As Introduced

134th General Assembly

Regular Session S. B. No. 344

2021-2022

A BILL

To amend sections 107.036 and 5747.98 and to enact section 122.91 of the Revised Code to create the Ohio community revitalization program, authorizing nonrefundable income tax credits for undertaking community projects.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 107.036 and 5747.98 be amended and section 122.91 of the Revised Code be enacted to read as follows:

Sec. 107.036. (A) For each business incentive tax credit, the main operating appropriations act shall contain a detailed estimate of the total amount of credits that may be authorized in each year, an estimate of the amount of credits expected to be claimed in each year, and an estimate of the amount of credits expected to remain outstanding at the end of the biennium. The governor shall include such estimates in the state budget submitted to the general assembly pursuant to section 107.03 of the Revised Code.

(B) As used in this section, "business incentive tax credit" means all of the following:

(1) The job creation tax credit under section 122.17 of the Revised Code;

(2) The job retention tax credit under section 122.171 of the Revised Code;

(3) The historic preservation tax credit under section 149.311 of the Revised Code;

(4) The motion picture and broadway theatrical production tax credit under section 122.85 of the Revised Code;

(5) The new markets tax credit under section 5725.33 of the Revised Code;

(6) The research and development credit under section 166.21 of the Revised Code;

(7) The small business investment credit under section 122.86 of the Revised Code;

(8) The rural growth investment credit under section 122.152 of the Revised Code;

(9) The opportunity zone investment credit under section 122.84 of the Revised Code;

(10) The transformational mixed use development credit under section 122.09 of the Revised Code;

(11) The community revitalization credit under section 122.91 of the Revised Code.

Sec. 122.91. (A) For purposes of this section:

(1) "Business day" means a day of the week excluding Saturday, Sunday, and a legal holiday as defined under section 1.14 of the Revised Code.

(2) "Economically disadvantaged community" means a low-income community as defined in section 45D of the Internal Revenue Code.

(3) "Taxpayer," "taxable year," and "Internal Revenue Code" have the same meanings as in section 5747.01 of the Revised Code.

(4) "Community revitalization project" and "project" mean a community project designed to incentivize the revitalization of the state's communities. This may include a complete project or a distinct phase of a larger project.

(5) A project is located in a township only if it is located in the unincorporated area of the township.

(B) There is hereby created the Ohio community revitalization program. Under the program, a person undertaking a community revitalization project may apply to the director of development for the right to claim or transfer a nonrefundable credit against the tax levied under section 5747.02 of the Revised Code.

The application shall be made on forms prescribed by the director. The director shall accept and review applications submitted under this section during two periods in a fiscal year, the first of which begins on the first day of July and ends after the thirtieth day of September, and the second of which begins on the first day of January and ends after the thirty-first day of March. If any of those dates fall on a day that is not a business day, then the application period begins on or ends after the next business day, as applicable.

The person shall include the following information with the person's application:

(1) A description of the proposed community revitalization project and project site, and whether the application is made on the basis of a distinct phase of a larger project;

(2) Documentation demonstrating the availability of the proposed project site;

(3) The applicant's construction and development cost estimates for the project, bearing certification from a person qualified to provide such assessments, such as an architect or engineer. Such estimates may include all the costs listed in division (D)(1)(a) of this section, but shall not include estimates of costs incurred or expected to be incurred before the applicant receives a credit allocation under division (C)(2) of this section.

(4) Financial statements with estimates demonstrating the project's financial solvency, which may be demonstrated, in part, by assuming the receipt of a credit allocation under division (C) of this section;

(5) Project renderings or images demonstrating the final outcome of the project through a visual depiction thereof.

The application shall be accompanied by a five hundred dollar application fee and an ordinance or resolution expressing support for the project adopted by the legislative authority of the municipal corporation or board of trustees of the township in which the proposed project will be located. The application fee shall be credited to the tax incentives operating fund created under section 122.174 of the Revised Code.

(C)(1) The director shall evaluate and rank each complete application timely submitted under division (B) of this section based on the following factors:

(a) Project feasibility, such as by demonstrating an amount of financing secured or committed, existing end user agreements, and cost estimates from architects, engineers, and contractors;

(b) Economic impact of the project with a preference towards projects in low-income or high-unemployment areas;

(c) Social impact the project will have on the surrounding community such as by bringing assets to the community that are otherwise lacking, including critical infrastructure such as health or food access points;

(d) Physical scope of the project with a preference for larger projects that will maximize the economic stimulus effect on a community by creating more construction jobs and providing a larger area of physical improvement. Physical scope may include rehabilitated historic buildings, with or without the tax credit authorized by section 149.311 of the Revised Code, and other buildings, building additions, and new construction that is part of the project scope identified in the application.

