Economic Development Tools · 12/29/2015 6 Provisions of the JEDD Contract (the “Contract”) R.C. Sections 715.74, 715.79, 715.80 (Contd.) 4.3 Duties of Board of Directors

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Presented by:John Albers

88 North Fifth St. Columbus, Ohio 43215 (614) 464‐4414 (ph) (614) 464‐0604 (f)[email protected]

Presented to the Ohio Township Association2016 Annual Winter Conference

Wednesday, January 27, 2015 (2:30 – 3:45 p.m.)Friday, January 29, 2015 (10:15 – 11:15 a.m.)

Economic Development ToolsJoint Economic Development Districts (JEDDs); Cooperative Economic

Development Agreements (CEDAs); Annexation Agreements; Compensation Agreements; Tax Increment Financing (TIFs); Enterprise

Zones; Community Improvement Corporations (CICs)

©2016 Albers & Albers ‐ All Rights Reserved2

The information contained in this presentation should not be considered legal advice. Please

consult your legal counsel to ensure compliance with the law.

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Which Entities May Establish a JEDD?

One or more municipal corporations and one or more townships. (Counties before June 30, 2009; contracting parties creating a JEDD under R.C. 715.70 or 715.71 prior to November 15, 1995.

1.1 Excluded as a Party

School districts, counties after June 30, 2009, corporations, and individuals cannot be parties to a JEDD Contract.

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Which Entities May Establish a JEDD? (Contd.)

1.2 Contiguity

No more than one intervening township or municipality (or county, if a county is a party to the contract). R.C. 715.72(C)(1).

1.3 Constitutionality

In Desenco, Inc. v. City of Akron, (1999) 84 Ohio St. 3d 535, the Ohio Supreme Court rejected four constitutional challenges.

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Purpose of a JEDD

2.1 “… to facilitate economic development to create or preserve jobs and employment opportunities and to improve the economic welfare of the people in this state and in the area of the contracting parties.” ORC 715.72(C).


Territory to Be Included in a JEDD R.C. 715.73

3.1 No electors may reside within territory of the JEDD.

3.2 Territory zoned for residential use may now be included within a JEDD district, but the income of an individual who resides in the JEDD district shall not be subject to such income tax unless the income is received for personal services performed in the district. (See R.C. 715.74).


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Territory to Be Included In a JEDD R.C. 715.73(Contd.)

3.3 The JEDD may include all or a part of the territory of the contracting parties.


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Provisions of the JEDD Contract (the “Contract”)R.C. Sections 715.74, 715.79, 715.80

4.1 Annexation

Annexation of territory within the JEDD District is prohibited for 3 years, or longer if the parties agree Annexation can occur at any time with the consent of township. R.C. 715.79(A). No contracting party is divested or relieved of its rights or obligations under the contract creating a JEDD because of annexation, merger, or consolidation. R.C. 715.79(C).

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Provisions of the JEDD Contract (the “Contract”)R.C. Sections 715.74, 715.79, 715.80 (Contd.)

4.2 Contribution of Parties, Share Tax Revenue, Joint Construction of Projects.

The contract shall state the amount of nature of

the contribution.

May provide for sharing of costs of the operation of and improvements for the district.

Contribution may be in any form to which the contracting parties agree and may include, but are not limited to, the provision of services, money, real or personal property, facilities or equipment.



4.2 Contribution of Parties, Share Tax Revenue, Joint Construction of Projects.

Contract may provide for the contracting parties to share revenue from taxes levied on property.

Contract shall specify and provide for new, expanded or additional services, facilities, or improvements.


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4.3 Duties of Board of Directors

Contract shall enumerate the specific powers, duties and functions of the Board of Directors of the district. R.C. 715.74(B).

4.4 Income Tax, Sharing of Income Tax

Will apply against the income earned by persons working within the district and on the net profits of businesses located in the district.



4.4 Income Tax, Sharing of Income Tax

Income tax shall be used for purposes of the district or any portion of the district in which the contract authorizes an income tax, and for the purposes of the contracting parties pursuant to the contract. R.C. 715.74(C)(1).

4.4.1 Rate of income tax shall be no higher than the highest rate being levied by municipal corporations that is a contracting party. R.C. 715.74(C)(1).


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4.4.5 2015 Ohio AG Lexis 2

4.4.5.2 Income tax levied in a JEDD may not exempt the income of persons working in the JEDD or the net profits of businesses operating in the JEDD. R.C. 715.74(C)(1).


Procedure to Create JEDD District. R.C. Sections 715.75, 715.76, 715.77, 715.771

5.1 Each contracting party holds a separate hearing

5.2 Each party provides thirty days notice

5.3 Documents available for public inspection

5.3.1 Copy of JEDD Contract

5.3.2 Description of area to be included, map

5.3.3 Economic development plan

See R.C. 715.75


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Procedure to Create JEDD District. R.C. Sections 715.75, 715.76, 715.77, 715.771 (Contd.)

5.4 A copy of the proposed JEDD Contract must be delivered to county commissioners of each county in which is located a contracting party before it is signed.

