The time to act is right now! As we have been expecting, the House Ways and Means Committee has removed historic tax credits, during the tax reform process.
We are in a national campaign to Save Historic Tax Credits. Everyone who has used these credits or benefited from these credits needs to act now.
We realize the importance of national tax reform. But we also think the tax credits that work for American communities, which have proven to provide a positive return should be retained.
In Ohio the impact of historic tax credits has been truly phenomenal.
In Ohio 1976-2016 there have been 1,898 completed projects = Total Investment $4,091,824,967
In Ohio 2012-2016 Total Rehabilitation Costs $1,392 billion
In Ohio 2012-2016 historic tax credit projects created 24,616 Jobs
The risk is assumed 100% by the private sector, the credit is not taken until 100% certified completion.
We have seen spectacular results in Ohio’s small towns: Chillicothe to Painesville, mid-sized towns Hamilton to Canton, and the biggest cities: Cincinnati to Cleveland economies have been transformed by historic tax credits.
- Your congressman
- Senator Rob Portman
- Congressmen Tiberi and Renacci, members of House Ways and Means Committee
Ask them to put Historic Tax Credits back in, tell your story, tell what you’ve seen and experienced, let them know this is a vital tool for Ohio. It allows Ohio communities to compete with coast for talent, and investments.
Share this with everyone on your team and with other community members.
To be successful we need full participation.
A good resource for more complex questions is the NTCIC Historic Tax Credit Coalition
The U.S. Green Building Council (USGBC) recently recognized Ohio for having more LEED-certified K-12 schools than any other state in the country.
LEED, or Leadership in Energy and Environmental Design, is the world’s most widely used green building rating system.
USGBC, the creators of LEED, honored the Ohio Facilities Construction Commission (OFCC) for assisting more than 300 K-12 buildings across the state to achieve LEED certification. That number makes Ohio the nationwide leader in K-12 sustainable construction, well ahead of second-place California with 121 LEED certified schools.
The recognition was presented to OFCC Executive Director David Williamson at USGBC’s Design
Columbus Education Day, held at Ohio State University. Williamson noted that this has been a 10-year process for the commission, which first mandated the use of environmentally friendly design techniques in state-funded K-12 projects back in 2007.
“Our commission has always stressed innovation and new ideas into our program,” Williamson added. “We believe that our efforts in this area have yielded both environmental benefits and operational cost savings for public owners in Ohio. We look forward to our continued work with USGBC in this vital area.”
Ohio’s LEED-certified schools are designed to be more energy efficient, save money and reduce resource consumption. Buildings in OFCC-funded LEED projects are designed, on average, to be 33 percent more energy efficient, reduce potable water consumption by 35 percent, and provide healthier learning environments for children. The 300 school projects have implemented recycling practices that have diverted an average of 77 percent construction waste for each project, meaning that more than 500,000 tons of waste have been kept out of local landfills.
The program also has an economic impact, the commission pointed out: through LEED, the OFCC has spent approximately $1.4 billion to purchase products and materials within 500 miles of each project, thus supporting the local economies.
“Where we learn matters. At the U.S. Green Building Council we believe that children all over the world deserve the opportunity to learn in a green school that sustains the world they live in, enhances their health and well-being and prepares them to be global sustainability citizens,” said Mahesh Ramanujam, USGBC CEO & president. “We applaud Mr. Williamson and the OFCC for their commitment to Ohio’s students. By prioritizing green schools, the OFCC is leading the way and helping USGBC continue toward our vision of a sustainable built environment within a generation.”
In addition to Ohio’s comprehensive public K-12 school construction and renovation program, the OFCC guides capital construction projects for state agencies and state-supported universities and community colleges as well.
The 2020 Tax Policy Study Commission has issued its final report after a two-year review of Ohio’s tax system, but those hoping for a set of firm policy recommendations will likely be disappointed. That’s because the commission’s report comes down to one recommendation: Further study is required.
The bulk of the report’s 323 pages consist of copies of public testimony submitted to the commission. The only recommendation contained in the document is that the Tax Expenditure Review Committee conduct a more in-depth study moving forward. (Final Report)
“Although the (commission) heard testimony on the tax credits and expenditures, a more thorough review is needed and is required as part of the permanent Tax Expenditure Review Committee,” the report recommends.
