Six Steps for Creating Ohio Downtown Redevelopment Districts

Six Steps for Creating Ohio Downtown Redevelopment Districts DAVID J. ROBINSON, THE MONTROSE GROUP, LLC

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Six Steps for Creating Downtown Redevelopment Districts

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The Montrose Group, LLC Team

The Montrose Group, LLC Team

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https://www.palgrave.com/page/detail/economic-development-from-the-state-and-local-perspective-david-j-robinson/?isb=9781137320674

https://www.palgrave.com/page/detail/economic-development-from-the-state-and-local-perspective-david-j-robinson/?isb=9781137320674


• Federal Historic Preservation Tax Credit create more than 2 M jobs and $90 Bin investment

• Rehab construction creates 50 % more jobs than new build construction

• Historic preservation revives neighborhoods, enhance environmental quality and reduces sprawl

• Historic preservation projects save 50-80 % in infrastructure costs compared to new suburban development

• Ohio Historic Preservation Tax Credit

• For every $1 million in tax credit allocated by the state $8 million of construction spending and 80 construction jobs are created

• $32 M in total economic impact is created by this $1 million in state investment

Value of historic preservation

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Six Steps for Creating Downtown Redevelopment District

• Millennials

• Value mixed use development

• Older, historic structures often part of Downtowns designed for today’s Millennials

Value of Historic Preservation

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•Vehicle to redevelop and maintain public and private sector buildings

Value of Historic Preservation

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Types of Possible Historic Structures within a DRD :

• Historic Theaters

• Historic Courthouses

• Historic City Hall

• Historic Museums

• Historic Office Buildings


Historic Preservation

Certification or Identification

DRD and Innovation

District Economic

Development Plan

Adopt a DRD Financial Model

Build a DRD Innovation

District

DRD District Ordinance &

Public Hearing

DRD Agreements & Annual Reporting

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Six Step DRD Process


• National Register of Historic Places

• Contributes to a National Register Historic District

• National Park Service Certified Historic District

• Certified Local Government Historic District

DRD Historic Certification Process

• Approved plan for historic facility renovation to keep historic nature of the property

DRD Historic Facility Renovation

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•4000 Ohio structures and sites on National Registry of Historic Places

•Over 60 local governments have a historic certification process

•Threshold Questions

• Is your property at least 50 years old ?

•Does it still have historical integrity ?

• Is it significant in local, state, or national history ?

DRD Historic

Certification Process


• Local governments can be certified to make historic site certifications

• Specific process and guidelines required

• Model Local Ordinance

Certified Local Government Process

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Six Steps to Creating Downtown Redevelopment Districts

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Ohio Downtown Redevelopment Districts

• Historic Preservation Redevelopment

• Capture property tax gain in a 10 acre district continuous to a certified historic structure preparing for redevelopment

• DRD Funding used for

• Historic structure redevelopment

• Funding for historic preservation CIC

• Public infrastructure

• Tech Corridors


DRD Historic Preservation Criteria

• The property is associated with events that have made a significant contribution to the broad patterns of our history;

• The property is associated with the life of a person or people important in our past at the local, state, or national level.

• The property has the distinctive characteristics of a type, period, or method of construction, represents the work of a master, possesses high artistic values, or represents a significant and distinguishable entity whose components may lack individual distinction (e.g. a historic district).

• The property has a distinctive history

• The property is in its original condition

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LEARN

• The first step to create a DRD Economic development plan is to define exactly who a community is through research from primary data sources to determine the assets and liabilities of a community

• Elements

• identify area historic structures

• research potential project ideas around historic structures including potential for innovation districts in the DRD based upon a community economic development SWOT analysis

• define one or more DRD’s up to 10 acres in a municipality

• determine speed and availability of broadband service in identified DRD

• Identify costs of project including historic and non-historic building rehab and infrastructure

• develop funding models to address various costs through DRD PILOTs, redevelopment charges and other resources

• outline local government process for creating DRD

Fundamentals of an DRD Economic Development Plan


LISTEN

• The second step is to listen to community, political and business leaders and the public for what economic direction the community wants to go.

• Elements

• one on one interviews

• focus groups

• surveys

• public meetings

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DO

• Finally, mixing who a community is with what they want to become needs to turn into a concrete action plan to develop high-wage jobs and capital investment.

