Agenda and Topics The Core Four State Incentives –Rapid Outreach Grants –Job Creation Tax Credit –Ohio Investment in Training Program –166 Direct Loan The Core Four Local Incentives –Enterprise Zones –Community Reinvestment Areas –Municipal Income Tax Credit –Tax Increment Financing New Credits
Rapid Outreach (fka: 412) Grant funding program Recipients are companies or community/government entities New job creation preferred, but job retention projects are also possible Controlling Board has final approval Clawback provisions apply for non-compliance Funds to offset fixed-asset investment: –On- and off-site infrastructure –Building acquisition and construction –Machinery and equipment acquisition
Variations on Rapid Outreach Contingency JRS Discretionary Targeted Industry Attraction 629 (Roadwork Development)
Job Creation Tax Credit Net, new, full-time jobs at the project site 25 jobs or more (10 jobs if high wage) Performance based, reporting requirements Relocation issues Local match Variation: Job Retention Tax Credit
Job Retention Tax Credit Nonrefundable tax credit against Commercial Activity, Personal Income and Corporate Franchise taxes Today –1000 Full-time employees, $100 million investment minimum Proposed –500 Full-time employees, $50 million investment for manufacturing and $20 million for non-manufacturing –Adds Premiums and Dealers in Intangibles taxes
166 Direct Loan Direct financing to companies for fixed asset investment Job creation and/or retention requirements Rates: Currently around 3 percent fixed Terms: 7 to 10 years for M&E; 10 to 15 years for real estate Maximum amounts of 30 percent of project costs, or $1 million (subject to flexibility) Flexible repayment schedules
Variations on 166 R&D Investment Loan Innovation Ohio Loan Regional 166 Loan Bonds: Ohio Enterprise Bond Fund
Ohio Investment in Training Program Company must demonstrate investment in facilities and/or equipment that would not otherwise be made in Ohio and/or the creation of jobs or retention of jobs Company must match dollar for dollar Company must pay the wages of the employee during training
Ohio Investment in Training Program Funding formula, including: Projects paying less than $10.88/hr. (150% of the Fed. Wage Rates FWR) are not eligible Projects paying at or above 150% of the FWR may receive between $300 to $1,000 per job Variation – Workforce Guarantee
The Core 4 Local Incentives Community Reinvestment Area Enterprise Zone Tax Increment Financing Municipal Income Tax Credit
Ohio Community Reinvestment Area Program (CRA) permits local governments to grant exemptions from real property taxation for qualifying improvements made within a locally designated CRA area CRA area designation is based on determination that there is a lack of reinvestment in housing Improvements to residential, commercial, industrial, and retail properties are eligible for abatements Abatements are for 0-100% of property tax liability, but maximum term varies from 10 to 15 years, depending on the type of improvements (new construction vs. renovation) and project type (single family, multi-family, commercial, or industrial) Ohio Community Reinvestment Area Program (CRA)
Ohio Enterprise Zone Program (EZ) permits local governments to grant exemptions from real and personal property taxation for qualifying improvements made within a locally designated EZ area EZ area must meet one or more economic distress criteria Abatements are from 1-15 years and for 0-100% of property tax liability Improvements to residential, commercial, and industrial properties are eligible for abatements Retail is ineligible except in 27 Ohio cities certified by ODOD as “impacted” Programs expires October 15, 2009 Ohio Enterprise Zone Program
Pre vs. Post 1994 CRA Pre 1994 - community creates area. Post 1994 -CRA confirms that created area meets statutory requirements. Pre 1994 – No relocation limits. Pre 1994 – C/I Incentives set by legislation on a program basis. Post 1994 - project specific agreement. Pre 1994 – minimal role for school boards Pre 1994 – no oversight of C/I tax incentives by local TIRC
Comparing CRA & EZ Municipal income tax sharing required for all CRA or EZ projects with new employee payroll in excess of $1M. Renovation exemption can be up to 12 years in a CRA, but up to 15 years in EZ. CRA exemptions are processed through County Auditor while Ohio Tax Commissioner must approve EZ real estate tax exemptions. CRA can provide exemptions for retail businesses.