Historic Preservation Tax Credit
By Oct. 31, 2016, the group had published its findings on the historic preservation tax credit, calling for stronger reporting and tracking requirements, increased disclosure of how much of the credit will support the proposed project, and regular budget language depicting the total allowable amount of credits that may be authorized during the biennium.
Sen. Bob Peterson (R-Sabina), who co-chaired the panel along with Rep. Tim Schaffer (R-Lancaster), called the commission’s work a “great process” that resulted in plenty of information useful during budget talks earlier this year.
“Any time you have a focused look at this sort of information it’s helpful.” he said in an interview.
Despite the final report’s lack of conclusive recommendations, taking the view that the commission accomplished little would be inaccurate, he said. In addition to the final report, the commission released more detailed reports on the oil and gas severance tax and the historic preservation tax credit over the last two years.
“Certainly there’s more to do, but I would argue look where the state of Ohio was eight years ago or even two years ago in the budget you’ll find substantial changes in (tax) policy,” Sen. Peterson said. “It was a great process, a great opportunity to sit down and work with tax policy.”
Rep. Jack Cera (D-Bellaire), one of two minority members on the committee, was less impressed with the process.
“I don’t think it was as productive as I would have liked it to have been,” Rep. Cera said, who added he expected the process would be more closely tied to tax proposals in recent state budgets.
“I thought the thinking was, ‘Let’s create this commission to look at where the tax policies need to be changed and be prepared for the next budget.’ Of course…with the revenue issues and everything, there really weren’t a whole lot of tax law changes.”
Sen. Charleta B. Tavares (D-Columbus), the group’s other minority member, acknowledged the brevity of the final report but said she agrees that tax policy expenditures need to be thoroughly reviewed.
“These are foregone taxes that reduce our budget revenues, and consequently, the amount of revenue that can be used to provide for the needs of our constituents,” Sen. Tavares said in a statement. “Since my time in the Senate, I have advocated for and sponsored legislation and amendments to create a Tax Expenditure Review Committee…. This committee is necessary to ensure that Ohio has a fair and effective tax system.”
The expenditure review committee was formed by legislation last session (HB9, 131st General Assembly) and was supposed to begin meeting in June 2017.
But legislative leaders failed to appoint members by the statutory deadline, only doing so in July following prodding from Policy Matters Ohio and subsequent media attention. The group, which has a July 1, 2018, deadline for a report, has yet to meet.
With the new report issued, the 2020 study commission now ceases to exist. The state budget (HB64, 131st General Assembly) that created the 2020 group called for the publication of a final report by Oct. 1, 2017. (See Gongwer Ohio Report, October 22, 2015)
The commission’s charge was fourfold: Recommend how to transition personal income tax to a 3.5% or 3.75% flat tax by 2018; explore how to make the historic rehabilitation tax credit more effective; study how to reform the severance tax to maximize competitiveness; and review all tax credits.
Policy Matters Research Director Zach Schiller said he’s glad the group didn’t move forward with recommendations for a flat tax. But he said the recommendation to shift the burden of discussion highlights the need to get the review committee working.
“I think this has made the work of this new tax expenditure review committee all the more important and it is somewhat and it’s unfortunate it hasn’t gotten started already,” Mr. Schiller said.
Regarding the lack of specific recommendations from the 2020 group, Mr. Schiller opined, “It’s better to kick the can down the road than make recommendations that aren’t fully vetted, but that said they spent quite a bit of time having a number of hearings and I hope it isn’t time ill-spent.”
The 2020 panel first met in October 2015, the same day a working group issued a report opining that any change in the Oil and Gas Severance Tax should be based on market conditions.
Polls will be open in just 10 counties next week for special elections. Of the 11 issues that are set to appear before voters Tuesday, five are school levies or bonds.
Although turnout is typically low for special elections, there is hope that going to the ballot off-cycle could be beneficial for schools, said Van Keating, senior staff attorney for the Ohio School Boards Association.
