Reviving Downtown’s with Creative Economic Development Approaches – A Look at DRD’s

Does your community have a Downtown rich with history? Do some of those downtown structures still resemble the days when that rich history was being made? Perhaps your community should consider one of Ohio’s newer revitalization programs, the Downtown Redevelopment District, as a mechanism to preserve that rich history while reinvigorating economic activity. 

Ohio’s Downtown Redevelopment District (DRD) program is a critical tool for municipalities in Ohio to use for redeveloping important historic structures. Downtown Redevelopment Districts work like Tax Increment Financing in that they capture new growth in property taxes in a defined 10-acre district continuous to a certified historic structure. Unlike a TIF that is generally restricted to public infrastructure improvements, a DRD can be used to redevelop the historic building, encourage economic development in commercial, mixed-use and residential areas, build public infrastructure or fund local economic development groups associated with the projects. Within a DRD, the municipality may also designate an Innovation District that support business incubators and accelerators, growing high-tech companies in the community.

DRD Process

DRD’s must be created, implemented and administered by a municipality. The applicable city or village council of a municipal corporation may adopt an ordinance creating a Downtown Redevelopment District and declaring improvements to parcels within the district for a public purpose and thereby exempt from taxation. The ordinance must specify all the following:

  • The boundary of the district, including specific permanent parcel numbers of each parcel within the district;
  • Identification of the parcel(s) within the district that include an historic building that is, or will be rehabilitated;
  • The proposed life of the district.

Additionally, the applicant municipality must:

  • Draft an Economic Development Plan for the district that includes all of the following:
    • A statement describing the principal purposes and goals to be served by creating the district;
    • An explanation of how the municipal corporation will collaborate with businesses and property owners within the district to develop strategies for achieving such purposes and goals;
    • A plan for using the service payments provided for in the Ohio Revised Code to promote economic development and job creation within the district;
    • If an Innovation District will be created within the DRD, strategies for achieving Innovation District goals must also be identified;
  • Provide required notices and public hearings in accordance with the Ohio Revised Code and the Ohio Development Services Agency.

DRD Compliance & Reporting Requirements

Once a DRD is created through a municipal ordinance, the municipality must: 1. file annual DRD status reports to the Ohio Development Services Agency, and 2. file an annual DTE 24 Form with the Ohio Department of Taxation.

To file the DRD Annual Status Report with Ohio Development Services Agency, there are several components of the District a municipality must report on. These components should be carefully accounted for and inventoried:

  • Track the progress of projects and services that occurred during the previous year;
  • Provide a summary of receipts for service payments in lieu of taxes (PILOTS);
  • List out expenditures of money from the funds created from the DRD;
  • Provide a description of projects and services financed with DRD funds;
  • Track and provide a quantitative summary of employment and private investment results of each project and service occurring within the district.

The Ohio Department of Taxation DTE 24 Form covers the Tax Incentive Program – Application for Real Property Tax Exemption and Remission. Important to filing this form are:

  • Two copies must be submitted to the County Auditor’s Office in the county where the property is located. The County Treasurer must complete a Treasurer’s Certificate, confirming taxes, penalties and interest are paid in full up to and including the current tax year for the applicant property. The deadline for filing with the county auditor is December 31;
  • The County Auditor must confirm findings of taxable value of the applicant property and provide a recommendation to the Ohio Department of Taxation on whether the application should be granted, partially granted, or denied;
  • Within the DTE 24 an applicant must know the section(s) of the Ohio Revised Code for which the exemption is being sought and explain the terms and details of the incentive;
  • A copy of the resolution/ordinance and school district approval (if required) granting the incentive must be included.

DRD Financial Models

The municipal corporation can exempt up to 70% of the increase in assessed value of the qualified parcels within the DRD for up to 10 years. In certain instances, the exemption may extend out to 30 years with the consent of the affected school district. The municipality may require owners receiving tax exemptions within the DRD to make PILOT payments (payments in lieu of taxes). These PILOT payments are then directed as financial resources back into the District to advance its Economic Development Plan objectives.

DRD’s can also choose to impose redevelopment charges on properties, which are imposed as a lien on the property and may be collected in the same manner as real property taxes by the County Auditor. Redevelopment charges are considered a covenant on the property and are transferrable and binding on future owners of the land. These redevelopment charges can be collected in a variety of manners including: as a fixed dollar amount; calculated on the basis of the assessed valuation of the property; or calculated on all or part of the profits, gross receipts or other revenues of a business operating on the property, including lease revenues.

Does your community have a downtown with redevelopment potential? Would the creation of a Downtown Redevelopment District transform your economic development efforts? Contact Dave Robinson at [email protected] or (614) 738-2109 and let us help your community!

Do you already have a Downtown Redevelopment District and need assistance filing your Annual Status Report with Ohio Development Services Agency or your DTE 24 Form with the Ohio Department of Taxation? The Montrose Group can assist with that too.

About the author