As Reported by House Economic Development and Small Business 1
Committee 2
123rd General Assembly 5
Regular Session Sub. S. B. No. 265 6
1999-2000 7
SENATORS HORN-HAGAN-SPADA-WATTS-ARMBRUSTER-BRADY-LATELL-GARDNER 8
REPRESENTATIVES KREBS-HARTNETT-BENDER-PATTON-AUSTRIA-HOLLISTER 9
_________________________________________________________________ 11
A B I L L
To amend sections 1724.05, 1724.06, 1726.11, 13
1726.12, 5709.67, and 5709.68 of the Revised Code 14
to modify requirements concerning the Department 15
of Development's annual enterprise zone report, 16
to increase the penalty assessed against 17
municipal corporations and counties that fail to
meet annual enterprise zone agreement reporting 18
requirements from $500 to $1,000, and to transfer 19
the oversight of community improvement 20
corporations and development corporations from
the Director of Development to the Auditor of 21
State.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 23
Section 1. That sections 1724.05, 1724.06, 1726.11, 25
1726.12, 5709.67, and 5709.68 of the Revised Code be amended to 26
read as follows: 27
Sec. 1724.05. Annually, before the thirty-first day of 36
January, each EACH community improvement corporation shall submit 38
a PREPARE AN ANNUAL FINANCIAL report THAT CONFORMS to RULES 40
PRESCRIBED BY THE AUDITOR OF STATE PURSUANT TO SECTION 117.20 OF 41
THE REVISED CODE, THAT IS PREPARED ACCORDING TO GENERALLY 43
ACCEPTED ACCOUNTING PRINCIPLES, AND THAT IS CERTIFIED BY THE
BOARD OF TRUSTEES OF THE CORPORATION OR ITS TREASURER OR OTHER 45
CHIEF FISCAL OFFICER. THE FINANCIAL REPORT SHALL BE FILED WITH 46
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THE AUDITOR OF STATE WITHIN ONE HUNDRED TWENTY DAYS FOLLOWING THE 47
LAST DAY OF THE CORPORATION'S FISCAL YEAR, UNLESS the director of 49
development AUDITOR OF STATE EXTENDS THAT DEADLINE. THE AUDITOR 51
OF STATE MAY ESTABLISH TERMS AND CONDITIONS FOR GRANTING ANY 52
EXTENSION OF THAT DEADLINE. The director, by rule, shall 53
establish guidelines governing the scope and frequency of audits 55
of such corporations. Each
EACH COMMUNITY IMPROVEMENT corporation, when required SHALL 59
SUBMIT TO AUDITS by the director AUDITOR OF STATE, shall submit 60
an audit THE SCOPE AND FREQUENCY OF WHICH SHALL BE IN ACCORDANCE 61
WITH SECTION 117.11 OF THE REVISED CODE AS IF THE CORPORATION IS 63
A PUBLIC OFFICE SUBJECT TO THAT SECTION. HOWEVER, A COMMUNITY 64
IMPROVEMENT CORPORATION MAY REQUEST IN ACCORDANCE WITH SECTION 66
115.56 OF THE REVISED CODE, AS IF THE CORPORATION IS A PUBLIC 68
OFFICE SUBJECT TO THAT SECTION, THE PERFORMANCE OF ANY OF THOSE 69
AUDITS by a AN INDEPENDENT certified public accountant. The 71
director
THE AUDITOR OF STATE is hereby authorized to receive and 74
file THE annual FINANCIAL reports REQUIRED BY THIS SECTION and 75
THE REPORTS OF ALL audits PERFORMED IN ACCORDANCE WITH THIS 76
SECTION. Annual reports shall cover all financial and other 78
transactions of the corporation for the preceding year. Audits 79
shall cover such period of time as the director specifies. The 81
director AUDITOR OF STATE shall analyze the THOSE annual 83
FINANCIAL reports and THE REPORTS OF THOSE audits to determine 84
whether or not the activities of the COMMUNITY IMPROVEMENT 85
corporation INVOLVED are in accordance with Chapter 1724. of the 86
Revised Code THIS CHAPTER. 88
Sec. 1724.06. If any COMMUNITY IMPROVEMENT corporation 97
FAILS TO PREPARE AN ANNUAL FINANCIAL REPORT AS required by 98
SECTION 1724.05 OF THE REVISED CODE AND TO FILE THAT REPORT WITH 100
THE AUDITOR OF STATE WITHIN NINETY DAYS OF THE TIME PRESCRIBED 101
FOR THAT FILING BY THAT section 1724.05 of the Revised Code to 104
submit reports or audits fails or neglects to make the annual 106
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report to the director of development as required by law for 108
ninety days after the time prescribed by law for making such 110
