Senate Bill 33 changes to Community Reinvestment Area (CRA) tax incentives cut red tape for projects, expand opportunities to limited home rule townships

2023, the year of the rabbit in the Chinese zodiac, may well turn out to be the year of the CRANE (Community Reinvestment Areas in Need of Expertise) in Ohio.

On January 2, 2023, Governor Mike DeWine signed Substitute Senate Bill 33, which, in large part, modifies not only the establishment and management of Community Reinvestment Areas (CRAs), but also the agreements for commercial and industrial projects that seek to take advantage of the property tax incentives the CRA program can offer. The CRA program has been historically split into a “pre-1994” and “post-1994” analysis (generally: (1) pre-1994--no state oversight, limited local government flexibility, no written agreements; (2) post-1994--state oversight, more local government flexibility, and written agreements for commercial/industrial projects). With SB 33, the legislature has brought Ohio back towards a “modified pre-1994” statutory scheme that largely reduces state oversight, expands the use of CRA to limited home-rule townships and modifies triggers that would require school district compensation and approvals. Some highlights include:

• Limited home-rule townships now eligible to designate unincorporated area of the township as a CRA, previously only available to villages, cities and counties;
   
• Township housing council comprised of:
  • Two members appointed by board of township trustees;
  • One member appointed by township law director;
  • One member appointed by either the township zoning commission (if established) or the county planning commission;
  • One member appointed by the board of county commissioners
     
• State no longer involved in approving CRA boundaries, local governments no longer petition the state to designate an area as a CRA, only send a copy of the legislation and map by certified mail to the Ohio Department of Development;
   
• Modifies the information that a local government must submit by March 31, each year, related to CRA programs that the local government is administering;
   
• Increases the percentage of property tax exemption threshold for school district board of education approval from 50 percent to 75 percent;
   
• Increases the payroll amount threshold for tax revenue sharing with school districts for cities and villages that levy an income tax from $1 million to $2 million per year and also tying the payroll amount to inflation year over year.

Our economic development team has the experience to assist municipalities, counties, and school districts with modifying their CRA programs to address these changes, and to advise limited home rule townships looking to leverage this new tool in their economic development tool box. Our team is also available to unpack the new annual compliance requirements for public and private entities impacted by these CRA law changes.