The budget bill offers new incentive opportunities
On June 30, 2021, Governor Mike DeWine signed the Amended Bill 110 (HB 110 or Budget Bill), which creates the biennial budget for the State Fiscal Years (SFY) 2022-2023 (1 July 2021 – June 30, 2023). HB 110 offers several new initiatives and significant changes to the economic development of the State of Ohio through the Ohio Department of Development (formerly known as the Ohio Development Services Agency ). The General Assembly also changed other important incentives for economic development through HB 110, which we plan to address in a future customer alert.
MEGA-PROJECT TAX INCENTIVES:
The conference committee added provisions from previously proposed legislation to increase potential incentives for projects with at least $ 1 billion in investment or at least $ 75 million in Ohio payroll (Megaproject). For a megaproject operator or an eligible supplier, the maximum limit for tax credits for job creation is increased from 15 years to 30 years under section 122.17. In addition, the eligible supplier’s revenue from the sale of tangible movable property to a megaproject operator may be excluded from the Business Activities Tax (CAT). These changes also extend the potential duration of corporate zone exemptions from 15 years to 30 years for an owner of real estate constituting the site of a megaproject or an eligible supplier. Similarly, HB 110 extends the potential duration of a community reinvestment zone exemption from 15 years to 30 years for commercial or industrial structures on the site of a megaproject or on a site owned and occupied by a qualified supplier.
BROWNFIELD SANITATION PROGRAM:
The conference committee added a new section 122.6511, creating the Brownfield Remediation Program (PRB) to provide grants, up to 75% of the total cost of a project, for brownfield remediation. Eligibility and administration are the responsibility of the Ministry of Development, which must adopt rules, including determining the eligibility of projects and sponsors and the administration of programs. The development must have the BRP operational and accept requests within 90 days of the effective date (by approximately December 27e). For the first year following the allocation of $ 350 million to the BRP, $ 1 million is earmarked for projects in each of Ohio’s 88 counties (leaving $ 262 million available in general, to be allocated to eligible projects according to the first come, first served principle).
BUILDING DEMOLITION AND SITE REVITALIZATION PROGRAM:
The conference committee added new section 122.6512, creating the Building Demolition and Site Revitalization Program (BDSRP) to provide grants, up to 75% of the total cost of a project, for the demolition of commercial buildings and residential and the revitalization of surrounding properties on sites that are not brownfields. Eligibility and administration are the responsibility of the Ministry of Development, which must adopt rules, including determining the eligibility of projects and sponsors and the administration of programs. The development must have the BDSRP operational and accept requests within 90 days of the effective date (approximately December 27). For the first year following the allocation of $ 150 million to the BRP, $ 500,000 is earmarked for projects in each of Ohio’s 88 counties (leaving $ 106 million available in general, to be allocated to eligible projects according to the first come, first served principle).
DEDUCTION OF TAX ON VENTURE CAPITAL GAINS:
New section 122.851 includes a new income tax deduction, starting in 2026, for all or a portion of capital gains received by investors in certain Ohio-based venture capital operating companies (VCOCs). The VCOC must manage at least $ 50 million in active assets and must have Ohio residents as 2/3 of its managing and general partners. The deduction is equal to 100% of the capital gain received attributable to investments in Ohio businesses and 50% received attributable to other investments of an eligible VCOC.
MEAT PROCESSING INVESTMENT PROGRAM:
The budget bill includes $ 10 million for the Meat Processing Investment Program (MPIP) to provide grants of up to $ 250,000 to Ohio meat processing plants. Under Section 701.90 of the Temporary Act, the meat processing plant must be located in Ohio, in operation as of July 1, 2021, and provide processing services to livestock and poultry producers . The provision sets out the criteria for application, including (1) increasing the efficiency of treatment, (2) expanding or constructing new facilities; (3) the use of funds for food security or to assist interstate cooperative expedition; (4) whether the subsidy will improve harvesting services; and (5) project preparation.
MINORITY BUSINESS MICRO-LOANS PROGRAM AND WOMEN BUSINESS LOAN PROGRAM:
$ 20 million from the State Small Business Credit Initiative Fund could be used for loans for these two new programs.
EMERGENCY PROGRAMS (FEDERAL) FOR SMALL BUSINESS:
Aid subsidy for bars and restaurants (food and drink establishments). This $ 100 million program provides grants of up to $ 30,000 to restaurants, bars, cafes and other food and beverage businesses affected by the COVID-19 pandemic. The amount of individual grants to eligible businesses will be determined by the company’s loss of income in 2020.
Coronavirus Relief – Entertainment Venues Grant. This $ 20 million program provides grants of up to $ 30,000 to theaters, concert halls, sports halls, museums and other entertainment establishments affected by the COVID-19 pandemic. The amount of individual grants to eligible businesses will be determined by the company’s loss of income in 2020.
Accommodation grant. This $ 25 million program provides grants of up to $ 30,000 to hotels, motels and bed and breakfast establishments affected by the COVID-19 pandemic. The amount of individual grants to eligible companies will be determined by the decrease in the company’s occupancy rate in 2020.
Coronavirus Relief New Business Relief Grant. This $ 10 million program provides grants of up to $ 10,000 to small businesses created between January 1, 2020 and December 31, 2020.
OTHER PROGRAMS FUNDED AT NEW LEVELS OR EXTENDED:
Grants Fund for Sporting Events: $ 10 million is allocated in SFY 2022 for the grants described in sections 122.12 and 122.121, with the unspent balance to be reallocated for SFY 2023. These grants of up to $ 2 million support local organizing committees, municipalities or counties competing to host a sporting event.
Ohio Residential Broadband Expansion Grants Program: Provides $ 250 million ($ 230 million in SFY 2022 and $ 20 million in SFY 2023) for the broadband development grant program outlined in HB 2.
Rural Industrial Park Loan Program: $ 15 million per fiscal year will be available for rural industrial park loans, and the restriction on eligible counties has been significantly expanded, adding any other county in the country to existing rural counties. Ohio which is not designated as part of a metropolitan statistical area by the United States Office of Budget and Management.
Rural Business Growth Program: $ 45 million increase in available tax credits and amends the eligibility and investment criteria for the new credit allocation with revisions to section 122.15-122.156.
Transformational mixed-use development: The certification deadline for new projects is extended from SFY 2023 to SFY 2025.
ADDITIONAL STATUTORY CHANGES:
As noted in the introduction, the Ohio Development Services Agency reverted to its old name, the Ohio Department of Development. There are substantial statutory changes in HB 110 in several programs.
The Job Creation Tax Credit (JCTC), in Section 122.17 (T), now expressly provides for employees working from home, even for rewards approved before the passage of the homework provision .
The Job Retention Tax Credit Section 122.171 now includes additional criteria that the Ohio Tax Credit Authority must consider when awarding a job retention grant, including whether the applicant (a ) has received a JCTC within the past five years, (b) is currently receiving a JCTC, (c) has been operating at the project site for at least 10 years, (d) is performing a significant upgrade of the project site (rather than routine maintenance) and (e) plans to use machinery, equipment and materials provided by Ohio companies in the project when possible.
For the Ohio Opportunity Zone Incentive, section 122.84, the tax credit limit has increased from $ 1 million to $ 2 million in any biennium.
In the motion picture tax credit program, production contractors (persons other than the production company) were removed from section 122.85 as potential beneficiaries of the tax credit.
In summary, the Budget Bill has provided a number of new programs, funding and programmatic changes for the Ministry of Development this year, and we look forward to the deployment of these new opportunities to help and support economic development. .