Office projects drive economic growth. However, areas like Downtown Columbus Ohio’s Statehouse Square have office towers with under 50% occupancy and these structures present community economic challenges and redevelopment opportunities. Fortunately, states like Ohio offer a range of tax incentives and public finance tools to develop office projects. These tools range from tax abatements to tax credits to sales tax exemptions to grants and loans to infrastructure funding.
Tax Abatements. Ohio law authorizes local governments to provide property tax abatements on new investments up to 100% with local school board approval and 75% without local school board approval through the Ohio Enterprise Zone Program for a term often as long as 10 years.
Grants & Loans. JobsOhio, the state’s private sector economic development corporation, offers the JobsOhio Revitalization Program grant and loan program that provide loans and grants totaling as much as $5 M.
Sales Tax Exemption. Ohio port authorities are permitted to offer a sales tax exemption on construction materials used for economic development projects.
Historic Preservation Tax Credits. The Ohio Development Services Agency awards twice annually Ohio Historic Tax Credits for designated historic properties (structures 50 years or older) that can provide direct building funding for historically consistent remodeling costs.
Downtown Redevelopment Districts. Ohio’s Downtown Redevelopment District Program permits the capture of up to 70% of the future property tax growth around 10 acres of a historic structure for public infrastructure, historic groups, building renovations and innovation districts.
PACE Financing. Property Assessed Clean Energy financing provides a financing tool for energy related building renovations costs through non-traditional means.
Tax Increment Financing. Ohio’s Tax Increment Financing Program funds public infrastructure through the capture of future property tax growth of a defined district or site.
Special Improvement Districts. Ohio’s Special Improvement Districts permit property owners in a defined area through a majority vote to create a special assessment to fund area public infrastructure improvements and provide services.
As an example, for an office project in Downtown Columbus, Ohio, with an estimated value of $15,000,000 and renovation costs of $15,000,000, the Montrose Group would project $12,800,000 in potential economic development incentives based upon local and state approvals:
- Real Estate Property Tax Abatement: $6,400,000 over a 15-year period based on an increase in value of the buildings of $15,000,000;
- Columbus-Franklin County Finance Authority Sales Tax Exemption on Construction Materials: $450,000, based on $15,000,000 of hard construction costs;
- JobsOhio Revitalization Grant: $1,000,000;
- JobsOhio Revitalization Loan: $3,000,000; and
- State Historic Tax Credit: $2,000,000.
Ohio is fortunate to have a broad range of economic development tools designed to support the growth of office projects all over the state, and please contact Dave Robinson at [email protected] if you need assistance with an office project or other economic development project.