5.5 After hearings of all parties are completed, each party may adopt an ordinance or resolution approving the contract. Upon adoption, parties shall deliver to the county commissioners the required documents.

See R.C. 715.76



5.7 If all documents are not filed as required, or if the county determines that the JEDD contract was not entered into freely and without duress or coercion, it may adopt a resolution disapproving the creation of the JEDD district. R.C. 715.76.

5.8 Unless it makes a determination disapproving the creation of the district, the county commissioners of each county in which is located a contracting party, within 30 days, must adopt a resolution approving the creation of the district. R.C. 715.77(A)(2).


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5.9 Thereafter, the matter must be submitted to a vote of the electorate of the township.

5.9.1 Unanimous vote by the board of township trustees.

5.9.2 JEDD is proposed at the request of a majority of the owners of land.

5.9.3 Territory to be included in proposed JEDD is zoned in a manner appropriate to the function of the proposed district.


When Can You Use JEDDs? 5 Most Important Factors

1. Where is the Property Located?

Easily Annexable?

See Figures 1 & 2


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Municipality

TownshipFigure 1 –

Easily Annexable


Municipality

Township

Route 1

U.S. Rt. 66

JEDD District

(Industrial Park)

JEDD District(Interchange Area)

1 mile

Figure 2

Not Easily Annexable

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2. Are Businesses Located in the District?

Future Development Only?


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3. Does Business/Property Owner Consent to be

Included in the JEDD?

Leverage: Water, Sewer, Tax Abatement, TIFs, Subdivision Approval, Other Amenities


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When Can You Use JEDDs?5 Most Important Factors

4. What Items are Needed from Municipality and Township to make District Development Ready?

Fire, EMS, Police, Water, Sewer,

Tax Abatement?

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5. Will Income Tax Make Property Less

Competitive?


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Comparative Analysis:

Cooperative Economic Development Agreement (CEDA)

Annexation Agreements (AA)

Prepared by:John AlbersEric Luckage

88 North Fifth St. Columbus, Ohio 43215 (614) 464-4414 (ph) (614) 464-0604 (f)

[email protected] [email protected]

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PurposeCEDA

ORC 701.07

Annex. AgreementORC 709.192

To achieve cooperative agreements related to development, annexation, and other purposes, between a township and municipality.

To achieve cooperative agreements related to development, annexation, and other purposes, between a township and municipality.

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Parties Who May Enter into Agreement

CEDAORC 701.07


1. Municipal Corp(s).

2. Township(s)

3. County/Counties with approval of 1&2

4. Person or private entity

5. State or State Agency –upon approval of Governor and other parties to agreement

1. Municipal Corp.

2. Township(s)

3. State – only to promote economic development or provide state functions or services, and only with approval of Director of Development and other parties to agreement.

4. Board of County Commissioners upon approval of parties to contract.

5. Any person – upon approval of parties to contract.

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Contiguity of the PartiesCEDA

ORC 701.07


6. No contiguity requirement (usually between township and municipality adjacent to each other).

6. No contiguity requirement (usually between township and municipality adjacent to each other).


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Territory Within Area(s); Limit(s); Contiguity

CEDAORC 701.07


1. Area may be located within one or more of the contracting parties.

2. Electors may reside in the Area.

3. If more than one Area, no requirement that they be contiguous.

1. Area may be located within one or more of the contracting parties.

2. Electors may reside in the Area.

3. If more than one Area, no requirement that they be contiguous.


Terms of AgreementCEDA

ORC 701.07


1. CEDA Area identified

2. Provision of Joint Services/Permanent Improvements in incorporated or unincorporated areas

3. Provision of services/improvements by municipality in unincorporated areas

4. Provision of services/improvements by twp. Or county in municipality

5. Service fees from twp/county to municipality

1. Identify the territory to be annexed

2. Areas and periods of time during which annexation is prohibited

3. Land use planning matters

4. Provision of joint services and permanent improvements within incorporated and unincorporated areas

5. Provision of services and improvements by municipal corp. in unincorporated areas.


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Terms of Agreement (Contd.)CEDA

ORC 701.07


6. Service fees from municipality to twp/county.

7. Issuance of notes and bonds by either party for purposes in the CEDA.

8. Municipal industrial development notes, bonds, debt obligations for project in unincorporated area.

9. Areas and periods of time during which annexation is prohibited.

6. Provision of services and improvements by twp. in territory of municipal corp.

7. Payment of service fees to municipal corp. by twp.

8. Payment of service fees to twp. by municipal corp.

9. Reallocation of minimum mandated levies established under Tax Levy Law between a municipal corp. and a twp. in areas annexed after the bill’s effective date.



ORC 701.07

Annex. Agreement

ORC 709.192

10. Public service, facility or improvement agreements with landowners or developers.

11. Apply tax abatement statutes in CEDA area.

12. Change twp. boundaries under ORC 503 to exclude annexed area from old twp. and provide services in area.

10. Issuance of notes, bonds and other obligations by municipal corp. or twp. for purposes authorized under an annexation agreement.

