The Ohio Jobs Alliance Executive Director Nate Green testified in support of Ohio House Bill 123 that would provide the first substantive reform of Ohio’s tax abatement laws since 1994. 

A region’s property tax rates can directly impact their ability to retain and attract industrial, logistics, data centers and other capital-intensive corporate site location projects that can produce thousands of jobs in a post COVID 19 marketplaces.  To address high property tax rates, a majority of states across the United States permit local cities, townships and counties to adopt property tax abatements tied to capital investment and payroll creation.  One of those programs is the Ohio Community Reinvestment Area (CRA) program, which is an economic development tool administered by municipal and county government that provides real property tax exemptions for property owners who renovate existing or construct new buildings. CRAs are areas of land in which property owners can receive tax incentives for investing in real property improvements.  The program is delineated into two distinct categories, those created prior to July 1994 (“pre-1994”) and those created after the law changes went into effect after July 1994.

Property tax abatement programs are a prime tool to retain and attract manufacturing and logistics jobs to Ohio.  Manufacturing and logistics are hot growth markets in today’s COVID 19 economy launching what is a second Industrial Revolution.  Logistics is a booming industry driven by the growth of the $340 B e-commerce industry expected to grow to $476 B by 2024 according to CBRE. Manufacturers in the United States account for 11.39% of the total output in the economy, employing 8.51% of the workforce according to the National Association of Manufacturers. 

Nate Green, Executive Director of the Jobs Alliance, testified before the Ohio House of Representatives Ways and Means Committee to the fact that Ohio property tax rates are higher than competitors of common market size such as North Carolina and Georgia.  Mr. Green called on Ohio to reform its tax abatement program to streamline the process and encourage economic investment.  HB 123, sponsored by Representatives’ Mark Frazier and Jon Cross, will streamline the process of creating a new CRA by eliminating the requirement that the Ohio Development Services Agency approve a proposed CRA. The legislation would require DSA instead to create a model CRA exemption agreement between both the owners of a commercial or industrial project and the local authorities as well as establish the terms of such an agreement. 

The legislation would increase from 50% to 75% the percentage of a proposed CRA that a municipality or county is able to approve without obtaining permission from a school district encompassing a project. As well as a number of other changes, which I have outlined below.

  • Removes the requirement that municipalities share municipal income tax revenue generated by new employees at a large CRA commercial or industrial project with the school district encompassing that project;
  • Reduces, from five to two years, the amount of time required to transpire between the discontinuation of a CRA commercial or industrial project, and when the project’s owner may obtain an enterprise zone tax exemption or another CRA exemption;
  • Removes the requirement that the owner of a CRA commercial or industrial project notify the local authority in advance of relocating the site of the project to another local authority’s CRA;
  • Modifies the recipients of and the information appearing in a required annual report issued by local authorities detailing CRA commercial and industrial projects;
  • Eliminates fees paid by CRA commercial and industrial project owners to the local authority and DSA to cover the cost of administering such projects; and
  • Requires DSA to publish on its website the locations of each CRA, as well as all commercial and industrial project exemption agreements.

House Bill 123 is pending in the Ohio House of Representatives Ways and Means Committee.  Opponents of HB 123 provided testimony to the Ohio House Ways and Means Committee driven by the misguide notion that tax abatements “cost school districts revenue.”  The reality is without the tax abatement this is no new investment and no tax revenues to flow to local governments and school districts.  Supporters of HB 123 are urged to testify either in person or in writing in support of HB 123. 

Please contact Dave Robinson at the Montrose Group at drobinson@montrosegroupllc.com if you have an interest in supporting HB 123.