report, or fails to submit the results of an audit within ninety 112
days of the date for submission of the audit as specified by the 114
director, OR IF THE AUDITOR OF STATE DETERMINES BY APPLYING THE 116
STANDARDS APPLICABLE TO A PUBLIC OFFICE UNDER SECTION 117.41 OF 117
THE REVISED CODE THAT ANY COMMUNITY IMPROVEMENT CORPORATION 118
CANNOT BE AUDITED AND DECLARES IT TO BE UNAUDITABLE AND THE 119
CORPORATION FAILS TO THEN PREPARE AN ANNUAL FINANCIAL REPORT AS 120
REQUIRED BY SECTION 1724.05 OF THE REVISED CODE AND TO FILE THAT 121
REPORT WITH THE AUDITOR OF STATE WITHIN NINETY DAYS OF THE TIME 123
THAT THE AUDITOR OF STATE DECLARED THE CORPORATION TO BE 124
UNAUDITABLE, the director AUDITOR OF STATE shall certify such 126
THAT fact to the secretary of state. The secretary of state THEN 127
shall thereupon cancel the articles of the COMMUNITY IMPROVEMENT 128
corporation INVOLVED by filing and recording the certificate of 130
the director AUDITOR OF STATE or a true copy thereof OF IT. 132
Thereupon all ALL of the rights, privileges, and franchises 133
conferred upon such THAT COMMUNITY IMPROVEMENT corporation by 135
such THOSE articles of incorporation THEN shall cease. The 138
secretary of state shall immediately notify the THAT COMMUNITY 139
IMPROVEMENT corporation of the action taken. Reinstatement may 140
be accomplished within two years after such THAT cancellation 141
upon proper filing of all delinquent ANNUAL FINANCIAL reports and 143
audits to the satisfaction of the director AUDITOR OF STATE and 145
THE filing his OF THE AUDITOR OF STATE'S certificate thereof 147
REFLECTING THAT SATISFACTION with the secretary of state, who 148
shall be entitled to a fee of ten dollars for recording the same 150
CERTIFICATE in the corporate records. Such THAT filing may be 151
made by any officer, member, creditor, receiver, lessee, or 152
sublessee of the COMMUNITY IMPROVEMENT corporation INVOLVED, and 153
any such person or his agent OF ANY SUCH PERSON shall be granted 155
access to the books and records of the corporation for such THAT 156
purpose. The rights, privileges, and franchises of a COMMUNITY 157
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IMPROVEMENT corporation whose articles have been reinstated are 159
subject to section 1702.60 of the Revised Code. 160
Sec. 1726.11. Annually before the thirty-first day of 169
January, a EACH DEVELOPMENT corporation incorporated under 171
Chapter 1726. of the Revised Code THIS CHAPTER shall submit a 172
PREPARE AN ANNUAL FINANCIAL report THAT CONFORMS to RULES 174
PRESCRIBED BY THE AUDITOR OF STATE PURSUANT TO SECTION 117.20 OF 175
THE REVISED CODE, THAT IS PREPARED ACCORDING TO GENERALLY 177
ACCEPTED ACCOUNTING PRINCIPLES, AND THAT IS CERTIFIED BY THE
BOARD OF TRUSTEES OF THE CORPORATION OR ITS TREASURER OR OTHER 179
CHIEF FISCAL OFFICER. THE FINANCIAL REPORT SHALL BE FILED WITH 180
THE AUDITOR OF STATE WITHIN ONE HUNDRED TWENTY DAYS FOLLOWING THE 181
LAST DAY OF THE CORPORATION'S FISCAL YEAR, UNLESS the director of 183
development together with an audit by a certified public 184
accountant and the director of development AUDITOR OF STATE 186
EXTENDS THAT DEADLINE. THE AUDITOR OF STATE MAY ESTABLISH TERMS 187
AND CONDITIONS FOR GRANTING ANY EXTENSION OF THAT DEADLINE. 189
EACH DEVELOPMENT CORPORATION SHALL SUBMIT TO AUDITS BY THE 191
AUDITOR OF STATE, THE SCOPE AND FREQUENCY OF WHICH SHALL BE IN 192
ACCORDANCE WITH SECTION 117.11 OF THE REVISED CODE AS IF THE 193
CORPORATION IS A PUBLIC OFFICE SUBJECT TO THAT SECTION. HOWEVER, 195
A DEVELOPMENT CORPORATION MAY REQUEST IN ACCORDANCE WITH SECTION 197
115.56 OF THE REVISED CODE, AS IF THE CORPORATION IS A PUBLIC 199
OFFICE SUBJECT TO THAT SECTION, THE PERFORMANCE OF ANY OF THOSE
AUDITS BY AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT. 201
THE AUDITOR OF STATE is hereby authorized to receive and 205
file the same ANNUAL FINANCIAL REPORTS REQUIRED BY THIS SECTION
AND THE REPORTS OF ALL AUDITS PERFORMED IN ACCORDANCE WITH THIS 206
