Ohios Incentive Programs

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Ohios Incentive Programs

• Megan Gordon-Lakey
• Regional Economic Development Director
• Region 1 Central Ohio
• Ohio Department of Development

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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

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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

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Variations on Rapid Outreach

• Contingency
• JRS Discretionary
• Targeted Industry Attraction
• 629 (Roadwork Development)

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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

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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

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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 ME 10 to 15 years for
  real estate
• Maximum amounts of 30 percent of project costs,
  or 1 million (subject to flexibility)
• Flexible repayment schedules

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Variations on 166

• RD Investment Loan
• Innovation Ohio Loan
• Regional 166 Loan
• Bonds
• Ohio Enterprise Bond Fund

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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

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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

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The Core 4 Local Incentives

• Community Reinvestment Area
• Enterprise Zone
• Tax Increment Financing
• Municipal Income Tax Credit

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Ohio Community Reinvestment Area Program (CRA)

• 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)

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Ohio Enterprise Zone Program

• 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

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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

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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.

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Tax Increment Financing (TIF)

• 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)

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Municipal Income Tax Credit

• ORC 718.15. A citymay 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 employeesand
  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.

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Incentive Study

• Came out May 4, 2009.
• In-depth evaluation of the Departments business
  incentives.
• The Department is using the studys results to
  determine what incentives are most helpful and
  responsive to companies and what incentives can
  be enhanced.
• The studys recommendations include ways to make
  the states 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 Ohios 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.

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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
  Ohios 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 Developments Web site at www.development.ohio.
  gov

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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

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Misc. FYIs and FAQs

• Ohio InSite
• http//www.ohiomeansbusiness.com/ohioinsite/
• Ohio wins Governors Cup 3rd Straight Year Site
  Selection Magazine
• Ohio Department of Developments 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

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Misc. FYIs and FAQs

• American Recovery and Reinvestment Act Federal
  Stimulus Bill
• Go To The Website!
• http//recovery.ohio.gov/
• Ohio Bipartisan Job Stimulus Plan State
  Stimulus
• 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

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Contact Information

• Megan Gordon-Lakey
• Regional Economic Development Director
• Region 1 Central Ohio
• Ohio Department of Development
• Tel. [phone]
• Email megan.gordon_at_development.ohio.gov