“They can kind of target and get a lot of interest in what their issue is and perhaps people pay more attention to it because there are not a lot of other issues,” he said in an interview.
“It’s about the time where kids go back to school so people are paying attention to schools, there is an interest in schools and they’re getting involved in schools after summer, so I’d say it’s probably a good time of year,” he added.
Xenia Community City, Crestwood Local and Clark-Shawnee Local school districts are asking voters to pledge additional dollars to be used for building, renovating and equipping facilities as well as making permanent improvements.
Respectively, the districts are seeking $52 million, $23 million and $37 million bonds for their projects
Mr. Keating said voters should consider bond issues as investments in their school districts because they’ll likely be used to fund more efficient buildings and technology upgrades.
“It’s important because a lot of schools do need funding for building renovations,” he said. “Some of them are experiencing student growth and so they have a need for more space or a lot of the older schools are running into (the issue of) it’s kind of hard to keep up with modern technology and wiring.”
Meanwhile, Madison-Plains Local Schools is looking to avoid an operating deficit through a proposed additional 5.9-mill, five-year levy set to raise $2 million annually.
Waterloo Local Schools is also asking for an increase to cover current expenses. It has proposed an additional 8.25-mill continuing levy.
Other issues on the ballot include a 0.25 sales tax continuation in Ashland County to operate its jail and an additional 1.8 mills for permanent improvements to the Louisville Public Library.
The latter was set to appear on the May ballot, but it was pulled when residents called for the library’s board to consider other options that would eliminate the need for additional funding for a new facility, according to reports.
Renewal levies include those in North Canton, where residents will be asked to vote up or down for emergency medical services, and Minerva Park, which is looking to cover current expenses with dollars raised.
Camden Village ballots will include two renewal levy requests, one for police protection and another for current operating expenses.
Per Ohio law, the entire cost of special elections is paid for by those subdivisions where elections are held.
A new joint legislative committee charged with periodically reviewing state tax expenditures has been appointed. The Tax Expenditure Review Committee includes Sens. John Eklund (R-Chardon), Scott Oelslager (R-North Canton) and Vernon Sykes (D-Akron), according to the Senate Journal. Representing the House on the panel are Reps. Tim Schaffer (R-Lancaster), Gary Scherer (R-Circleville) and John Rogers (D-Mentor-on-the-Lake).
The permanent committee, created in 131-HB9 (Boose), will also include the tax commissioner or the commissioner’s designee. The representative from the Ohio Department of Taxation (ODT) will serve as a non-voting member.
Tax expenditures are provisions like the Historic Preservation Tax Credit that grant deductions, exemptions and credits to specific activities or groups of taxpayers. Under the act, a provision qualifies as a tax expenditure only if all of the following apply, according to the Legislative Service Commission (LSC) analysis of the bill:
- It could reduce revenue to the state’s General Revenue Fund.
- It may be legislatively changed or repealed.
- The attribute exempted from tax would otherwise be included as part of that tax’s defined base.
- It is not subject to an alternate tax.
There are 128 tax expenditures that satisfy this definition. The committee must establish a schedule for reviewing every tax expenditure at least once every eight years.
According to the Ohio Revised Code, the committee will review multiple factors to determine the effectiveness of a tax expenditure, including the following:
- The number and classes of persons, organizations, businesses or types of industries that are benefiting from a tax expenditure.
- The fiscal impact of the tax expenditure on state and local taxing authorities.
- Public policy objectives that might support the tax expenditure, which include the sponsor’s intent in proposing the tax expenditure, effects on economic development and growth or retention of high-wage jobs in the state, or aiding community stabilization.
- Whether the objective of a tax expenditure could have been accomplished through the use of appropriations.
- The extent to which the tax expenditure is more expansive than intended and creates negative effects or an unfair competitive advantage for its recipient.
- Potential negative effects on a population when terminating a tax expenditure.
The Tax Expenditure Review Committee must prepare a report by July 1 of every even-numbered year while in existence, detailing its findings and recommendations.
The state awarded nearly $35 million in Ohio Historic Preservation Tax Credits during the last week in June to historic building rehabilitation projects in 13 communities.
