economic development incentives ccao economic development symposium june 25, 2015 presentation by ...

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


Tax Increment Financing

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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)


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


Local Special Purpose Economic Development Entities

JEDDS, JEDZ and MUDS

New Community Authorities (NCAs)


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”



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



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


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”


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


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


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


______________________Erik Collins, Director Montgomery County

Community & Economic Development

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

Economic Development Tools

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

Jurisdictional Map

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

CRAS & 3PSJohn Recker CEcD,

Senior Project Manager

Regional Growth Partnership/JobsOhio

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

The Canton CIC is a dual role organization: Economic Development Business Development

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


Evolving, Engaging, ProactiveEconomic Growth Initiative

Policies – Local, State & Federal

Asset Inventory Brownfields Business Trends Politics –

Enhancers/Detractors


InnovativeAEP and BWC Referrals

Equifinality B2B Programs and Resources Business Opportunities


Outward Focus

HOF Village Session

“Not About Me” Business, Client Priority Enables Rapport Enhances Partnerships


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 Networking Business Advocate Organizer/Matchmaker


Rapport Driven

Decision to Stay in City

Genuine interest Not an expert Manage expectations Deliver the good and the bad


Networking

Business Circle

Networking is not socializing Two way networking:

• Give• Receive

Relax and have fun


Business Advocate

Personal Representation

Agree to disagree In person introduction Engage in the Process to Believe in Your Advocacy Avoid conflicts of interest


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.


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

CCAO Economic Development Symposium l 57

Thank you!

economic development incentives ccao economic development symposium june 25, 2015 presentation by ...

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