11. Agreements by municipal corp. and twp., with owners or developers of land to be annexed concerning provision of services, facilities, and permanent improvements.

12. Application of tax abatement statutes within the territory covered by the annexation agreement subsequent to its execution.


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ORC 701.07


13. Municipality may earmark to its general fund, a portion of utility charges collected from outside municipality but in CEDA – if the CEDA does not cover annexation matters.

14. Payments in lieu of taxes to a twp. from a municipality.

15. Any other matter regarding annexation territory or development.

16. No Board of Directors

appointed.

13. Exclusion of newly annexed territory from the original twp. (conforming boundaries) and provision of services to that territory.

14. Payments in lieu of taxes, if any, to a twp. by a municipal corp.

15. Any other matter concerning annexation or development of publicly or privately owned territory.

16. No Board of Directors appointed.


Public Approval / Vote on Establishment

CEDAORC 701.07


1. No vote required.

2. Public Hearing required before entering agreement. Copies of agreement open to public for 30 days prior to hearing.

1. No vote or public hearing required.

2. Only municipal ordinance and twp. resolution necessary.


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Changes/AmendmentsCEDA

ORC 701.07


CEDA may be amended at any time in same manner as initially authorized.

May be amended at any time in same manner as initially authorized.


Can Tax Exemptions be Granted Within the Area?

CEDAORC 701.07


No prohibition; can be in agreement.

No prohibition; can be in agreement.


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Tax Increment Financing (TIFs)Overview

Tax Increment Financing (TIF) is an economic development mechanism available to local governments in Ohio to finances public infrastructure improvements and, in certain circumstances, residential and rehabilitation.

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Tax Increment Financing (TIFs) (Contd.)For Whom

TIFs are implemented at the local level and may be created by a township, municipality or county.


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Tax Increment Financing (TIFs) (Contd.)Benefits

Payments derived from the increased assessed value of any improvement to real property beyond that amount directed towards a separate fund to finances the construction of public infrastructure defined within the TIF legislation.


Tax Increment Financing (TIFs) (Contd.)How to Establish a TIF

Local jurisdictions seeking to establish a TIF project must enact legislation that (a) designates the parcel(s) to be exempted from taxation, (b) declares improvements to private property within the specified area as serving a public purpose, (c) delineates the public infrastructure improvements to be made that will directly benefit the parcel and (d) specifies the equivalent funds to be created for those redirected monies. Only those public infrastructure improvements directly serving the increased demand arising from the real property improvements to the parcel(s) or an Incentive District are eligible for TIF financing.


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Tax Increment Financing (TIFs) (Contd.)

2Types Parcel Specific

Incentive District


Tax Increment Financing (TIFs) (Contd.)

Tax Benefits 75% for 10 years

Longer with school board approval

(Most 100% for 30 years)


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Compensation Agreements5709.82 Compensating school district for revenues

lost due to tax exemptions

The legislative authority of any political subdivision that has acted to grant an exemption from taxation for real or tangible personal property may negotiate with the board of education of each city, local, exempted village, or joint vocational school district or other taxing unit within the territory of which the exempted property is located, and enter into an agreement whereby the school district or taxing unit is compensated for tax revenue foregone by the school district or taxing unit as a result of the exemption.

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Ohio Enterprise Zone Program

Overview The Ohio Enterprise Zone Program is an economic development tool administered by municipal and county governments that provides real and personal property tax exemptions to businesses making investments in Ohio.


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Ohio Enterprise Zone Program (Contd.)For Whom

Enterprise zones are designated areas of land in which businesses can receive tax incentives in the form of tax exemptions on eligible new investment. The Enterprise Zone Program can provide tax exemptions for a portion of the value of new real and personal property investment (when that personal property is still taxable) when the investment is made in conjunction with a project that includes job creation. Existing land values and existing building values are not eligible (except as noted within rare circumstances).


Ohio Enterprise Zone Program (Contd.)When is Township Approval Needed

If the county is designating an unincorporated area as an enterprise zone. See R.C. 5709.63(A)

If an enterprise zone is submitting a proposal to be in a designated enterprise zone, the county needs township approval in order to do anything listed in 5709.63(B).


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Ohio Enterprise Zone Program (Contd.)

When is Township Approval Needed

If the county is designating an unincorporated area as an urban job or enterprise zone. See 5709.632(A)(2)

In order for the county to enter into an agreement with an enterprise to do any of the incentives listed in 5709.632(C)


Community Improvement Corporations (CICs) (R.C. Chapters 1702, 1724)

What is it?

Quasi Public Entity

Formed by Township


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Community Improvement Corporations (CICs) (R.C. Chapters 1702, 1724)(Contd.)

Purpose?

Undertake economic development projects if designated as agent of Township for industrial, commercial, distribution and research development

Negotiate incentive deals (buy land, obtain tax incentives/abatements. Make development ready.)


Community Improvement Corporations (CICs) (R.C. Chapters 1702, 1724)(Contd.)

Powers?

Borrow money, issue debt

Purchase real and personal property Assume liabilities
