This past spring, the Kasich Administration put another $15 million in grant funding into the Clean Ohio program. (See prior post). While a public announcement has yet to be made regarding grant awards for the remaining $15 million, it is my understanding that the money is allocated. Announcements may be made next week at the Ohio Economic Development Association 2013 Summit.
After this last $15 million has been spent, what is the future in Ohio for brownfield grant funding? The Administration has discussed a possible rollout of a new program by year's end. On multiple occasions, the Kasich Administration has indicated the new JobsOhio brownfield grant program will closely approximate the size of the old Clean Ohio program- roughly $43 million annually.
The changes made to the Clean Ohio program this past spring provide some indication of what a new program could look like.
- Streamlined application process where selection decisions are made before investing significant money in preparing detailed applications;
- Selection criteria that will emphasis end use, job growth, job retention and enhanced tax revenue post development;
- More involvement of local economic development organizations in the selection process; and
- Continued use of Ohio EPA's Voluntary Action Program as the benchmark for determining whether a property has been adequately cleaned up
With the incredible success of the Clean Ohio program there is a lot to emulate when JobsOhio launches its new program.
The uncertain rollout date for the new program has hindered getting new brownfield projects in the que. Projects can take months before all the pieces (end use, infrastructure, financing, incentives, etc.) can be fit together. Hopefully, an announcement can be made before the end of the year so we don't lose any more momentum in this critically important area of economic development.
In the meantime are there other brownfield incentives available?
Yes. Many of the major and medium sized metropolitan areas have their own brownfield redevelopment programs. They don't provide the same level of grant funding, but they can be attractive.
Both the City of Cleveland and Cuyahoga County maintain their own brownfield incentive programs. They are similar in their approach. Here are the key aspects of the Cuyahoga County Commercial Property Reutilization Program:
- Phase I Funding: Up to $6,500
- Phase II Funding: Up to $35,000
- Up to $1 million- 4% over 10 years
- 40% forgiveness
- 15% for VAP NFA
- 15% job creation (1% per job over $44k per year)
- 10% for use of vendors in the County
- Wider eligibility for types of clean up costs covered by the program (i.e. BUSTR, RCRA, etc.)
Brownfield Redevelopment Tax Incentives
Ohio also has on it books tax incentives for brownfield redevelopment. The automatic abatement described below has been widely used, but is tricky to navigate. There was considerable debate following a determination that the automatic tax incentive didn't cover new buildings.
Automatic Abatement (R.C. 5709.87)
- 10 year Ohio Property Tax Abatement for Brownfield redevelopment
- Abatement is on the increase in value of land and buildings post clean up
- Abatement does not include new structures or fixtures after clean up (Caution: process for fixing abatement is complicated)
A more broad based tax incentive is available that does allow coverage for new structures as well as machinery. However, do to the fact these incentives must be negotiated with local officials, the local tax abatement has not been utilized frequently.
Local Tax Abatement (R.C. 5709.88)
- Tax abatement for real or tangible property(machinery and equipment)
- Up to 100% abatement for increase in value in land or buildings(including new structures)