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Current Alerts and Events
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Legislative Directory for Cuyahoga County
Neighborhoods, Ohio
Platform
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The Neighborhood Platform
Affordable Housing Taskforce Testimony
Election 2002 -
A Summary of Priorities and Action Steps for Ohio's Elected Leaders
Cleveland Neighborhood Development
Coalition (CNDC) surveyed its 49 member community development organizations -
representing all 36 of the City's neighborhoods - to identify priority areas and
action steps to address our challenges and compiled them in
The Neighborhoods, Ohio Platform. In
it, CNDC has suggested tools and policies that will help secure the long-term
sustainability and prosperity of Ohio's urban communities.
Below is the index for the different white
papers that describe these tools and policies. Just click on the hot links
to be taken to the location of your choice.
COMMUNITY AND ECONOMIC DEVELOPMENT
NAP
HOUSING
Restore Funding
Predatory Lending
LAND ASSEMBLY
Clean Ohio
Public Nuisance Foreclosure
COMMERCIAL / INDUSTRIAL
Financial Incentives
Marketing
Historic Preservation
COMMUNITY AND ECONOMIC DEVELOPMENT
R
Approve the Neighborhood Assistance Program (NAP) or similar legislation that
would give tax credits or incentives for contributing to community development
organizations and projects; incorporate the NAP into the State’s 2003-2004
budget.
Neighborhood Assistance
Programs are easy to use tax benefit programs that leverage significant funds
from the private sector for community and economic development projects. The
purpose of a NAP is to encourage the private sector to contribute to, and form
partnerships with, the projects of nonprofit community development and community
service organizations. NAPs exist in fifteen states and have been a vital and
substantial tool in the redevelopment of urban and rural neighborhoods. They do
not use government funds, but rather encourage the infusion of private funds by
offering corporations a significant tax incentive.
CNDC has been a member of
the Ohio Community Development Policy Group, a network of organizations
interested in the revitalization of communities throughout the state of Ohio.
OCDPG worked to draft NAP legislation that was introduced as S.B. 88 into the
124th General Assembly by Senator Jeffry Armbruster. The legislation
has garnered widespread support in the executive and administrative offices that
would oversee the NAP.
An Ohio NAP would offer a tax
benefit to a business that makes a contribution to a non-profit 501 © 3
organization working in the community development arena, including affordable
housing development, community-based economic development and neighborhood-based
services. Community development improvement projects would serve primarily low
and moderate-income families and/or impoverished areas. The value of the
contribution would then be subtracted from state corporate taxes that are due at
the end of the year. The amount of the tax benefit would be 50% in urban areas
and 70% in rural areas. The credit cap would be $250,000 per fiscal year.
NAPs provide the tools to
rebuild neighborhoods. They are known to work cooperatively with community
agencies, government and corporate entities in planning a thoughtful approach to
an array of development projects. The types of activities that can be supported
by a NAP include:
- Rental and owner occupied
housing
- Child care facility
development
- Job training, tutoring and
reading initiatives
- Homeless services and
shelters
- Homeownership support
programs
- Crime prevention
activities
- Renovations of storefronts
and the redevelopment of commercial areas
- Industrial retention and
development, brownfield cleanup
States that have a NAP
include: Connecticut, Delaware, Florida, Indiana, Kansas, Louisiana, Maryland,
Missouri, Nebraska, New Jersey, Pennsylvania, South Carolina, Virginia and West
Virginia. Illinois has a modified NAP and the state of California has
considered NAP legislation. Massachusetts has the “Act Insuring Community
Investment and the Equitable Taxation of Insurance Companies in Massachusetts”
that gives state-based insurance companies tax benefits for capitalizing two
community development investment initiatives and provides tax incentives for out
of state insurance companies to invest in these initiatives.
The NAP is a significant and
cost effective incentive for corporations to invest in community change. NAPs
have leveraged significant dollars in other states for community revitalization
projects. Between 1990 and 1997, Indiana had $6.5 million dollars in tax
credits leverage $54.8 million in contributions to assist neighborhoods.