Ohio Tax Increment Financing (TIF) permits local governments to grant exemptions from real estate taxation for qualifying improvements made within a TIF project area or an incentive district Instead of receiving an abatement, property owner makes a payment-in-lieu-of-taxes (PILOT), equivalent to the taxes the owner would otherwise have been obligated to pay to the local government creating the TIF The PILOT is deposited in a service fund, the proceeds of which are used by the local government to provide services to the property (frequently the amortization of bonds financing public infrastructure serving the site) Tax Increment Financing (TIF)
Municipal Income Tax Credit ORC 718.15. A [city]…may grant a refundable or nonrefundable credit against its tax on income [to a JCTC recipient]. [Credits] shall be measured as a percentage of the new income tax revenue the [city] derives from new employees…and shall be for a term not exceeding fifteen years. [The City and the company] shall enter into an agreement specifying all the conditions of the credit.
Incentive Study Came out May 4, 2009. In-depth evaluation of the Department’s business incentives. The Department is using the study’s results to determine what incentives are most helpful and responsive to companies and what incentives can be enhanced. The study’s recommendations include ways to make the state’s programs for loans, Job Creation and Job Retention Tax Credits, Workforce Development, and local tax abatement and increment financing less complex and faster to implement. Task force of experts from the economic development community and local governments was created to advise the Department of Development on Ohio’s tax credits, loans, grants, and workforce training programs at the local, regional, and state levels. The task force provided extensive feedback for each incentive, and Development also spoke with a wide variety of stakeholder groups including school associations, counties, townships, and municipal governments.
Incentive Study Some of the main recommendations include: Simplifying the annual reporting requirements for the Job Creation Tax Credit and broadening the eligibility requirements of companies for the Job Retention Tax Credits. Extending eligibility for loans to include any minority-owned company certified by a federal or Ohio public agency, thus eliminating the need for multiple certifications. Streamlining the roles of offices administering incentives or coordinating with other agencies to better serve Ohio companies. Creating a special bipartisan working group to develop a detailed proposal for reforming tax incentives. Created after the enactment of the 2010-2011 Biennial Budget, the group will research and develop ways to rework and combine Ohio’s existing incentives to be more responsive to business and community needs. To read the entire Ohio Economic Development Incentive Study please visit the Ohio Department of Development’s Web site at www.development.ohio.gov www.development.ohio.gov
New Credits State New Markets Tax Credit –Add on to the Federal credit –Seeks to capture a higher proportion of NMTC funds for Ohio Film Tax Credit –Will function much like a grant program
Misc. FYI’s and FAQ’s Ohio InSite –http://www.ohiomeansbusiness.com/ohioinsite/http://www.ohiomeansbusiness.com/ohioinsite/ Ohio wins Governor’s Cup 3 rd Straight Year – Site Selection Magazine Ohio Department of Development’s Strategic Plan http://development.ohio.gov/strategicplan/ –Ohio Means Jobs www.ohiomeansjobs.com –Check Ohio First a business-to-business service designed to encourage companies to use Ohio businesses when making purchases
Misc. FYI’s and FAQ’s American Recovery and Reinvestment Act — Federal Stimulus Bill –Go To The Website! –http://recovery.ohio.gov/http://recovery.ohio.gov/ Ohio Bipartisan Job Stimulus Plan – State Stimulus –http://jobstimulus.ohio.gov/http://jobstimulus.ohio.gov/ –Advanced Energy - $150 million –Biomedical - $100 million (tobacco settlement) –Bioproducts - $50 million (tobacco settlement) –Logistics & Distribution - $100 million –Internships & Co-ops - $250 million in Ohio's Higher Education Workforce Initiative –Infrastructure - $400 million in the Public Works Commission –Historic Preservation Tax Credit - $120 Million –Clean Ohio Fund - $400 Million
Contact Information Megan Gordon-Lakey Regional Economic Development Director Region 1 – Central Ohio Ohio Department of Development Tel. 614-466-9627 Email: email@example.com@development.ohio.gov