• Elements

• Recommend a land use and site development plan to determine the building, operational and infrastructure costs and the zoning for specific sites within the DRD

• Recommend DRD tax incentive and redevelopment charges that will cover the building, operational and infrastructure costs;

• Industry market research and marketing plan for the DRD

• DRD PILOTs and redevelopment charge agreements

• Identify additional sources of public and private revenue derived from long and short range planning of community goals

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JobsOhio Revitalization

Program

Historic Preservation Tax Credits

New Markets Tax Credits

Downtown Redevelopment and Innovation

District

State of Ohio Capital Bill

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DRD Financial Model: The Capital Stack


DRD Building, Operational &

Infrastructure Costs

DRD Funding from PILOTs, Redevelopment Charges & Other Public

and Private Sources

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DRD Financial Model


Building Investment

Increase in Building

Value

Increase in Property

Tax

70% new Property

Tax to DRD

DRD Uses of Funds

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DRD Revenue Generation


DRD Costs/PILOTs Funding Uses

•Rehab of historic structures (grants & loans)

•Rehab of non-historic structures (loans)

•Fund SIDs, CICs and not for profits organized for the purpose of redeveloping historic buildings and districts (up to 20% of DRD funds)

•Public Infrastructure

•Public roads and highways; water and sewer lines; environmental remediation; land acquisition, including acquisition in aid of industry, commerce, distribution, or research; demolition, including demolition on private property when determined necessary for economic development purposes; stormwater and flood remediation projects, including on private property when determined necessary for public health, safety, and welfare; provision of gas, electric, and communications service facilities, including gas or electric service facilities owned by nongovernmental entities if necessary for economic development purposes; and enhancement of public waterways through improvements that allow for greater public access

• Innovation Districts can finance with grants & loans tech companies

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DRD Tax Exemption

• Modeled after Ohio Tax Increment Financing Law

• Tax exemption or “abatement” used to create Payments in Lieu of Taxes following TIF law rules

• Does not permit diversion of property taxes from community mental health, seniors, county hospital, alcohol/drug addiction, mental health, library, children, zoo, park, joint recreation, public assistance, health & social and general health district services and facilities

• Challenge of existing TIF, Enterprise Zone or CRA tax abatement

DRD Redevelopment Charge

• Owner of Parcel and Municipality enter into agreement providing for municipal redevelopment charge on property in addition to the payments in lieu of taxes

• Charge may be fixed dollar or various amount based upon assessed valuation, revenues or profits of the business

• Charges runs with the land

• Funds used in same manner as Payments in Lieu of Taxes

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DRD Tax Exemption Process

Six Steps to Creating Downtown Redevelopment Districts

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• Past law prohibited a DRD from including any parcel that has ever been exempted from taxation as part of a TIF or DRD. The bill allows for the inclusion of previously exempt parcels so long as they are not tax-exempt on the effective date of the DRD ordinance

• SB 235, 131st Ohio General Assembly, amendment permits a DRD to include property that was previously part of a TIF district

DRD TIF Amendment


JobsOhio Revitalization Program Loan and Grant Fund

• Challenging redevelopment site with 20 or more jobs created

• Targeted industry sectors

• Capital investment

• Businesses, non-profits or local governments eligible

• Business and financial plan for site

• Abandoned or under-utilized contiguous property eligible

• Eligible costs include: demolition; environmental remediation; building renovation; asbestos and lead paint abatement; removal and disposal of universal and construction waste; site preparation; infrastructure; and environmental testing and lab fees; remediation projects

• For environmental remediation loans and grants, a No Further Action letter issued by an Ohio Certified Professional is typically required for projects where long-term engineering controls are necessary on the site.

• May require a Covenant Not to Sue from the Ohio Environmental Protection Agency, depending on the project and site characteristics.

