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ECONOMIC DEVELOPMENT INCENTIVES
CCAO Economic Development Symposium
June 25, 2015
Presentation by
Christiane W. Schmenk, Esq., Bricker & Eckler LLP
Erik Collins, Director Montgomery County Community & Economic Development
John Recker CEcD, Sr. Project Manager Regional Growth Partnership/JobsOhio
L. Rafael Rodriguez, Canton CIC Business Development Manager
TYPICAL COUNTY INCENTIVESChristiane Schmenk
Bricker & Eckler LLP
CCAO Economic Development Symposium l 2
Local Tax Credit or Exemption Programs
“Enterprise Zones” or “EZ”(O.R.C. 5709.61 et seq.)
“Community Reinvestment Areas” or “CRA” (O.R.C. 3735.65 et seq.)
“Tax Increment Financing Districts” or “TIF” (O.R.C. 5709.40, 5709.73 and 5709.78)
3CCAO Economic Development Symposium l
Enterprise Zones
4
Characteristics• Economic development tool to attract, retain and expand
businesses• Tax exemption on NEW eligible investments• Real and Personal property• Both municipalities and counties have EZ creation powers
Exemption Parameters• Municipality: (1) up to 75% and up to 10 years or (2) average
of 60% over term• Unincorporated area: (1) up to 60% and up to 10 years or
(2) average of 60% over term• Exception with school district approval (up to 100% for up to
15 years)
CCAO Economic Development Symposium l
Community Reinvestment Areas
5
Characteristics• Encourage revitalization of existing housing and development
of new structures (business/economic development incentive as well)
• Tax exemption on real property only (up to 100%)• Significant differences between pre/post 1994 CRAs
Creation• Local government conducts a Housing Survey (need at least
20% of properties in need of rehabilitation)• Legislation adopted that defines area, incentive rate and term• Post-’94 CRA incentives: Need prior ODSA approval
CCAO Economic Development Symposium l
Tax Increment Financing
6
Characteristics• Assists local governments to finance public
improvements to encourage development• Municipalities, counties and townships all have TIF
authority• Use property taxes that would have otherwise have
been paid by a property owner with respect to improvement to real property to pay for “public improvements” that directly benefit the property
• Payments in Lieu of Taxes (PILOTs)
CCAO Economic Development Symposium l
Tax Increment Financing
7
Tax Incentives• 75% for 10 years
- 14 days notice to school district- No school district approval required
• 100% for 30 years (with school district approval)- 45 days notice to school district- School district’s response must be delivered at least 14 days
prior adoption of the TIF legislation- School district must approve, disapprove, or conditionally
approve proposed exemption- Joint vocational school districts also compensated
CCAO Economic Development Symposium l
Local Special Purpose Economic Development Entities
JEDDS, JEDZ and MUDS
New Community Authorities (NCAs)
8CCAO Economic Development Symposium l
Joint Economic Development Districts
Contractual agreement among jurisdictions (municipalities, townships and counties) to create a new political subdivision charged with improving an identified district, typically in connection with an economic development initiative
Special-purpose districts formed to “facilitat[e] economic development to create or preserve jobs and employment opportunities and to improve the economic welfare of the people in the state and in the area of the contracting parties”
9CCAO Economic Development Symposium l
Joint Economic Development Districts
Benefits• Enable district-wide income tax and the provision of
municipal services to unincorporated areas• JEDDs replace antagonism of annexation with
collaborative spirit of cooperative agreement between municipalities and townships
• Typical scenario involves a township with prime development land and a municipality that is willing to offer services
10CCAO Economic Development Symposium l
Joint Economic Development Districts
Powers• Can levy income tax at rate no higher than
municipality’s rate (no vote required)• Can determine zoning and land-use regulations for
district• Can limit annexation within JEDD• Can limit granting of property tax abatements and
other tax incentives within JEDD• Coordination of services provided by municipality and
township
11CCAO Economic Development Symposium l
JEDZ/MUDS
JEDZ (“Joint Economic Development Zone)• Parties are only municipalities• No requirement of contiguity of contracting parties• Approval is not needed by property owners to be
included• Board of seven members (3 from each jurisdiction plus
Director)• Per last year’s HB 289, as of 1/1/15, no new JEDZ may
be formed (perception of unfairness); existing ones remain in effect but name changed to “Municipal Utility Districts” or “MUDS”
12CCAO Economic Development Symposium l
Municipal Utility Districts Two or more municipalities enter into agreements to
share costs of improvements for areas located in one or more of the parties in order to facilitate new or expanded utility services for economic development
“Utility services” means water, sewer, electric, or other utility services necessary to the public health, safety and welfare
