority of the municipal corporation, the board of education shall be considered to have approved of the designation of the neighborhood development area.  If all boards of education that receive notice approve the designation of the neighborhood development area, the board of township trustees or legislative authority of the municipal corporation may adopt a resolution or ordinance prescribing a percentage of value under division (B)(1)(f) of this section of one hundred per cent.

The bill has been assigned to the Senate Ways & Means Committee, where a first hearing occurred November 5 and a second hearing occurred December 17.  During sponsor testimony, Senator Kirk Schuring stated that he has prepared a substitute bill to offer in the future that emphasizes the measure would apply to only owner-occupied dwellings.

SB 219 APPRENTICE PROGRAM (Williams, S.)  Introduced October 15, this bill would empower the Ohio Departments of Education and Higher Education to establish a career pathways apprentice program for high school grades 9-12.   The purposes of the program would be to establish partnerships between schools, businesses, communities, local government entities, and nonprofit organizations to create career pathways for apprenticeships in the following professions: (a) Manufacturing; (b) Information technology; (c) Financial services; (d) Business operation (e) Healthcare, and (f) Education. The program would also be charged with providing information and technical assistance to high school students who enroll in the program and reducing obstacles to and ensure compatibility with division (J)(3) of section 3313.603 of the Revised Code. The program may incorporate or work in conjunction with other apprentice and pre-apprentice programs already in operation under the Revised Code.   

It has been referred to the Senate Education Committee.

SB 234 WIND REGULATIONS (McColley, R.)  This bill, introduced November 6, is a companion bill to HB 401 and its provisions are identical. A first hearing occurred December 10 in the Energy and Public Utilities Committee.

SJR 3 TAX INCREASES (Burke, D.) Introduced December 11, this Senate Resolution proposes to enact Section 7 of Article XII of the Constitution of the State of Ohio to require that any increase in income tax rates be approved by a supermajority (two-thirds) of the membership of each house of the General Assembly.  If the Resolution is approved by three-fifths of the members of both the House and the Senate, then the proposed amendment would be submitted to the electors of the state to be voted on at the general election to be held on November 3, 2020.  The matter has been assigned to the Ways and Means Committee.