Pennsylvania’s NAP determined that a corporate donor in the state pays about 24
cents for each dollar donated. Some companies in other states that have
participated in NAPs include: National City, Hallmark Cards, Allstate
Insurance, Virginia Electric and Power Corporation, Tasty Baking Company, PECO
Energy Corporation, Cigna Insurance, PNC Bank, Sherwin Williams, State Farm
Insurance, Crown Cork and Seal Company, Lucent Technologies, Primus, Inc., and
Sears.
Most states have a statewide
cap on the total amount of tax credits that will be available each year under
the NAP. The proposed legislation for Ohio features a phase-in of
increasing caps, from $2.5 million in the first year, $3.5 million in the second
year, with the cap gradually increasing over the next decade to $20 million.
Investment in
community development generates additional economic benefits. A recent study
regarding the accomplishments of community development corporations operating in
the City of Cleveland revealed that over the past 10 years they have produced
over $308 million worth of investment in neighborhood revitalization. This
figure reflects new construction of housing, housing rehab and retail
redevelopment. It does not reflect support services that organizations under S.B. 88 engage in, including the activities bulleted above. A NAP would
leverage more dollars for community redevelopment programs, bringing more
financial resources to distressed communities.
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HOUSING
R
Address Ohio’s affordable housing crisis through a commitment to adequately fund
the State’s housing and community development programs. This includes creating
a permanent dedicated source of revenue for the Ohio Housing Trust Fund.
Increasing housing costs coupled with a dwindling supply of affordable housing
has led to a housing crisis throughout the State of Ohio. According to the
National Low Income Housing Coalition (NLIHC)’s Out of Reach 2001: America’s
Growing Wage-Rent Disparity, the “housing wage” in 2001 for the metropolitan
area that includes Cleveland, Lorain, and Elyria, Ohio, was $13.96 an hour, an
increase of almost 13 percent from 2000 and 271% of the present minimum wage of
$5.15 per hour. The 2001 housing wage for all of Ohio was $11.37 per hour, 221%
of the minimum wage, an increase of 10.39% from 2000. The national median
housing wage was $13.87 per hour. NLIHC defines the housing wage to be the
amount a worker needs to earn per hour in a 40-hour week in order to afford a
two-bedroom unit at the area’s Fair Market rent. The study found that for Ohio,
an extremely low-income family is able to afford monthly rent of no more than
$414, while the Fair Market rent for a two-bedroom unit is $591. A worker
earning minimum wage must work 88 hours per week in order to afford a
two-bedroom unit at the area’s Fair Market rent.
It is no
wonder then that, according to a recent Fannie Mae Foundation Affordable Housing
Survey, Americans perceive a lack of affordable homes for low- and
moderate-income working families as being as much of a problem as job loss or
unemployment, an even bigger problem than crime and the environment, and second
only to a lack of affordable health care. The same survey found that the public
supports policies that would allow state and local governments to give grants to
nonprofit organizations and tax credits to for-profit housing development
companies if they build housing for low- and moderate-income working families.
The public also supports policies such as down payment and closing cost
assistance that would help public servants to purchase homes in the city or town
where they work. There is also growing support for the notion of permanent
supportive housing for chronically homeless people. Such housing provides
necessary counseling and medical services on-site to residents. Successful
organizations that provide permanent supportive housing in other cities, such as
Chicago’s
Lakefront SRO and New York’s Common Ground Community, attest to the need for
more funds to truly address the housing needs of all Ohioans.
Despite
the documented need for and public support of affordable housing, State funding
of key housing programs has significantly decreased in recent years, in large
part due to the State’s recent 2002 budget shortfalls. According to the
Coalition on Homelessness and Housing in Ohio (COHHIO), as of August 2002, all
state fiscal year 2002 General Revenue (GRF) funded programs (which includes
Transitional and Supportive Housing for the Homeless, Emergency Shelter Grant,
CDC Grant Program) had been cut by 15 percent. In addition, the budget
corrections bill passed in June 2002 cut $80.8 million in unclaimed funds
administered by the Ohio Department of Commerce. Historically, some of these
funds have been used by the Ohio Housing Finance Agency to finance, at zero or
very low interest rates, many affordable housing programs, including low-income
housing tax credit projects and multi-family bond financed projects. The
approved state fiscal year 2003 appropriations for the Trust Fund was $22.1
million. In its 2004-2005 biennial budget, the Taft administration may propose
an additional slashing of the Housing Trust Fund by15 percent – which would put
the Trust Fund at $15.5 million a year, a sobering number when one considers
that the approved appropriation for state fiscal year 2003 was $22.1 million.
