Many of Ohio's fire and emergency-medical districts will keep more of their property-tax revenue after a new law goes into effect March 23.
On Dec. 22, Gov. John Kasich signed House Bill 69 into law to exempt certain districts from having revenue redirected as part of tax-increment-financing agreements.
State representatives on June 21 unanimously approved HB 69 by a vote of 92-0, according to Ohio General Assembly records.
The Ohio Senate, after amending the bill, on Dec. 13 approved it unanimously by a vote of 32-0; it was returned to the House on Dec. 13 for a vote, as amended, where it was approved 85-7 before being sent to Kasich.
The law will apply only to township fire departments that provide EMS and fire-suppression services to a municipality.
Notable examples in central Ohio include Mifflin Township for Gahanna, Jackson Township for Grove City, Norwich Township for Hilliard, Plain Township for New Albany and Washington Township for Dublin. City fire departments, such as those in Upper Arlington and Whitehall, are not subject to the new law.
Although state lawmakers overwhelmingly favored the measure, officials at the local levels were divided, as city officials and township leaders consistently expressed opposing views as HB 69 wound its course last year.
Tax-increment-financing district proponents, which included many mayors and development directors of municipalities, said the bill would significantly erode the purpose of TIFs, whereas agencies from which TIFs usually divert property taxes, such as township fire departments, said the bill would restore fairness to a process over which they have no control.
A TIF is an economic-development mechanism available to local governments to finance public-infrastructure improvements and, in certain circumstances, residential rehabilitation, according to the Ohio Development Services Agency.
A TIF locks in the taxable worth of real property at the value it holds at the time the authorizing legislation is approved, diverting the incremental revenue from traditional property-tax-collecting entities to designated uses, such as funding the necessary improvements or infrastructure to support a new development.
In addition, HB 69 applies only to incentive-district TIFs, not parcel TIFs, according to David Meadows, Hilliard's economic-development director.
An incentive-district TIF is defined as an aggregation of individual parcels comprising an area no larger than 300 contiguous acres, or one that exhibits at least one characteristic of economic distress, according to the Ohio Development Services Agency.
The service payments collected through an incentive-district TIF can be used to fund public infrastructure improvements anywhere in the district, even if the public infrastructure does not directly benefit every parcel within the district.
Incentive-district TIFs can be commercial or residential in nature, or a combination of both, Meadows said.
Meanwhile, a parcel TIF applies to a single parcel and generally is not permitted for residential uses unless the parcel is in a blighted area, Meadows said.
Effects on municipalities
Most of Hilliard's TIFs are of the parcel variety, Meadows said.
"We don't have many incentive-district TIFs," he said.
Thus, the new law is not expected to affect Hilliard as much as neighboring communities because Hilliard voters in 2016 approved Issue 9, a charter amendment to prohibit City Council from rezoning by emergency and from using TIF agreements for residential developments and those with residential components.
Still, Hilliard Mayor Don Schonhardt said, the new law hinders development efforts.
"I continue to be disappointed in the state legislature's efforts to reduce the tools available to advance economic development," he said. "This legislation erodes the effectiveness of certain TIFs and makes it more difficult to finance public infrastructure (that) benefit not only the development that generates new tax revenue, but also our citizens which expect quality-of-life amenities.
Dublin officials expressed a similar view.
"Any changes in state law that restrict a city's ability to fully utilize economic development tools are of a concern to the city of Dublin," said Angel Mumma, Dublin's director of finance.
The new law could have an effect on Dublin's Bridge Street District, she said.
"This area is anticipated to offer some owner-occupied housing within its limits," Mumma said. "For those residential development areas within the district that are not already in an approved incentive district, the city will be required to reimburse certain township and emergency-medical-service levy revenue forgone if we cannot come to some other mutual agreement with Washington Township.
"A reduction in the revenue available to the city by utilizing this economic tool ultimately results in a reduction of funds available for use on public improvements which benefit not only the Bridge Street District, but the community at large – improvements such as parks, roadway networks and neighboring maintenance projects."
When asked for an example of how the new law might affect a future Dublin project financially, Dublin spokeswoman Sue Burness said "the anticipated impact of this legislation is so minimal we are choosing not to provide any additional comment."
Effects on townships
The origins of HB 69 began with former Rep. Cheryl Grossman (R-Grove City), who in 2016 asked Rep. Bob Cupp (R-Lima) to consider the legislation in response to the concern of townships' loss of revenue through TIF agreements.
Cupp said he agreed to sponsor the bill in reaction to townships whose officials had expressed concern about the loss of property-tax-revenue through TIFs while being tasked with providing the same – or even additional – EMS and fire support.
"Tax-increment financing provides municipalities with an economic-development mechanism that encourages community improvements. However, forgone tax revenue can deprive local emergency services from funds raised by levies," Cupp said in February. "(This new law) allows local fire and emergency medical services to retain levy revenue while their service area benefits from the creation of a TIF district."
Washington Township trustee Denise Franz King said she is pleased with the outcome of HB 69.
"As a general rule, public entities should stay within their revenues," she said. "Just because they can pirate funds from other public-service partners does not mean it is right. In the end, the other levy-funded agencies will have to ask the public for more levy funds to replace what has been taken."
Norwich Township leaders said they were pleased with the new law.
"It balances the playing field and gives us a seat at the table and the opportunity to have the same consideration the school districts get (concerning proposed TIF agreements)," Norwich trustee Chuck Buck said. "We are not anti-growth (and) we have not opposed something that will bring jobs to our community."
Sen. Stephanie Kunze (R-Hilliard), a former Hilliard councilwoman, was among the state lawmakers who backed the measure.
"This bill protects certain township fire departments from losing funding from their fire and emergency-service levies resulting from municipal TIFs," Kunze said.
Rep. Mike Duffey (R-Worthington), however, said he ultimately voted against HB 69 because of unrelated amendments that he could not support.
Duffey was the only central Ohio legislator among the seven who voted against the bill after it left the Senate.
"The bill was amended in the Senate to add a bunch of unrelated provisions, some of which I opposed," he said. "(But) I do not oppose the original bill, which protected revenue for fire and EMS during TIFs."
The unrelated amendments, Duffey said, concerned compensating counties for a sales tax lost when the federal government resolved that sales taxes could not be applied to Medicaid-managed care.
"I did not feel state taxpayers should pay to reimburse counties for revenue that did not exist six to eight years ago and that was being taken away by the federal government," Duffey said.
The amendment Duffey was referring to "increases the transition payments to be made to counties and transit authorities to mitigate their sales-tax revenue loss from the cessation of the sales tax on Medicaid-managed care services provided by health-insuring corporations under contracts with the state," according to an email from Brad Miller, press secretary and deputy communications director for House Speaker Clifford Rosenberger.
Keys dates for House Bill 69 in the 132nd General Assembly:
• Feb. 15, 2017: Introduced in the Ohio House of Representatives
• Feb. 21, 2017: Referred to the State and Local Government Committee
• May 10, 2017: Amended in committee
• June 21, 2017: Approved by the House, 92-0
• June 22, 2017: Introduced in the Ohio Senate
• June 28, 2017: Referred to the Ways and Means Committee
• Dec. 13, 2017: A substitute bill is reported in committee
• Dec. 13, 2017: Approved by the Senate, 32-0
• Dec. 13, 2017: House concurs with Senate amendments, 85-7
• March 23, 2018: Legislation is effective, with certain provisions effective Dec. 22, 2017