(e) Alignment with state priorities, which may include the creation of low-income and middle-income housing, the purchase and revitalization of existing structures for mixed-use commercial and residential development, and the development of job-creating commercial or industrial facilities.

(2) The director shall review applications under division (C)(2) of this section and issue credit allocations for approved projects, in accordance with the director's ranking and subject to the limitations in division (C)(3) of this section, not later than the thirty-first day of December for applications submitted during the first funding period and not later than the thirtieth day of June for applications submitted during the second funding period in each fiscal year. If either of those dates fall on a day that is not a business day, then the director must review and rank applications and issue credit allocations not later than the next business day. A project's credit allocation shall equal the lesser of five million dollars or either fifteen per cent of the amount of the applicant's estimated costs reported under division (B)(3) of this section or twenty per cent of such costs if the project is located in an economically disadvantaged community. The director may award a credit allocation for each distinct phase of a larger community revitalization project, and the five-million-dollar limitation described in division (C)(2) of this section applies to each phase of such a project.

The director shall notify an applicant, in writing, whether or not the applicant's project has been awarded a credit allocation under division (C)(2) of this section and, if approved, the amount of the allocation and the date by which a project must be completed, which shall be two years after the date the notification is sent. An applicant whose application is denied may file an application under division (B) of this section for a subsequent funding period.

(3) The director shall not approve credit allocations in a fiscal year in a total amount that exceeds one hundred million dollars.

(D)(1) Subject to division (D)(2) of this section, within fourteen days after completion of a community revitalization project that has received a credit allocation under division (C) of this section, the applicant for that allocation shall submit an application to the director of development for a tax credit certificate authorizing the applicant to claim a credit under division (E) or transfer a credit under division (F) of this section. The applicant shall include the following information with this application:

(a) An itemized cost breakdown of the project with third-party verification of all costs incurred. Only expenses incurred by the applicant following receipt of the credit allocation shall be included, including those costs for site acquisition; architectural, design, planning, and engineering costs; local, state, and federal tax and legal compliance consulting fees; legal fees associated with project formation; and costs of establishing connections to public utilities and infrastructure.

(b) Proof that the project is complete and of the date of its completion, including visual proof of the completed project.

The application shall be accompanied by an ordinance or resolution of support for the completed project adopted by the legislative authority of the municipal corporation or board of trustees of the township in which the completed project is located. The ordinance or resolution shall not be the same ordinance or resolution submitted under division (B) of this section.

If the director determines that the project that is the subject of the application has been completed, the director shall issue, within sixty days after receipt of a complete application, a tax credit certificate to the applicant that shall include a unique number and list the amount of the tax credit the applicant may claim or transfer, which shall equal the lesser of the amount of the credit allocation or either fifteen per cent or, if the project is located in an economically disadvantaged community, twenty per cent of the amount of costs reported under division (D)(1)(a) of this section.

(2) No tax credit certificate may be issued under division (D)(1) of this section on the basis of a project that is not completed within two years after the applicant is sent notice of a credit allocation under division (C) of this section.

(E) There is hereby allowed a nonrefundable credit against a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code for a taxpayer that holds a tax credit certificate issued under division (D) of this section or that has been transferred the right to claim such a credit pursuant to division (F) of this section. The credit shall equal the credit amount authorized on the certificate. The credit shall be claimed for the taxable year in which the certificate is issued and in the order required under section 5747.98 of the Revised Code. Any unused amount may be carried forward for the following five taxable years.

If the certificate is issued to a pass-through entity for an investment by the entity, any taxpayer that is a direct or indirect investor in the pass-through entity may claim the taxpayer's proportionate or distributive share of the credit against the taxpayer's aggregate amount of tax levied under section 5747.02 of the Revised Code. A person that is not a taxpayer shall not claim the credit, but if the person is the applicant to which the certificate is issued, the person may transfer the right to claim the credit under division (F) of this section.

A taxpayer claiming a credit under this section shall submit a copy of the certificate with the taxpayer's return or report.

