Ohio developers file writ with Supreme Court over tax credit program

A group of Ohio developers yesterday filed a writ of mandamus with the Supreme Court of Ohio over the failed Ohio Historic Preservation Tax Credit (OHPTC) program, saying that they have a "clear legal right" to have their applications approved.

The developers are seeking to force the Ohio Department of Development (ODOD) to process, review and approve applications submitted through OHPTC, which they say was "unilaterally and arbitrarily stopped", violating an act of Ohio law.

"No legislative or administrative authority exists for ODOD's refusal to process, review and approve the pending applications," wrote Tim Burke of Manley Burke, who is representing developers Middle Earth 617 Vine Street, LLC and The American Can Building, LLC of Cincinnati; Sherman-Grant Investments, LLC and E3 Development, LLC of Dayton; and AJH LLC of Cleveland.

Respondents named in the writ include the Ohio Department of Development, director of ODOD and Lieutenant Governor Lee Fisher, and state historic preservation officer Dr. William K. Laidlaw, Jr.

They are being represented by Attorney General Marc Dann.

On March 13, ODOD announced that the initial $120 million in funding for the OHPTC program had been exhausted and the two-year pilot program would be closed.

A total of 115 applications were filed, but only 37 were accepted.

The legislation creating the OHPTC, Sub. H.B. 149, established two application periods during which projects would be considered - from July 1, 2007 through June 30, 2008 and from July 1, 2008 through June 30, 2009.

The General Assembly's legislation stated that all projects that meet the qualifications for the program shall be funded, with a cap of 100 projects in each application year.

No provisions were made for ending the program for financial - or other - reasons.

"Assuming at least 100 applications meeting the criteria of the Program are filed, the statutory scheme offers no language to support the exercise of any discretion by the director to approve fewer than 100 qualified applications for any reason, budgetary or otherwise," Burke wrote.

A writ of mandamus, which is subject to judicial review, is normally sought by one party to compel another party to comply with a law when no other form of remedy is available.

The OHPTC program doesn't provide for appeals.

"Mandamus is appropriate to compel the Respondents to comply with the law, as contained in the Program, and to resume processing, reviewing and approving eligible applications for historic tax credits," Burke wrote.

Specifically, Burke claims the following about the developers:

* Middle Earth 617 Vine Street, LLC purchased the old Enquirer Building for $2.5 million specifically because OHPTC requires applicants to possess fee simple ownership of their properties. They submitted their application on the first day of the application period and were listed as the 57th submitted.

* The American Can Building, LLC purchased its building in 2005 and, relying on the tax credits, increased its financial investment and sped up the timeline of its work. They submitted their application on the first day of the application period and were listed as the 74th submitted.

* Sherman-Grant Investments, LLC purchased the historic Dayton Power and Light Building in 2005 and increased their level of investment due to the tax credit program. They submitted their application on the first day of the application period and were listed as the 45th submitted.

* E3 Development, LLC purchased the historic C.F. Ware Coffee Company Building in Dayton in 2004, also increasing its level of investment due to the tax credits. They submitted their application on the first day of the application period and were listed as the 46th submitted.

* AJH LLC says that the availability of the OHPTC was a major factor in their decision to rehabilitate the Andrew Jackson House in Cleveland. They submitted their application on the first day of the application period and were listed as the 41st submitted.

Governor Strickland's recent economic stimulus package calls for reconstituting the program for next year with $120 million in funding.

But those who were left out of this cycle would have to re-apply and take their chances.

The Ohio Historic Preservation Tax Credit is equal to 25 percent of qualified renovation and rehabilitation expenditures, refundable when the project is complete and generating tax revenue back to the state.

"ODOD's refusal to comply with its requirements in the Program is contrary to the legislature's intent in creating the Program to spur economic development and the rehabilitation of historic buildings in Ohio," Burke wrote.

Previous reading on BC:
Cincinnati, SW Ohio projects may receive historic tax credits after all (4/3/08)
SW Ohio largely bypassed by failed tax credit program (3/18/08)