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New Market Tax Credit

• 39% Federal Tax Credit Over 7 Years

• $1M Ohio Tax Credit Paired with Federal Credit

• Real Estate Investments in Poor Communities

• Complex Transactions

• Retail, Office & Manufacturing Eligible

• Rural opportunities

The Basics

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Historic Preservation Tax Credit

• 20% Credit for Certified Rehab of Certified Historic Structures

• 10% Credit for Rehab of Non-historic, Non-Residential Buildings Built Before 1936

• 25% Ohio Historic Preservation State Tax Credit

• Structure not a Bridge, Ship, Railroad Car ore Dam

• Available for Reuse for non-home Residential , Commercial, Industrial or Agricultural

• Profit Producing Property, Substantial Rehab & 5 Year Ownership (federal credit only)

• Round 18 has $75m in applications

The Basics

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State of Ohio Capital Budget Community Project

• $150-$200 M

• Every two years

• Capital in nature

• Connection to state government agency

• Economic development, arts, historic, sports, infrastructure, health care

SB 310 Highlights

• $1.25 B in Capital Bill Community Project Requests

• $156M in Capital Bill Community Project Awards compared to $166M last time

• 358 Capital Bill Community Project Awards Compared to 280 last time

• $608,000 average award in Capital Bill Community Projects compared to $346,000 last time

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Overlay of Traditional Municipal Financings

• Additional municipal financing of the projects and services may be provided by any methods that the municipal corporation and the economic development plan may otherwise use for financing such projects and services; including:

• Port Authority or other governmental financing and credit enhancements

• Cooperative agreements with other governments

• Overlay of Private Funding

• If the municipal corporation issues bonds or notes to finance such projects and services and pledges money from the municipal downtown redevelopment district fund to pay the interest on and principal of the bonds or notes, the bonds or notes are not subject to Chapter 133. of the Revised Code.

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Overlay of Traditional Municipal and Private Financing


Innovation Districts

• Within DRD

• 100 gigabits per second of high-speed broadband service

• Municipal designation

• Tech district supporting business incubators and accelerators

• Identical tax incentive and term as DRD

• Provide loans/grants to tech companies within Innovation District

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Innovation District

• 100 gigibitbroadband speed

• Ohio OARnetNetwork

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https://www.oar.net/sites/oar.net/files/maps/Map_100gbps.pdf

https://www.oar.net/sites/oar.net/files/maps/Map_100gbps.pdf


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Cluster Strategy to Determine Industry

Focus

Build a capital access system

Recruit early stage company advisors

Develop and fund a STEM workforce

development program

Develop and fund a broadband network

Negotiate a Buy Local Campaign

Develop and fund operation of

incubator/research park

Innovation District: Building a Technology Ecosystem


• Describe the area included in the district

• The number of years the DRD will exist

• An economic development plan,

• Confirmation the territory of a DRD contain at least one historic building and

• Authorize the designation of an innovation district within a new or existing DRD if the district includes an area equipped with a high-speed broadband network capable of download speeds of at least 100 gigabits per second,

• Establish a DRD special fund for the deposit and dispersal of service payments and redevelopment charges, and

• Create a mechanism for the municipal corporation to file a DRD an annual report to the Development Services Agency (DSA) on the progress of DRD projects and services and the expenditure of money from the district’s special fund.

DRD Municipal Ordinance

• The municipal corporation to hold a public hearing on the proposed DRD ordinance and give notice of the hearing to each property owner in the district.

DRD Public Hearing

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•DRD PILOTs and Other Revenue Sharing Agreements

•School District

•Other Local Governments Connected to Property Tax

•DRD Redevelopment Charge Agreements

•Between Local Property Owners and Municipality

•Covenant Running with Land

•Unpaid redevelopment charges can be certified to County Auditor for collection

•Redevelopment Charges can be included as part of Lease Rate

•Funding Award Agreements

• JobsOhio

•Historic Preservation Tax Credits

•New Market Tax Credits

•State Capital Bill

DRD Agreements

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• The progress of the projects and services provided in the DRD for each year that an exemption remains in effect, including a summary of the receipts from service payments in lieu of taxes;

• Expenditures of money from the municipal downtown redevelopment district fund;

• A description of the projects and services financed with such expenditures;

• A quantitative summary of changes in employment and private investment resulting from each project and service.

DRD Annual Reporting Requirements

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Six DRD Conclusions

• Valuable redevelopment tool for certified historic public OR private sector buildings

• Designed for addressing in part Ohio’s historic courthouse’s challenge

• Works best with planned development and investment around a certified historic structure

• Works in small communities and large

• County governments and the private sector need to work with municipalities to create DRDs

• DRDs will likely be a piece not the entire historic preservation financing solutions

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Conclusion

•Questions??

•Contact

•[email protected]

•[email protected]

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Documents

Six Steps for Creating Ohio Downtown Redevelopment Districts