SECTION. Such reports and audits shall cover all financial and 208
other transactions of said corporation for the preceding year. 210
Said director of development THE AUDITOR OF STATE shall analyze 211
said THOSE ANNUAL FINANCIAL reports and THE REPORTS OF THOSE 212
audits to determine whether or not the activities of such 214
corporations THE DEVELOPMENT CORPORATION INVOLVED are in 215
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accordance with Chapter 1726. of the Revised Code THIS CHAPTER. 217
Sec. 1726.12. If any DEVELOPMENT corporation FAILS TO 226
PREPARE AN ANNUAL FINANCIAL REPORT AS required by SECTION 1726.11 228
OF THE REVISED CODE AND TO FILE THAT REPORT WITH THE AUDITOR OF 229
STATE WITHIN NINETY DAYS OF THE TIME PRESCRIBED FOR THAT FILING 230
BY THAT section 1726.11 of the Revised Code fails or neglects to 232
make the annual report to the director of development as required 235
by law for ninety days after the time prescribed by law for 237
making such report, OR IF THE AUDITOR OF STATE DETERMINES BY 239
APPLYING THE STANDARDS APPLICABLE TO A PUBLIC OFFICE UNDER 240
SECTION 117.41 OF THE REVISED CODE THAT ANY DEVELOPMENT 241
CORPORATION CANNOT BE AUDITED AND DECLARES IT TO BE UNAUDITABLE 242
AND THE CORPORATION FAILS TO THEN PREPARE AN ANNUAL FINANCIAL 243
REPORT AS REQUIRED BY SECTION 1726.11 OF THE REVISED CODE AND TO 244
FILE THAT REPORT WITH THE AUDITOR OF STATE WITHIN NINETY DAYS OF 246
THE TIME THAT THE AUDITOR OF STATE DECLARED THE CORPORATION TO BE 247
UNAUDITABLE, or if any such ANNUAL FINANCIAL report discloses 249
that the ANY DEVELOPMENT corporation has failed to begin business 250
for a period of three years from the effective date of the filing 251
of its articles of incorporation, the director of development 253
AUDITOR OF STATE shall certify such THAT fact to the secretary of 254
state. The secretary of state THEN shall thereupon cancel the 255
articles of the DEVELOPMENT corporation INVOLVED by appropriate 256
entry upon the margin of the record thereof OF THE ARTICLES. 257
Thereupon, all ALL the powers, privileges, and franchises 259
conferred upon such THAT DEVELOPMENT corporation by such THOSE 261
articles of incorporation THEN shall cease. The secretary of 262
state shall immediately notify the THAT DEVELOPMENT corporation 265
of the action taken.
Sec. 5709.67. (A) Except as otherwise provided in 274
sections 5709.61 to 5709.69 of the Revised Code, the director of 275
development shall administer those sections and shall adopt such 276
rules as are necessary to ensure that no zone is certified or 277
remains certified unless it meets any applicable requirements of 278
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division (A) of section 5709.61 of the Revised Code, and to 279
determine the number of positions attributable to an enterprise 280
for the purposes of division (A)(3) of section 5709.64 of the 281
Revised Code. The director shall assign to each zone currently 282
certified a unique designation by which the zone shall be 283
identified for purposes of administering sections 5709.61 to 284
5709.69 of the Revised Code. The tax commissioner shall 285
administer all other tax incentives provided under sections 286
5709.61 to 5709.69 of the Revised Code and shall adopt such rules 287
as are necessary to carry out that duty. No tax incentive 288
qualification certificate or employee tax credit certificate 289
shall be issued or remain in effect unless the enterprise 290
applying for or holding the certificate complies with all such 291
rules. The director of job and family services shall administer 293
the incentive provided under division (B)(1) of section 5709.66 294
of the Revised Code and shall adopt such rules as are necessary 295
to carry out that duty. No extension of benefits certificate 296
shall be issued or remain in effect unless the enterprise 297
applying for or holding the certificate complies with all such 298
rules.