The tax credits were distributed among 30 new applicants who plan to rehabilitate 36 historic buildings. The projects are expected to spur over half a billion dollars in private investments across the state.
“Preserving these historic buildings creates opportunities for small businesses and revitalizes downtown’s,” Development Services Agency Director David Goodman said in a statement. “We’re capitalizing on what makes Ohio unique.”
Private developers will be able to use the tax credit awards to rehabilitate historic buildings, many of which are vacant and generate little economic activity. Once the rehabilitation is complete, the developers receive the tax credit and the refurbished buildings will drive further investment and increase interest in adjacent properties.
The two projects receiving the largest tax credit awards are the Dayton Arcade-Fourth Street and the Cincinnati Union Terminal, each receiving $5 million credit. The Arcade-Fourth Street project will revitalize a vacant historic public market space as a mixed-use area with housing, performance spaces, and commercial and office space. The Union Terminal project will update the historic building’s systems and spaces inside the Cincinnati Museum Center.
Northeast Ohio leads the state with just under half of all Historic Preservation Tax Credits announced by the Ohio Development Services Agency (DSA) Wednesday as part of its latest round of awards.
Of the 30 projects in six regions of the state selected for the tax credit, a dozen lie in the northeast quadrant, including a $4.5 million offering to the NASA Lewis Research Center, Development Engineering Building and Annex in Fairview Park, Cuyahoga County. The estimated project cost is more than 10 times that amount.
In Central Ohio, the Columbus Dispatch Building at 34 S. Third St., right across from the Statehouse, will also receive a tax credit of $2,228,459 which could go up to $2.9 million if funds become “available through withdrawn applications or project savings.” The total project cost is set at $29.1 million.
Overall, Northeast Ohio will receive $15,585,192 in Historic Preservation Tax Credits in the 18th funding round. Including the old Union Terminal in Cincinnati, Southwest Ohio is marked out for $10,407,500; Western Ohio, $5,186,850; Central Ohio, $2,478,459; Eastern Ohio, $713,489; and Northwest Ohio, $609,065.
DSA says the $35 million in total tax credits are expected to leverage private investments exceeding $520 million in 13 communities.
“Preserving these historic buildings creates opportunities for small businesses and revitalizes downtowns,” DSA Director David Goodman said in a release. “We’re capitalizing on what makes Ohio unique.”
Awards will help private developers rehabilitate historic buildings in downtowns and neighborhoods. Once rehabilitated, they will drive further investment and interest in adjacent properties, DSA says.
Developers are not issued the tax credit until project construction is complete and all program requirements are verified.
The full list tax credit recipients can be found here.
At its May 26, 2017 public meeting, the Ohio Board of Building Standards (BBS) adopted of what will be the next edition of the Ohio Building Code (OBC) (hereafter referred to as the 2017 OBC). The 2017 edition of the OBC will go into effect on November 1, 2017. All applications for a permit submitted on or after November 1, 2017 will be reviewed for compliance with the new OBC and its referenced standards. THERE IS NO GRACE PERIOD.
The BBS approved select rules of the Ohio Administrative Code (OAC), identified as Amendments Group XCIII (93) pursuant to Chapters 119, 3781, 3791, and 4104 of the Ohio Revised Code (ORC). The 2017 OBC is based on the International Building Code 2015 (IBC), first printing, Chapters 2 to 35 – with Ohio Amendments through April 14, 2017. Publication dates for hard and electronic versions from ICC and Thompson-Reuters are not yet available.
The full text of the approved draft can be viewed on the Board’s website at:
While there are numerous changes from the 2011 OBC to the 2017 OBC, some of the specific rules adopted in Chapters 1 through 35 of the 2017 OBC include:
- Updating the provisions for health care occupancies including revisions to the occupancy classifications based on the levels of care being provided, and new definitions for the levels of care being provided.
- Revisions throughout the OBC for better alignment with the 2012 edition of NFPA 101, which is required by the Center for Medicare and Medicaid Services (CMS).
- Reformatting Table 503 and Chapter 5 provisions for building height and area.
- Expanding the use of exit access stairs and unenclosed exit stairs, including atriums.
- Continuing the use of Chapter 34 for existing buildings in lieu of adoption of the ICC International Existing Building Code (IEBC).
