Working group makes recommendations on state tax credit program

A working group created by Lieutenant Governor and Ohio Department of Development (ODOD) director Lee Fisher to address issues with the Ohio Historic Preservation Tax Credit (OHPTC) has submitted its suggestions for the future of the program, including ideas on how to handle the dozens of unfunded projects.

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, after only 37 of the 115 submitted applications were approved.

The legislation creating the OHPTC, Sub. H.B. 149, set a cap on the number of projects per year, but not on the dollar amount.

As a result, some developers were put in the precarious position of having obtained fee simple ownership of their properties to qualify for the program, then having the source of funding for their projects pulled.

After hearing concerns from applicants and stakeholders, Fisher appointed a working group on April 3 to begin looking at language for a proposed new tax credit program and to identify possible sources of financial assistance for projects that were left out of the money when the former program was unexpectedly closed.

Among the suggestions of the working group, which included local members Chad Munitz of 3CDC and Tim Voss of Middle Earth Developers:

* Investment in Ohio will come with effective incentives, a high level of confidence, and fewer restrictions. States without dollar caps see the highest level of investment and participation.

* Approve all qualified projects waiting in the queue with the $120 million in funding expected to be allocated in 2009-2010. Because the development community has lost confidence in the program, a re-worked tax credit program will not be effective until this is resolved.

* Change the requirement for ownership from fee simple to "master tenant". Doing so would attract more projects.

* Do not restrict or penalize projects that chose to begin construction during the tax credit review process.

Earlier this month, a group of five developers filed a writ of mandamus with the Supreme Court of Ohio to compel ODOD to address projects still in the queue, saying that they have a "clear legal right" to have their applications approved.

A summons and complaint has been served to ODOD, Fisher, and state historic preservation officer Dr. William K. Laidlaw, Jr., but no arguments have yet been heard in the case.

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.

The 91 submitted applications that were not withdrawn or denied represent over $1.1 billion in construction for Ohio.

They are also believed to create more skilled labor jobs than new construction, and have the added benefit of ridding municipalities of buildings that are drains on their communities.

Estimates are that every dollar the state invests, four dollars are leveraged from other sources.

On Friday, the Cleveland Plain Dealer featured an editorial calling for the removal of the $120 million cap and a reinstatement of the program.

"Many, if not most, of these projects in urban cores around the state won't get done without this credit," the editorial says. "More than half of the states in this nation have such a credit. And they've got it for the same reason Ohio put it in place: It makes money."

Little has been discussed locally about the tax credit program - or preservation in general - in the Cincinnati Enquirer, the City's newspaper of record.

The stories of the writ of mandamus and of a recent pledge drive to save Meiners Flats were ignored*, and the article on preservation that appeared yesterday was pulled from the AP wire.

CORRECTION: I have been informed that the Enquirer did post this article about the writ of mandamus on April 14.

* Aside from a guest editorial by Margo Warminski

Previous reading on BC:
Ohio developers file writ with Supreme Court over tax credit program (4/11/08)
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)