Other housing related line items may also face cuts of at least 15 percent. The
TANF Housing Program may be eliminated altogether.
Decreasing state government funds for housing programs in the face of an
affordable housing crisis makes the case for establishing a permanent and
dedicated source of revenue for the Ohio Housing Trust Fund extremely
compelling. According to the Ohio Department of Development, the Ohio Housing
Trust Fund provides funding for a wide range of housing activities targeted at
low-income residents, including housing development, emergency home repair,
handicapped accessibility modifications, and services related to housing and
homelessness. Organizations eligible to apply for money from the Ohio Housing
Trust fund include local governments, housing authorities, nonprofit
organizations, private developers and private lenders. Ohio Housing Trust Fund
dollars may be used for many housing activities including predevelopment costs,
rental assistance, housing counseling, handicapped accessibility modifications,
rehabilitation, home repair and new construction.
According to COHHIO, as of 2001, ten years after the Housing Trust fund was
created, the Ohio General Assembly had appropriated more than $125 million to
the Housing Trust Fund and over 83,200
Ohio
families had received housing assistance through its programs. According to a
recent study (“Prospects for an Affordable Housing Trust Fund in Michigan,”
Christine Hall, Justin Linker, and Chris Shay, Michigan State University, Oct.
2001), since 1991, more than 3,000 new housing units have been rehabilitated,
and over 6,800 homes have been repaired or rehabilitated using Ohio Housing
Trust Fund programs. The study also states that fund managers estimate that
every dollar the Housing Trust Fund provides leverages an additional five
dollars in private investments and federal resources.
It is
widely argued that a permanent, dedicated revenue source for housing trust funds
give these programs the funding stability necessary for longer-term planning to
address needs and to use resources more strategically and effectively. The Ohio
Housing Trust Fund has never operated with a permanent funding source. Its
appropriations are currently a combination of interest on the state’s budget
stabilization and general revenue funds, and interest on the balance in the
housing trust fund itself.
A 1992
Governor’s Advisory Committee on Financing of the Housing Trust Fund made
recommendations for sources of a permanent dedicated source of revenue for the
Ohio Trust Fund that should be newly examined by the Ohio General Assembly for
inclusion in the State’s Biennial Budget for 2004 and 2005. Of these
recommended sources of revenue (all involving housing or real estate), the most
viable are:
- Real
estate conveyance fees – imposed by county auditors when title to property is
transferred from one owner to another; a common, relatively stable revenue
source for housing trust funds in other states. In Ohio, counties collected
nearly $35 million from the mandatory 1 mill real estate conveyance fee in
2000.
-
County recorder fees – fees collected when lien, deed or mortgage documents
are filed with county recorder’s offices. According to COHHIO, the Housing
Trust Fund could be funded at $40 million annually if the current recording
fee were doubled, an average increase of $15.38 per filing (Breaking Ground,
September, 2002)
A small
fee on new housing construction is another possible revenue source. For example,
a $100 fee for each of the estimated 40,000 new homes built in Ohio during a
year would generate $4 million.
Sources:
Coalition on Homelessness and Housing in Ohio, “Breaking Ground”, July,
August and September 2002.Coalition on
Homelessness and Housing in Ohio, “Ohio Housing Trust Fund 2001: A Decade of
Success” fact sheet.
Fannie
Mae Foundation, “Results of the Fannie Mae Foundation Affordable Housing
Survey,” 2002.
Christine Hall, Justin Linker, and Chris Shay, Michigan State University, Oct.
2001.
“Prospects
for an Affordable Housing Trust Fund in
Michigan”.
National
Low Income Housing Coalition, “Out of Reach 2001:
America’s Growing Wage-Rent
Disparity.”
Ohio
Department of Development – web site.
Ohio
Legislative Budget Office,
Ohio Issues,
“Financing the Housing Trust Fund: Revisiting an Old Dilemma,” Rick Graycarek.
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R
Develop
comprehensive legislation that would protect homeowners as consumers against
predatory lending practices.