Process:• Each party must hold public hearing first (30 days notice)• Must establish economic development plan for district• After legislation passed, electors of all parties must approve
13CCAO Economic Development Symposium l
New Community Authorities
General Characteristics• A separate governmental body organized to encourage
the orderly development of an economically sound new community
• Developer driven- All acreage must be owned or controlled, through leases of at
least 40 years’ duration, options, or contracts to purchase- Developer is represented on board- Large developments only—minimum 1,000 acres if not wholly
within municipality
14CCAO Economic Development Symposium l
New Community Authorities
Formation• Procedure for creation
- Developer files petition with the board of county commissioners- Developer must obtain approval of most populous city in the
county and the most populous city of an adjoining county if any portion of the proposed district is within five miles of that city
- Commissioners must hold hearing and must approve creation if district is conducive to the public health, safety, convenience, and welfare
15CCAO Economic Development Symposium l
Business Retention & Expansion
What is BRE: • Focus on keeping and growing existing businesses in
your community Why focus on BRE:
• IEDC estimates 80% of Job Creation comes from existing companies
• Business attraction is more difficult, expensive and time consuming than business retention
• Business retention helps to make existing business customers “cheerleaders” for the community
Customer-focused program that gives businesses a single point of contact for a wide range of services
Regional organization with 30 member jurisdictions across six counties
Outreach specialists work to connect businesses with over 100 community resource partners
BusinessFirst! BRE Program
BusinessFirst! BRE Program
BusinessFirst! strategy is multifaceted Outreach specialists have conducted over 6,500
BRE visits with regional companies since 2001
• BusinessFirst! also coordinates Business Roundtables for targeted industries and Community Business Walks
BusinessFirst! Advantages
Coordinated Approach to BRE• Multiple ED organizations work collaboratively to touch
major employers- Helps to prevent organizations from constantly bothering
companies
• Program helps augment capacity of smaller communities- Resource Partners act as an extension of outreach professional
to provide services to businesses- Business Walks volunteers can touch 40-50 small businesses in
a few hours
BusinessFirst! Website
Central portal for information about resources for businesses and entrepreneurs available 24/7
Includes a Tools for Business Success module with over 600 resources
• Allows companies to contact BF! outreach professional for additional assistance
Montgomery County ED/GE
The ED/GE Program is composed of two separate, but interrelated, funds
Economic Development (ED) provides grants to businesses ($2 million annually)
Government Equity (GE) Fund provides each community with the opportunity to profit from economic growth in the county
14 Cities, 5 Villages, and 9 Townships participate
ED/GE History 1989
• County Commissioners voted to increase sales tax by 1/2 percent to capitalize ED Fund
1992 • ED/GE program began with $5 million available
2000 & 2010• ED/GE Program was renewed by Montgomery County
Commissioners
Economic Development (ED) Competitive Grants ($2 million) 2 Funding Rounds (April and November) Project Requirements:
• Retain/create jobs • Communities apply on
behalf of companies• Support priority economic
sectors in the county • Leverage other
public/private resources• Discourage
interjurisdictional relocation
Government Equity (GE) A portion of increased tax revenues collected as a
result of economic growth of program members is shared with fellow program participants
Participants either contribute to or receive money from GE Fund
Includes a “settle-up” provision to ensure jurisdictions contribute more to GE than they receive in ED grants
Participation Requirements
Jurisdictions must participate in the GE component in order to be eligible for ED grants
Once a jurisdiction joins the program, they are required to remain for the duration of the 10 year contract
ED/GE Projects
Procter & Gamble Mixing Center• 2013 ED/GE Recipient (City of Union)• $89 million total project• $500,000 Grant• 1.8 Million SQ/FT Building• 800 Jobs
Source: mydaytondailynews.com
ED/GE Projects
Fuyao Glass America• 2013 ED/GE Recipient (City of Moraine)• $250 million total project• $700,000 Grant• Project reused vacant GM Plant (4 million SQ/FT) • 1,500 Jobs
Source: daytondailynews.com
City of Findlay & Findlay-Hancock Econ Dev
Utilizes its Community Reinvestment Area to develop Public-Private Partnerships
A business-friendly CRA
Abatement is always 100%
Term years are pre-determined in ordinance based on project size
Max = 100% for 10 years
Companies can estimate early on in development process what abatement will be
Confidentiality is not risked by having to go publicly to city council or school board
Let’s Make a Deal
“This CRA will save you $20M, how about reinvesting some of that savings into redeveloping downtown….”
