In October, Ohio Treasurer of State Robert Sprague announced a new program called the Ohio Gains. This initiative is aimed at putting the state treasury’s balance sheet to work for Ohioans. The proposal centers around three new investment reforms that will help bolster support for the state’s agriculture community, health systems, and institutions of higher education.

Legislation authorizing Ohio Gains is expected to be introduced in the Ohio Senate by Senators Michael Rulli and Jerry Cirino and in the Ohio House by Representatives D.J. Swearingen and Andrea White.

The legislation will make reforms in the following three areas:

1. Modernizing the Ag-LINK Program:

For decades, the Ag-LINK linked deposit program has helped Ohio farmers and agribusinesses drive down the cost of doing business by providing interest rate reductions on new or existing loans. However, Ohio law currently restricts the loans for each borrower to $150,000 per year – deterring many from participating in the program.

The proposed legislation would eliminate the existing program caps, so Ohio’s agriculture community has access to an ample amount of lower-cost capital when they need it most. Eliminating the caps will also align Ag-LINK with the other linked deposit programs available through the Treasurer’s office.

Additionally, agricultural co-ops will become eligible Ag-LINK borrowers for the first time in the program’s history, further recognizing the valuable contributions they make to Ohio’s economy.

2. Reducing Costs for Ohio’s Hospitals:

A Variable Rate Demand Obligation (VRDO) is a borrowing tool commonly used by large institutions – including some of Ohio’s major hospital systems – to finance capital projects. Using a VRDO for debt issuance requires an entity to act as a “buyer of last resort,” effectively agreeing to purchase the debt if the market yields no investors.

While large Wall Street banks typically serve in this capacity, the Ohio Treasury can leverage its strong liquidity position to step into this role on behalf of Ohio’s hospital systems and lower their overall borrowing costs.

The proposed legislation will extend this cost-savings opportunity to more Ohio hospital systems and other large entities that utilize VRDOs.

3. Reducing Costs for Ohio’s Public Universities:

Under current Ohio law, the debt of the state’s four-year public universities is an eligible investment for the Ohio Treasury. The proposed Ohio Gains legislation would allow the institutions to leverage their State Share of Instruction (SSI) when issuing debt to the Treasury.

Doing so automatically enhances the university’s credit rating, thereby making it a more attractive and secure investment for the State of Ohio. Since Ohio provides significant financial support for its universities, the proposal will provide savings for higher education institutions while generating a meaningful return on investment for the Treasury — thus maximizing the value of those state funds like never before.

On November 10, 2021, the IRS released Rev. Proc. 2021-45 setting forth calendar year 2022 methodologies for establishing private activity bonds volume cap (state ceiling) as well as brokerage commissions on guaranteed investment contracts or investments purchased for a yield restricted defeasance escrows, such as those often used in housing and other community-oriented private activity bonds.

For calendar year 2022, the amounts used under § 146(d) of the Internal Revenue Code to calculate the state ceiling for the volume cap for private activity bonds is the greater of (1) $110 multiplied by the State population, or (2) $335,115,000. In addition, Rev. Proc. 2021-45 places limits on the issuance of agricultural bonds. For calendar year 2022, the loan limit amount on agricultural bonds under § 147(c)(2)(A) for first-time farmers is $575,400.

Rev. Proc. 2021-45 also set forth safe harbor rules for brokerage commissions on guaranteed investment contracts or investments purchased for a yield restricted defeasance escrow. For calendar year 2022, under § 1.148-5(e)(2)(iii)(B)(1), a broker’s commission or similar fee for the acquisition of a guaranteed investment contract or investments purchased for a yield restricted defeasance escrow is reasonable if (1) the amount of the fee that the issuer treats as a qualified administrative cost does not exceed the lesser of (A) $43,000, and (B) 0.2 percent of the computational base (as defined in § 1.148-5(e)(2)(iii)(B)(2)) or, if more, $4,000; and (2) for any issue, the issuer does not treat more than $122,000 in brokers’ commissions or similar fees as qualified administrative costs for all guaranteed investment contracts and investments for yield restricted defeasance escrows purchased with gross proceeds of the issue.

A team of six co-chairs, representing local leaders in the labor, business, faith, and community sectors, will lead the Transition CLE process. The co-chairs represent a diverse and dynamic team, and we are grateful to be guided by this cross-section of leaders:

  • Darrell McNair, President & Chief Executive Officer, MVP Plastics Corporation
  • Erika Anthony, Executive Director, Ohio Transformation Fund
  • John Ryan, Former labor and nonprofit leader
  • Phyllis “Seven” Harris, Executive Director, LGBT Community Center of Greater Cleveland
  • Paul Clark, Former Regional President, PNC Bank Cleveland
  • Richard Gibson, Pastor, Elizabeth Baptist Church

The co-chairs will oversee 10 committees and will develop a plan to tackle the top priorities on day one of the Bibb Administration in January. The 10 committees are focused on Economic Development, Education, Environment, Equity in Action, Health, Modern City Hall, Neighborhoods, Open Government, Safety, and Talent.

 

The new Stark County Manufacturing Workforce Development Partnership was created to spread valuable information about the manufacturing industry (and opportunities within it) for future workers. Twenty-four of Stark County’s more than five hundred manufacturers have already joined the organization, which aims to give its members the chance to actively participate in developing a qualified workforce.