Status of the Residential Code of Ohio (RCO)
The Ohio Residential Construction Advisory Committee (RCAC) recently completed review of the 2015 International Residential Code (IRC) and will begin review of the 2018 IRC once available for recommendation to the Board. It is expected that the next edition of the RCO will be based on the 2018 IRC and be effective mid to late 2018.
Status of the Ohio Fire Code (OFC)
The Ohio Department of Commerce, Division of State Fire Marshal’s (SFM) has recently issued the DRAFT of the 2017 Ohio Fire Code (OFC) and associated SFM rules at: http://www.com.ohio.gov/fire/OhioFireCodeInformation.aspx. Further details about OFC rule-related meeting dates, updates regarding procedures for and the status of the OFC update process, and proposed OFC related rule/hearing information can be found on the SFM’s website at http://www.com.ohio.gov/fire/OhioFireCode.aspx. No firm adoption date has been established at this time.
The Ohio Senate Finance Committee released its version of the state budget bill, Sub. HB 49 Monday agreeing with AIA Ohio on all three issues architects have raised relative to the original bill Governor Kasich introduced last January:
First, it removed a House inserted provision that allowed the Department of Administrative Services to circumvent the Qualification Based Selection of Architects (QBS). The language would have allowed DAS to award its own design and construction contracts as “supplies” or “services” contracts under R.C. Chapter 125, thereby circumventing R.C. Chapter 153 construction law. Using this language, DAS could have authorized a private third-party administrator to bid and award construction contracts, without the transparency and fair processes required under ORC 153. Further, DAS could have used its cooperative purchasing authority to extend this same contract to all political subdivisions. The state’s construction authority, OFCC, could not have challenge these contracts since “a contract awarded by DAS takes precedence over the commission’s authority.”
When this provision was inserted into HB 49 by the House, AIA Ohio issued an Action Alert asking members to communicate opposition. Points made about the provision:
- It bypasses the competitive processes and protections of standard construction under ORC Chapter 153, including advertising, bonding, subcontractor protections, etc.;
- It creates a path for all political subdivisions to avoid competitive bidding for construction;
- It could be a path to “pay to play” and the selection of less qualified professionals;
- It makes the award of construction contracts less transparent;
- It breeds confusion and a sense of unfairness within the design and construction industry in Ohio;
- It provides no legal recourse to challenge the appropriateness of a construction contract awarded by a non-construction agency (DAS).
Second, The Senate Finance Committee followed the House of Representatives by leaving intact the House’s removal of Governor Kasich’s provision that would have extended the sales tax to both interior and landscape design services.
Third, the Senate Finance Committee maintained the provision that’s intended to address the 2015 U.S. Supreme Court decision against the North Carolina Board of Dental Examiners that ruled they violated federal antitrust laws because members of the state’s dental board were active participants in the profession they regulated.
HB49 proposes the creation of a third-party review process by the Department of Administrative Services (DAS), in which the DAS would review any action taken by or on behalf of a board that could be subject to antitrust laws. Not only would this protect boards from costly legal action for antitrust-related concerns, it would also prevent unnecessary delays in business decisions the boards make and promote better coordination and efficiency within the licensing boards structure.
Finally, HB 49 continues to fund the operation of the Ohio Architects Board, though at a slightly lower level than the House version. Faced with a projected $1 billion shortfall in both sales and income taxes, senators balanced the budget with a 3-4% across the board cut in the administrative costs for state agencies ($20 million), more targeted cuts to agency programs ($100 million), the elimination of millions of dollars in earmarks and reducing Medicaid $200.
Following the unveiling of the Senate Finance Committee’s Substitute Bill, it was accepted by the Committee and will undergo several additional hearings where minor changes may be made prior to being approved by the full Senate on June 21. From there it will be reconciled by a conference committee composed of House and Senate leaders before being sent to Governor Kasich for his signature prior to June 30.
At this point state lawmakers have heard from AIA members and have responded favorably to all of AIA Ohio’s Budget Bill concerns. We’ll update you with any meaningful developments as the bill progresses through the Conference Committee and on to the Governor’s desk.