According to the Community Reinvestment Association of North Carolina (CRA of
NC), predatory lending is any unfair credit practice that harms the borrower or
supports a credit system that promotes inequality and poverty. Characteristics
of predatory lending include aggressive marketing to targeted neighborhoods,
home improvement scams, and deceptive sales techniques that, for example,
structure loans with payments the borrower cannot afford and change of the loan
terms at closing. Features of predatory loans include (but are not limited to)
high interest rates, high points or padded closing costs, balloon payments,
negative amortization, inflated appraisal costs, and financing credit
insurance.
All
predatory loans are sub-prime, but not all sub-prime loans are predatory.
Sub-prime lending provides credit to borrowers with poor credit histories at a
higher cost than conventional mortgage loans to account for the higher risk they
represent to creditors. By providing credit to borrowers who cannot qualify
for prime loans, sub-prime lenders help people buy or refinance their homes and
finance home improvements. Sub-prime lending is abusive when loans are marketed
to borrowers with good credit and when loans are deceptively structured so
homeowners cannot afford the debt incurred.
In
recent years, the number of sub-prime mortgage loans has dramatically increased.
The recent growth in sub-prime lending through mortgage brokers has paralleled a
dramatic increase in foreclosures. Harvard University’s Joint Center for
Housing Studies’ “The State of the Nation’s Housing 2002” found that mortgage
defaults and foreclosures are increasing among low-income home purchasers,
especially those using sub-prime loans to buy their first homes. According to
the Metropolitan Strategy Group, Ohio ranked fifth in 1998 and seventh in 1999
in the percentage of refinancing by sub-prime lenders. In Cuyahoga County,
foreclosures jumped from 2,812 in 1995 to 8,089 in 2001. Predatory lending
strips borrowers of the wealth represented in the equity built up in their
homes. As such, it is anti-development to Cleveland’s neighborhoods: one
boarded-up home makes a considerable dent in the progress a CDC can make in its
efforts to revitalize its community. Abusive lending practices cause erosion of
families and resources from neighborhoods. A recent Fannie Mae Foundation
Affordable Housing Survey found that, for many, home is much more than a house
but includes the neighborhood and community where it is located.
Predatory lending can happen because there is not enough accountability and
regulatory oversight of the financial services industry and not enough
alternative financing products for traditionally underserved populations. Many
predatory practices are unethical but not against the law.
Finance
companies and the sub-prime subsidiaries of banks are not regulated for
compliance with consumer laws nor are they required to comply with the Community
Reinvestment Act which encourages banks to invest in community development
activities and holds them accountable for lending in minority and low income
neighborhoods. Most of the Federal (Truth in Lending Act, the Home Ownership
Equity Protection Act (HOEPA), Real Estate Settlement Procedures Act, FTC Holder
Rule) and Ohio (Consumer Sales Practices Act, Home Solicitations Sales Act,
Small Loan Act, Mortgage Loan Act) consumer protection laws require certain
disclosures to the consumer by the seller. Not all contain protections from or
penalties for abusive sales practices. According to the Office of Thrift
Supervision, a very small number (one percent) of subprime loans “trigger”
HOEPA’s consumer protections. In addition, mortgage lending is exempt under
Ohio’s Consumer Sales Protection laws.
In
February of 2002, Ohio
enacted a predatory lending law (called the “Shark Loan Protection Act” by the
Plain Dealer) that fails to provide for new consumer protections but
simply incorporates existing HOEPA regulations. The law also created an Office
of Consumer Affairs in the Department of Commerce to process predatory lending
complaints and established a study committee for further investigation of
predatory lending in Ohio. The committee is not due to make recommendations
until June, 2003.
Perhaps
most importantly for
Cleveland,
the law includes a local preemption that prohibits local governments from
enacting anti-predatory lending ordinances. Despite this provision, Cleveland
adopted an anti-predatory lending law in March and began its implementation in
July after a Common Pleas Court ruling lifted a preliminary injunction in a suit
initiated by the American Financial Services Association, a trade association of
mortgage lenders, claiming violation of home rule amendments of the Ohio
Constitution. The Cleveland law prohibits predatory lending, prohibits lending
without home loan counseling for high cost loans made by mortgage brokers,
regulates payment of home improvement loans, requires lenders to file
certificates of compliance, and assesses criminal penalties for violation.