Cedar Fair is teaming up with Esports Development Co. to expand Cedar Point Sports Center by means of a new $28 million arena. While sports would be the focus of the project, the venue could also be used for concerts, educational programs, and other events. The space will include seating for approximately 1,500 fans. The project is still in the early planning phases, but Cedar Fair hopes to open the facility in 2023.

Raymond C. Headen will be appearing with a panel of national experts, including JobsOhio General Counsel Don Grubbs, for two economic development and public finance seminars to be released in mid-September 2021. For those who are lawyers, you can receive 1 hr. CLE credit.

Economic Development Law and Regulation – Land Use Planning and Corporate Site Location

  • What role does land use planning play in the corporate site location process?
  • How can land use master plans simplify the corporate site location process for developers and companies?
  • What role does project design play in the corporate site location process?
  • How can traffic studies impact a corporate site location process?
  • What role do site plans play in preparing a site to develop the on and off-site infrastructure needed for a corporate site location process to work?

Program release date: September 13, 2021

Economic Development Law and Regulation – Incentives

  • What type of economic development incentives are used to retain and attract companies?
  • What role do economic development incentives play in a corporate site location decision?
  • Have economic development incentives adapted to the Work From Home movement?
  • What advice would you give companies seeking economic development incentives from communities and states?
  • Will economic development incentives move away from the requirements of job creation and shift to payroll and capital investment creation as automation, AI and other technologies create fewer, higher wage jobs?

Program release date: September 17, 2021

The programs will be offered by the Practising Law Institute (PLI).

The State of Ohio’s recently enacted budget bill includes economic development appropriations for Ohio Department of Development new and/or continuing programs.

Some of the major benefits of these appropriations are as follows:

  1. Broadband: The language in the budget bill strips out the Senate’s proposed limits on existing and future municipal broadband networks. $230 million is appropriated in SFY 2022 and $20 million is appropriated in SFY 2023 new broadband expansion.
  2. Ohio Rural Industrial Park Loan Program: The budget bill appropriates $15 million in both SFY 2022 and SFY 2023.  It expands the eligibility for the program beyond certain distressed areas by including rural areas in the program, which are any county not within a statistical metropolitan area (MSA), as well as transfers $20 million in unencumbered funds to SFY 2022.
  3. Main Street Job Recovery Program: The budget bill appropriates $250,000 to the Ohio Department of Development in SFY 2022 to provide grants to nonprofit organizations to create permanent business development and employment opportunities targeted to low- and moderate-income individuals or individuals of the reentry population.
  4. Sports Events Grant Program: The budget bill appropriates $10 million in SFY 2022 to fund grants awarded under R.C. 122.12 and R.C. 122.121.
  5. Meat Processing Program: The budget bill creates a new meat processing program fund within the Ohio Department of Development in order to provide up to $250,000 grants to meat processing plants for facility improvements and equipment purchases.

H.B. 110 – Ohio’s recently enacted budget bill – has changed the definition of “Public Infrastructure Improvement” in R.C, 5709.40(A) to add language which will now permit off-street parking facilities to be financed with PILOTs, including those off-street parking facilities in which all or a portion of the parking spaces are reserved, i.e. non-public, when such reserved use is determined to be necessary for economic development purposes.

H.B. 110 also enacts new R.C. 5713.083 which require owners of exempt property to notify their respective county auditor (on a to be developed Ohio Dept. of Taxation form) as to the property’s ceasing to be exempt from real property taxes, with charges imposed for an owner’s failure to so notify.

H.B. 110 lastly provides the below specificity regarding when an urban redevelopment TIF (R.C. 5709.41) commences:

  • A 5709.41 TIF exemption commences on the effective date of the TIF ordinance and with the tax year specified in the TIF ordinance so long as the year specified in the TIF ordinance commences after the  effective date of the ordinance.
  • If the 5709.41 TIF ordinance specifies a year commencing before the effective date of the ordinance or specifies no year,  the 5709.41 TIF exemption commences with the tax year in which an exempted improvement first appears on the tax list and that commences after the  effective date of the TIF ordinance.
  • In lieu of stating a specific year, the  5709.41 TIF ordinance may provide that the exemption commences in the tax year in  which the value of an improvement exceeds a specified amount or in which  the construction of one or more improvements is completed, provided that such tax year commences after the effective date of the 5709.41 TIF ordinance.
  • In lieu of stating a specific year, the 5709.41 TIF ordinance may allow for the exemption to  commence in different tax years on a parcel-by-parcel basis, with a separate  exemption term specified for each parcel. The exemption ends on the date specified in the ordinance as the date the improvement ceases to be a public purpose.

In addition to the Brownfield Remediation Grant Program, H.B. 110 also creates within Ohio Department of Development (ODOD) a new grant program (new R.C. 122.6512) that covers up to 75% of a project’s total cost to demolish commercial and residential buildings and revitalization of surrounding non-brownfield properties. The new grant program is called the Building Demolition and Site Revitalization Program. H.B. 110 provides that the Ohio Department of Development will determine eligibility for the new program via administrative rule. The program must be operational and accepting application within 90 days of budget bill’s effective date (September 29, 2021). H.B. 110 appropriates $150 million for the new program for state  fiscal year 2022. H.B. 110 further provides that $500,000 will be reserved for each Ohio county for the first year of the program with all remaining funds after such reservation awarded by ODOD on a first-come first served basis. There is authority to re-appropriate any unencumbered balance of funds in the program to SFY 2023.