Legislation recently passed by the Ohio General Assembly authorizes cities and villages to create downtown redevelopment districts (DRDs) for the purpose of rehabilitating historic buildings, creating jobs and promoting economic development in commercial and mixed-use commercial and residential areas. A DRD is an area of not more than 10 acres enclosed by a continuous boundary in which at least one historic building is being, or will be, rehabilitated. A DRD may not be created in areas used exclusively for residential purposes and shall not be used for development or redevelopment of residential areas.
The ordinance creating a DRD must include an economic development plan (the Plan) for the DRD that describes the principal purposes and goals to be served by creating the DRD, explains how the city or village will collaborate with businesses and property owners within the DRD to develop strategies for achieving such purposes and goals and describes how the service payments to be received from the DRD will be used to promote economic development and job creation within the DRD.
The municipal corporation may exempt up to 70% of the increase in assessed value of identified parcels within a DRD for up to 10 years or, with the consent or reimbursement of the affected school district, as long as 30 years. The municipality may require the owners of exempted parcels within the DRD to make service payments in lieu of taxes. The service payments may be used to: (i) finance or support loans or grants to owners of buildings within the DRD for the purpose of rehabilitating historic buildings or to make repairs or improvements to buildings that are not historic buildings; (ii) to make contributions to a special improvement district, CIC or nonprofit corporation for use to rehabilitate a historic building or otherwise promote or enhance the DRD; or (iii) to finance public infrastructure improvements, within the DRD, identified in the Plan.
Sub. H.B. 233 also authorizes the designation of an innovation district (ID) within a new or existing DRD if the district includes an area equipped with a high-speed broadband network capable of download speeds of at least 100 gigabits per second. If an ID is created, the service payments may also be used to finance or support loans or grants to business primarily engaged in a trade or business that involves research and development, technology transfer, bio-technology, information technology, or the application of new technology developed through research and development or acquired through technology transfer (a qualified business), or to incubators and accelerators that provide services and capital to qualified businesses within an innovation district. The loans or grants must be used to start or develop one or more qualified businesses within the ID.
The municipality and a property owner in a DRD may agree to impose a redevelopment charge on the property for the same purposes that service payments may be used. The redevelopment charge may be a fixed dollar amount or determined on the basis of the assessed valuation of the property or all or part of the profits, gross receipts or other revenues of a business operating on the property, including lease revenues. The redevelopment charge is treated as a lien on property and may be collected in the same manner as real property taxes. The property owner’s agreement is a covenant running with the land and binding on future owners of the land. No purchase agreement for real estate on which a redevelopment charge is levied shall be enforceable by the seller or binding on the purchaser unless the purchase agreement specifically refers to the redevelopment charge.