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Local Business Tax Incentives
Ohio Tax Reform
In 2005, Ohio's business and elected leaders collaborated on the most sweeping tax reform in the state's history. The vision was simple but compelling - overhaul the tax code so Ohio companies could become more competitive globally, invest more in our state and, thereby, fuel our economic growth.
All evidence supports that Ohio's tax reform is working as planned. Taxes were eliminated on capital investment, inventory, sales of goods and services to customers outside of Ohio, as were corporate income and franchise taxes to help make Ohio the ideal location to build a successful global business. In addition, personal income tax was reduced by 21% helping Ohio citizens afford an even more fulfilling life.
Tax reform has accelerated business investment and an ever strengthening spirit of accomplishment to create job growth in Ohio. For the third straight year, Site Selection magazine has awarded Ohio the Governor's Cup for the most new and expanded large-scale capital projects with 503, edging out second place Texas which finished with 497 followed by Michigan (296), Pennsylvania (290) and North Carolina (245).
This marks the seventh time Ohio has been awarded the Governor’s Cup, receiving the award in 1993, 1994, 1995, 2003, 2006 and 2007.
Enterprise Zone Program
The Enterprise Zone Program is a tax exemption program which provides for abatement of real and tangible personal property taxes, for new improvements to land and structures, and for new machinery and equipment. Erie County, the City of Sandusky, the City of Huron, and the City of Vermilion all utilize the Enterprise Zone Program. All of Erie County with the exception of Bay View and Florence Township are within the countrywide Enterprise Zone.
In municipalities, up to a 75% exemption of real property improvements and/or new tangible personal property can be granted for up to 10 years. In unincorporated areas, incentives can be up to a 60% exemption of the value of new real and/or personal property for up to 10 years. The exemption level can be exceeded under special circumstances with school board approval.
All Enterprise Zone exemptions are granted on a project specific basis and agreements are negotiated between a city or county and the business via an Enterprise Zone Negotiating Committee. The committee is comprised of city, township, county and/or school board officials. The Enterprise Zone Agreement spells out the exemption percentages, time limits, and contains other requirements dealing with job creation, job retention, and minimum investment amounts.
Community Reinvestment Area
Community Reinvestment Areas (CRA) are areas of land in which property owners can receive tax incentives for investing in real property improvements. The CRA Program is a direct incentive tax exemption program benefiting property owners who renovate existing or construct new buildings.
Municipalities or counties designate Community Reinvestment Areas in locations where investment has been discouraged and it is hoped that tax incentives will encourage revitalization and development and can grant up to a 100% real property tax exemption on new improvements or structures.
The Ohio Revised Code sets limits on the length of time for which an exemption can be granted:
•Up to 10 years for residential remodeling (2 units or less; minimum $2,500.)
•Up to 12 years for residential multi-family (more than 2 units) or commercial and industrial remodeling (minimum $5,000.)
•Up to 15 years for new construction of residential, commercial, or industrial uses.
The city or county, through an ordinance or resolution, sets the exact time limits, which can be less than the limits noted above.
Tax exemptions for commercial and industrial projects are required to be negotiated on a project specific basis, and payments to local schools may be necessary to compensate for lost tax revenue depending on the size of the project and the terms of abatement desired by a business. Also, projects with a new annual payroll of $1,000,000 or greater and located within a municipality must meet the income tax sharing requirements agreed upon between the city and the local board of education.
Tax Increment Financing
Tax Increment Financing (TIF) is a method of funding public improvements in an area slated for redevelopment by recapturing for a period of no more than 30 years (all or a portion of) the increased property tax revenue that may result if the development stimulates private investment.
For example, a local government may install roads or sewer and water lines in a vacant industrial area and then finance their installation with the recaptured tax increment. The tax increment is created from the tax revenue generated by the increased value of the land adjacent to the new improvements and the value of any new structures built in the industrial area.
Revolving Loan Fund
Monies from the County’s Revolving Loan Fund (RLF) are generated by repayments from businesses that received financial assistance on Community Development Block Grant Economic Development (CDBG ED) Projects. The Revolving Loan Fund Committee, County staff, and the County economic development consultant evaluate and make recommendations regarding loan proposals.
The County has approved sixteen (16) RLF Projects since the inception of the program for a total of $630,000. These funds have been loaned to local businesses to generate additional income and to aid in the expansion of these businesses. The County has aided businesses in the creation/retention of 123 full-time employee positions based on these loans.
Community Development Block Grant Program
The Community Development Block Grant Economic Development (CDBG ED) Program is a Federal program administered by the State of Ohio, which provides grants to the County for economic development projects. The County uses this money to provide low interest loans to businesses and for infrastructure improvements, which help create or retain jobs. Loan repayments are credited to Erie County’s Revolving Loan Fund and used to provide financial assistance to other businesses or political subdivisions.
Loans are underwritten and approved by the Ohio Department of Development with all documentation and follow-up work done locally. All loans require the creation or retention of a specified number of permanent, private-sector jobs and continued location of the business within Erie County.
The CDBG ED Program is a competitive state program. Applications from counties are evaluated by the state based on community distress, unemployment rate, and low to moderate income population, program effectiveness, job quality, leveraging ratio (percentage of public vs. private funds in the project) and overall community impact.
The grant ceiling under this program is $500,000 for direct loans to a business and $400,000 for off-site infrastructure projects related to a business project.
In the last few years, the state has approved six different CDBG ED Program grants for Erie County totaling $1,345,000.
Erie County Economic Development Corporation
247 Columbus Ave., Suite 126
Sandusky, OH 44870
Phone: (419) 627-7791
Fax: (419) 627-7595
Business Expansion and Retention Specialist