(F) A person that holds a tax credit certificate issued under division (D) of this section, on or before the last day of the person's taxable year or, if the person is not a taxpayer, on or before the last day of the calendar year in which the certificate is issued, may transfer the right to claim all or part of the credit to any other person. To effectuate the transfer, the transferor must notify the tax commissioner, in writing, that the transferor is transferring the right to claim all or part of the credit stated on the certificate. The transferor shall identify in that notification the certificate's number, the name and the tax identification number of the transferee, the amount of credit transferred to the transferee, and, if applicable, the amount of credit retained by the transferor. The transferee may claim the amount of credit received under this division pursuant to and in the manner required under division (E) of this section, except that the credit must be claimed for the transferee's taxable year in which the transfer is made. A transferee may not transfer the right to claim the credit to any other person.

(G) The director of development shall adopt rules in accordance with Chapter 119. of the Revised Code as are necessary for the administration of this section, including rules describing the manner by which the director shall weigh the factors described in division (C)(1) of this section and a detailed description of such factors.

Sec. 5747.98. (A) To provide a uniform procedure for calculating a taxpayer's aggregate tax liability under section 5747.02 of the Revised Code, a taxpayer shall claim any credits to which the taxpayer is entitled in the following order:

Either the retirement income credit under division (B) of section 5747.055 of the Revised Code or the lump sum retirement income credits under divisions (C), (D), and (E) of that section;

Either the senior citizen credit under division (F) of section 5747.055 of the Revised Code or the lump sum distribution credit under division (G) of that section;

The dependent care credit under section 5747.054 of the Revised Code;

The credit for displaced workers who pay for job training under section 5747.27 of the Revised Code;

The campaign contribution credit under section 5747.29 of the Revised Code;

The twenty-dollar personal exemption credit under section 5747.022 of the Revised Code;

The joint filing credit under division (G) of section 5747.05 of the Revised Code;

The earned income credit under section 5747.71 of the Revised Code;

The nonrefundable credit for education expenses under section 5747.72 of the Revised Code;

The nonrefundable credit for donations to scholarship granting organizations under section 5747.73 of the Revised Code;

The nonrefundable credit for tuition paid to a nonchartered nonpublic school under section 5747.75 of the Revised Code;

The nonrefundable vocational job credit under section 5747.057 of the Revised Code;

The credit for adoption of a minor child under section 5747.37 of the Revised Code;

The nonrefundable job retention credit under division (B) of section 5747.058 of the Revised Code;

The enterprise zone credit under section 5709.66 of the Revised Code;

The credit for beginning farmers who participate in a financial management program under division (B) of section 5747.77 of the Revised Code;

The nonrefundable community revitalization credit under section 122.91 of the Revised Code;

The credit for selling or renting agricultural assets to beginning farmers under division (A) of section 5747.77 of the Revised Code;

The credit for purchases of qualifying grape production property under section 5747.28 of the Revised Code;

The small business investment credit under section 5747.81 of the Revised Code;

The nonrefundable lead abatement credit under section 5747.26 of the Revised Code;

The opportunity zone investment credit under section 122.84 of the Revised Code;

The enterprise zone credits under section 5709.65 of the Revised Code;

The research and development credit under section 5747.331 of the Revised Code;

The credit for rehabilitating a historic building under section 5747.76 of the Revised Code;

The nonresident credit under division (A) of section 5747.05 of the Revised Code;

The credit for a resident's out-of-state income under division (B) of section 5747.05 of the Revised Code;

The refundable motion picture and broadway theatrical production credit under section 5747.66 of the Revised Code;

The refundable jobs creation credit or job retention credit under division (A) of section 5747.058 of the Revised Code;

The refundable credit for taxes paid by a qualifying entity granted under section 5747.059 of the Revised Code;

The refundable credits for taxes paid by a qualifying pass-through entity granted under division (I) of section 5747.08 of the Revised Code;

The refundable credit under section 5747.80 of the Revised Code for losses on loans made to the Ohio venture capital program under sections 150.01 to 150.10 of the Revised Code;

The refundable credit for rehabilitating a historic building under section 5747.76 of the Revised Code.

(B) For any credit, except the refundable credits enumerated in this section and the credit granted under division (H) of section 5747.08 of the Revised Code, the amount of the credit for a taxable year shall not exceed the taxpayer's aggregate amount of tax due under section 5747.02 of the Revised Code, after allowing for any other credit that precedes it in the order required under this section. Any excess amount of a particular credit may be carried forward if authorized under the section creating that credit. Nothing in this chapter shall be construed to allow a taxpayer to claim, directly or indirectly, a credit more than once for a taxable year.

Section 2. That existing sections 107.036 and 5747.98 of the Revised Code are hereby repealed.

Section 3. The first application period as described in division (B) of section 122.91 of the Revised Code, as enacted by this act, shall be the first application period that begins six months after the effective date of this section.