The
State of Ohio needs a more comprehensive anti-predatory lending law, and plenty
of models – like the City of Cleveland ordinance and proposals by the American
Association of Retired Persons - exist. We encourage the Predatory Lending Study
Committee to seriously consider the testimony offered at the public hearings
held throughout the state and to offer substantive remedies for victims of
predatory lending. In tackling this problem, the Study Committee and the
Legislature should consider recommendations for additional oversight of the
financial services industry, for incentives to develop alternative products for
potential victims of abusive lending, and for encouraging financial literacy in
schools and the neighborhoods of
Ohio.
Sources:
CRA of
North Carolina, “Introduction to Predatory Lending.”
Coalition on Homelessness and Housing in Ohio, Breaking Ground (February,
March and June, 2002), Predatory Lending Fact Sheet (web site).
Fannie
Mae Foundation, “Results of the Fannie Mae Foundation Affordable Housing
Survey,” 2002.
The
Joint Center for Housing Studies of Harvard University, “The State of the
Nation’s Housing 2002”.
Metropolitan Strategy
Group, The Metro Eye, April 2002.
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LAND
ASSEMBLY
R
Channel Clean Ohio Revitalization Funds to target properties in distressed areas
and areas with many brownfields; reinstate the brownfield tax credit; support
local efforts at land assembly with matching pre-development grants.
The
Ohio Legislature created the Clean Ohio Fund in 2001. The goal of this fund is
to assist in revitalizing blighted neighborhoods, preserve green space and
farmland, and improve outdoor recreation. The total amount of the fund is $400
million, of which, $200 million has been allocated as the Clean Ohio
Revitalization Fund to be used for brownfield remediation projects.
In 2002,
16 projects totaling almost $40 million received funding from the Clean Ohio
Revitalization Fund. Most of this $40 million distribution was allocated to
areas classified as Priority Investment Areas within the state. This was a
positive outcome for these more distressed cities and areas around the state and
one that must continue to occur from this funding source.
The
application process is open to many projects within the state, both urban and
rural, through the initial screening by the Ohio Public Works Commission
districts. The process may be too open and could include projects from around
the state that the program was not intended to fund. There are 19 separate
Public Works districts. Because districts of the state that may not have many
environmentally challenged properties can submit the same number of applications
along with districts like Cuyahoga County that have many more brownfield
properties, the process may be weighted towards allocating funds to areas of the
state with fewer numbers of brownfield properties. Presently, each district can
submit applications for up to three projects to the Clean Ohio Council. We
would propose allowing applications for up to five projects in PublicWorks
Commission districts containing an “urban distressed” city.
Beginning with applications in the fall of 2002, up to $10 million from the
Brownfield Revitalization fund will be available for brownfield assessment
projects. This assessment program, the Clean Ohio Assistance Fund, is extremely
vital for estimating and understanding the true costs to revitalize specific
brownfield projects located within urban and distressed areas of the
state. Presently, only projects located within Priority Investment Areas are
eligible for the Clean Ohio Assistance Fund. It is imperative for the program to
keep this focus and allow areas that contain the majority of environmentally
challenged properties access to these funds.
In
addition, legislators should consider reinstating a brownfields tax credit
against the corporate franchise tax and the personal income tax. The credit
could be reinstated at the previously established rate of 10 percent throughout
the state, but be provided at a level of 20 percent in Priority Investment
Areas.
We encourage
legislators to monitor how Clean Ohio Revitalization funds are used and to
ensure that Clean Ohio Revitalization monies continue to fund projects in the
state’s Priority Investment Areas. The Ohio Department of Development should in
turn plan to market the success stories that will result from the projects
funded in the Clean Ohio Revitalization’s early years to show all Ohioans the
true benefits of reclaiming our older industrial districts for new investment
and job creation.
R
Develop legislative reform to assist court-appointed receivers and other
interested parties to gain title to properties with “abandoned” mortgage liens
in order to stave off neighborhood deterioration.
The
scenario is common enough to be familiar to most people. New homeowners on a
street turn out to be “neighbors from hell.” Their house and property fall into
disrepair and unsightliness. After a time, the house is abandoned and boarded
up, perhaps burnt down. A vacant lot blights a street, and several cause the
quality of neighborhood life and property values to plummet.