Significant projects – Findlay asks the company to develop a separate CRA “side-agreement” to reinvest approx 25% of its savings into infrastructure that supports the project.
Win – Win - Win
Company sees a direct benefit on tax $$ Company & City receive positive PR City is able to leverage other funds and make larger
infrastructure investments than if it relied solely on its own funds.
Successful Findlay CRA/3P Projects
Marathon Petroleum - $5M private contribution to redevelop downtown, leveraging over $3M in other funds
McLane - $500k contribution for roadwork & $100k for workforce dev, leveraging $637k
Current DC project - $800k private contribution, leveraging over $1.5M
Strong Cooperation
Findlay Hancock Co Alliance – Economic Dev City of Findlay Company leadership JobsOhio Ohio Development Services Agency Regional Growth Partnership Hancock County Blanchard Valley Port Authority
CANTON OHIOCreating a Place for Business
L. Rafael Rodriguez, Canton CIC Business Development Manager
CANTON CIC
ECONOMIC DEVELOPMENT:
Relationship Driven Evolving, Engaging, Proactive Innovative Outward Focused
Economic Development
Relationship Driven
Board Liaisons
Multi Level Relationships Public/Private Sector Neighboring Communities Formal and Informal
Economic Development
Evolving, Engaging, ProactiveEconomic Growth Initiative
Policies – Local, State & Federal
Asset Inventory Brownfields Business Trends Politics –
Enhancers/Detractors
Economic Development
InnovativeAEP and BWC Referrals
Equifinality B2B Programs and Resources Business Opportunities
Economic Development
Outward Focus
HOF Village Session
“Not About Me” Business, Client Priority Enables Rapport Enhances Partnerships
Economic Development
Dynamic economic and business development demand: ideas beyond the comfort zonevisualization of distant opportunities challenges to the “Status Quo”
Anything less negates
the significance in the
title, “Development”
PUBLIC SECTOR BUSINESS DEVELOPMENT
Rapport Driven
Decision to Stay in City
Genuine interest Not an expert Manage expectations Deliver the good and the bad
PUBLIC SECTOR BUSINESS DEVELOPMENT
Networking
Business Circle
Networking is not socializing Two way networking:
• Give• Receive
Relax and have fun
PUBLIC SECTOR BUSINESS DEVELOPMENT
Business Advocate
Personal Representation
Agree to disagree In person introduction Engage in the Process to Believe in Your Advocacy Avoid conflicts of interest
PUBLIC SECTOR BUSINESS DEVELOPMENT
Organize/Matchmaker
One contract two opportunities
Business Information Sessions Business Networks/Circles Matchmakers Stake Holder Meetings
Business Development is about creating relationships based on respect and transparency; where shared information becomes the currency that drives beneficial development to the public and private sector.
PUBLIC SECTOR BUSINESS DEVELOPMENT
CANTON CIC
The dual roles of Canton CIC, Economic and Business Development serve the local business community by delivering opportunities for growth while providing incentives for attraction, retention and expansion of economic development opportunities.
ECONOMIC DEVELOPMENT INCENTIVES
SUMMARY
Every county should have basic incentive programs in place so you can attract new businesses, incentivize growth of current businesses and retain current companies
Unique local incentives will set you apart and give business a reason to locate and grow in your community