Senate Bill 33: Changes to Ohio’s Community Reinvestment Area Property Tax Exemption Program

Upcoming changes to Ohio’s Community Reinvestment Area (“CRA”) property tax exemption program will make it easier to create and to use CRAs. On January 2, 2023, Ohio Governor Mike DeWine signed Substitute Senate Bill 33 of the 134th General Assembly (“SB 33”), enacting substantial changes to existing CRA statutes, ultimately easing existing CRA requirements. The changes will take effect on April 3, 2023.

CRA programs generally provide for property tax exemptions with respect to the improved value of residential, commercial or industrial development projects within an established CRA. Under current law, only municipalities and counties may establish CRA programs. One of the more significant changes included in SB 33 is the new ability of limited home rule townships to establish CRA programs within their unincorporated territory. Additionally, current law requires the Director of the Ohio Department of Development (“ODOD”) to confirm certain findings in the legislation establishing a CRA program. SB 33 eliminates this requirement.

Other significant changes pertain solely to CRA exemptions for commercial or industrial projects, including:

• the requirement that ODOD adopt a model form of exemption agreement for commercial or industrial projects, but retain the ability of subdivisions to negotiate their own forms of agreements with certain prescribed terms;
• the modification of the annual information required to be reported with respect to CRA exemptions;
• the increase from 50% to 75% of the percentage of commercial or industrial projects that may be exempted without obtaining the applicable school board approval (said differently, school district approval will not be required for commercial or industrial CRAs where expected property tax revenues resulting from increased property value, including payments to the applicable school district, equal or exceed 25% of the expected property tax revenues that would be charged and payable in the absence of any such property tax exemption, decreasing the prior “hold harmless” threshold applicable to school districts from 50% to 25%);
• the increase from $1,000,000 to $2,000,000 of the payroll threshold at which a municipality granting an exemption for a commercial or industrial project must share income tax revenues with the applicable school district; and
• the elimination of certain fees with respect to exempted commercial or industrial projects.

In sum, the material changes to the CRA statutes as a result of SB 33 make it easier to implement a CRA. While the creation and use of CRAs has been incentivized by SB 33, this legislation also has the effect of decreasing school district participation and tax revenues when compared to existing CRA statutes.

If you have any questions about these upcoming changes or other economic development incentives, please contact your Dinsmore & Shohl bond counsel to discuss your needs and how we can help meet them.