Retail Facilities Enterprise Zone Exclusion Now Permitted Retail Facilities Enterprise Zone Exclusion Now Permitted

Retail Facilities Enterprise Zone Exclusion Now Permitted

For many years, retail facilities located outside municipal corporations were ineligible for tax abatement. However, recent amendments to law, contained in House Bill 182 provide for the expansion of enterprise zone tax abatements to any place of business used primarily for making retail sales in unincorporated areas.
 
Under the new law (now codified in Sections 5709.631 and 5709.634 of the Revised Code), a county seeking to include a retail facility in an enterprise zone may petition the board of education of each school district affected by the proposed zone to waive the retail facilities exclusion. School boards may waive the exclusion by adopting a resolution approved by the majority of board members. The new law specifies that by waiving the retail facilities exclusion, a school board does not waive its right to approve enterprise zone agreements as required under existing law. Existing law requires school board approval of enterprise zone agreements in cases where the property tax exemption percentage exceeds 75% of the otherwise taxable value or if the exemption continues for more than ten years.
 
It should be noted that while this retail exemption is styled as something to be granted by counties, Sections 5709.63 and 5709.632 of the Revised Code, still prohibit a county from granting an enterprise zone tax abatement for specific businesses in unincorporated areas without township approval. As these new enterprise zone retail agreements could be of significant benefit to counties who derive revenue from sales taxes, this new provision at least suggests it might be possible to provide for a sharing of sales tax revenues derived from such retail enterprise zones.  However, no explicit authority for this sharing presently exists.
 
This exemption is likely to be most useful for large-scale retail projects, such as shopping malls, outlet centers or perhaps high impact retailers like Bass Pro or Ikea. Before any such exemption is granted, however, all parties involved should consider the possible benefits of other programs, like tax increment financing, that would not be fully useable if such abatements are granted. In addition, a township may wish to consider, in exchange for its consent to the retail enterprise zone, requiring the property owner to include the exempted property in a joint economic development district.
 
For more information regarding this potential tax abatement, please contact Kip Wahlers, Chris Magill or any member of Ice Miller’s Ohio Public Finance or Economic Development Team.
 
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
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