The
inability to acquire or repair these properties is a constant source of
frustration for community development corporations (CDCs), organizations that
work to revitalize the residential and commercial aspects of their
neighborhoods. The impediment to taking action on deteriorating properties
involves the state of the title of a property, and the number and amount of
liens held against it. The recent massive increase in predatory and abusive
sub-prime lending in urban neighborhoods has resulted in large numbers of
properties with “abandoned” mortgage liens – liens for an amount greater than
the property would bring at a judicial sale.
Currently, under the State’s Public Nuisance Abatement law, CDCs or another
interested party may file a civil suit in order to obtain the court’s judgment
that a property is a nuisance. A civil court has jurisdiction over the property
as well as the owner of a property so it may order the owner to make necessary
repairs, or it may appoint a receiver to do so. In criminal cases, courts may
penalize owners with fines but cannot take control of their distressed
properties.
In
receivership cases, the receiver is reimbursed for expenses through a court
judgment against the owner for costs. In many cases, selling the property is the
only way to recover costs. Municipal courts have the authority to order the sale
of properties, thereby removing all state tax liens – but not mortgage liens.
CDCs as receivers cannot acquire clear title to a property until all liens
against it are removed. In order to recoup costs to repair properties or to
acquire them free of prior mortgage liens, receivers must sue in a foreclosure
action as creditors to remove the liens. Foreclosure is encumbered by long
delays due to the type of lenders involved and to a growing backlog of cases.
At the end of the line, a property may be auctioned off at a sheriff’s sale. In
the meantime, the property in question sits vacant and unused, and is still a
burden for neighbors and taxpayers.
One
potential way to expedite the processing of these cases is to provide an
alternative to the current foreclosure process for wasted, blighted and
hazardous properties. This could be done if Sec. 3767.41 of the Public Nuisance
Abatement Statute were amended to allow municipal courts to conduct judicial
sales that would grant marketable titles free of all liens on properties.
Further study of this
issue is needed. Perhaps the Predatory Lending Study Committee created by Sub.
H.B. 386 could broaden the scope of its investigation to include examining how
the Legislature should address the growing number of predatory and abusive liens
on properties in the State of Ohio, which has paralleled the sharp increase in
sub-prime lending. This or another committee’s study should quantify the scope
of this problem as well as explore solutions that provide relief to
neighborhoods forced to bear the burden of these worthless, abandoned mortgage
liens.
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COMMERCIAL/INDUSTRIAL
R
Support
financial incentives and loan programs that assist businesses and encourage
investment in urban and distressed areas.
The State of
Ohio, through the Ohio
Department of Development (ODOD), offers a number of loan and incentive programs
for businesses that locate, expand, or relocate within the state. These programs
consist of special types of loans, bond funds, or tax incentives to help the
state of Ohio compete with neighboring states to attract new business,
and to help existing businesses in the state expand and grow.
Ohio must offer incentives
such as job training dollars, tax abatement, and low interest loans to compete
with neighboring states’ incentive packages. However, it is equally important
that economic incentives do not encourage suburban development at the expense of
Ohio’s city districts.
Currently, tax incentive programs are drawn in broad strokes, providing
identical levels of benefits for urban and suburban development. However, it is
well documented that the cost of development in an urban setting is elevated due
to higher land costs and aging infrastructure, among other factors. Therefore,
when State-issued tax incentives are part of the funding strategy, the overall
cost of developing in a suburban area is less than in an urban area since
comparable development costs tend to be lower in the suburbs. This economic
imbalance creates an unfair advantage towards suburban/greenfield development.
Cities need specialized, enhanced incentives to help make the cost of
development in the city equitable with the cost of development in the suburbs
and greenfields.
Priority Investment Areas are primarily distressed cities
or rural counties that may qualify for special incentives from ODOD programs.
Currently, Priority Investment Areas do not directly benefit from most of
Ohio’s incentive programs for
attracting businesses to the state. Most of the businesses
Ohio
attracts from outside the state do not locate within the Priority Investment
Areas. Because distressed cities and rural counties are not the desired location
for most of these companies, they do not benefit as directly from incentive
dollars, nor do they benefit from the jobs that may be created by the location
of a new plant or company headquarters. The advantages for keeping existing
businesses within Priority Investment Areas are inadequate as well when compared
to the advantages offered to relocating companies
Many businesses are located within the Priority Investment
Areas of the state, especially in cities where much of the state’s industrial
and manufacturing base began. ODOD should develop more programs to assist these
businesses to expand in their current location. For example, the Ohio
Manufacturing Machinery and Equipment Investment Tax Credit offers a significant
tax credit of 13.5 percent to businesses located in distressed cities such as
Cleveland
for the purchase of new machinery or equipment. The program offers only a seven
percent tax credit to business located in non-distressed areas. The Ohio
Manufacturing Machinery and Equipment Investment Tax Credit program is one of
the only ODOD programs that offers a significant incentive to businesses located
in distressed areas.
Other
examples of incentives that could be offered to existing businesses located
within Priority Investment Areas include:
Ohio
Job Creation Tax Credit
Presently: To
be eligible a company must create at least 25 net new full-time positions
regardless of where located.
Suggestion:
Priority Investment Areas companies may qualify if they create 10 net new
full-time positions. Non-Priority Investment Areas would have to create 35
net new full-time jobs.
166 Regional and Direct Loan Programs
Presently: The
loan offers an interest rate at two-thirds of prime for land and building
acquisitions, new construction, and/or equipment purchases in non-distressed
areas and as low as 4 percent in economically distressed communities. The
current interest rate of two-thirds of prime equals 3.42 percent. Because of
current low interest rates, the program gives no advantage to economically
distressed communities.
Suggestion:
Economically distressed communities receive loans with interest rates as low as
2 percent or one-third of prime.
Ohio
Industrial Training Program
Offer a new special
pool of funds for the training needs of companies located within urban and rural
distressed communities. These funds could be from a new source or redirected
from the existing OITP resources.
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R
Increase
the Office of Urban Development’s involvement in marketing urban business
districts and properties, and its role in assisting urban communities with
development and revitalization efforts.
The Ohio
Department of Development implemented a newly developed marketing campaign to
attract new businesses to
Ohio
including a website, Connect Ohio, and various print and radio ads. However,
proven by the platform statement, economic development professionals in the
Cleveland area are unaware of any efforts by the State to attract
new business investment. The lack of a connection between state efforts and
local efforts is problematic.
The
following strategies should be examined:
-
Closer linkage between State and local expansion and recruitment efforts.
-
Increased profile by ODOD at the local level to provide expertise, resources
and exposure to urban centers.
-
Targeted marketing campaign to encourage reinvestment in older, urban centers.
R
Support
an Ohio State Tax Credit for Historic Preservation
An
Ohio State Tax Credit for Historic Preservation would be similar to the federal
model and would borrow from the best of tax credit programs available in 17
other states. The credit would be a powerful and effective economic development
tool.
Summary
of Draft Bill:
- Allows
corporations and individuals to receive nonrefundable tax credits for all or
part of their costs of rehabilitating and preserving historic property.
- The tax
credit is equal to 25% of the total costs and expenses of rehabilitation
incurred on a project, including architects’ fees and the costs associated
with nominating a property to the National Register of Historic Places.
- Applies
to rehabilitation and preservation costs incurred after the year 2000.
- Excess
credits may be carried back to any of the three preceeding years and carried
forward for the succeeding ten years.
- Tax
credits granted to a partnership, a limited liability company taxed as a
partnership or multiple owners of property shall be passed through to the
partners, members or owners respectively pro rata or according to an executed
agreement among partners, members or owners documenting an alternate
distribution method.
Basic
Program Requirements:
- The
property must be located in Ohio and must be one of the following: listed on
the National Register of Historic Places; eligible for the National Register
of Historic Places; locally designated a historic landmark.
- The
rehabilitation must be “substantial”.
- The
rehabilitation or maintenance of the historic property must comply with the
Secretary of the Interior’s Standards for
Rehabilitation.
- To be
eligible, the historic property and the rehabilitation and/or maintenance must
be “certified” by the Ohio Historic Preservation Office (OHPO).
Rutger’s Center on
Public Policy in conjunction with Cleveland State University are currently in
the process of conducting an economic impact study, which should be completed
sometime in Fall, 2002.
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