(B) Annually NOT LATER THAN THE FIRST DAY OF AUGUST EACH 300
YEAR, the director of development shall report to the general 302
assembly the ON ALL OF THE FOLLOWING FOR THE PRECEDING CALENDAR 303
YEAR:
(1) THE cost to the state of the tax and other incentives 306
provided under sections 5709.61 to 5709.69 of the Revised Code, 307
the;
(2) THE number of tax incentive qualification 309
certificates, employee tax credit certificates, and extension of 310
benefits certificates issued, the; 311
(3) THE names of the municipal corporations and counties 314
that have entered agreements under sections 5709.62, 5709.63, and 315
5709.632 of the Revised Code, and the; 316
(4) THE number of new employees hired as a result of the 318
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tax and other incentives provided under sections 5709.61 to 319
5709.69 of the Revised Code; 320
(5) INFORMATION ON AGREEMENT TERMS CONCERNING SCHOOL 322
DISTRICT REVENUE THAT ARE NOT PROVIDED FOR IN SECTION 5709.631 OF 323
THE REVISED CODE AND THAT ARE FORWARDED TO THE DIRECTOR UNDER 326
DIVISION (H) OF SECTION 5709.62, DIVISION (H) OF SECTION 5709.63, 327
OR DIVISION (G) OF SECTION 5709.632 OF THE REVISED CODE. The 329
THE report shall include a finding by the director as to 332
whether the incentives provided under sections 5709.61 to 5709.69 333
of the Revised Code have resulted in the creation of more 334
positions in the state than would have been created without the 335
incentives. THE DIRECTOR SHALL SEND A COPY OF THE REPORT TO EACH 336
MEMBER OF THE GENERAL ASSEMBLY AND TO THE DIRECTOR OF THE 337
LEGISLATIVE SERVICE COMMISSION. 338
(C) All forms used in connection with the administration 340
of sections 5709.61 to 5709.69 of the Revised Code, except forms 341
administered directly by the tax commissioner, by the director of 343
job and family services, or by a county or municipal corporation, 345
are subject to review and approval by the state forms management 346
control center under sections 125.91 to 125.98 of the Revised 347
Code.
Sec. 5709.68. (A) On or before the thirty-first day of 356
March each year, a municipal corporation or county that has 357
entered into an agreement with an enterprise under section 358
5709.62, 5709.63, or 5709.632 of the Revised Code shall submit to 359
the director of development and the board of education of each 360
school district of which a municipal corporation or township to 361
which such an agreement applies is a part a report on all such OF 362
THOSE agreements in effect during the preceding calendar year. 364
The report shall include ALL OF the FOLLOWING information 365
described in divisions (A)(1) to (7) of this section.: 367
(1) The designation, assigned by the director of 369
development, of each urban jobs and enterprise zone within the 370
municipal corporation or county, the date each zone was 371
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certified, the name of each municipal corporation or township 372
within each zone, and the total population of each zone according 373
to the most recent data available.; 374
(2) The number of enterprises that are subject to such 376
THOSE agreements and the number of full-time employees subject to 377
those agreements within each zone, each according to the most 378
recent data available and identified and categorized by the 379
appropriate standard industrial code, and the rate of 380
unemployment in the municipal corporation or county in which the 381
zone is located for each year since each zone was certified.; 382
(3) The number of agreements approved and executed during 384
the calendar year for which the report is submitted, the total 385
number of agreements in effect on the thirty-first day of 386
December of the preceding calendar year, the number of agreements 387
that expired during the calendar year for which the report is 388
submitted, and the number of agreements scheduled to expire 389
during the calendar year in which the report is submitted. For 390
each agreement that expired during the calendar year for which 391
the report is submitted, the municipal corporation or county 392
shall include the amount of taxes exempted and the estimated 393
dollar value of any other incentives provided under the 394
agreement. 395
(4) The number of agreements receiving compliance reviews 397
by the tax incentive review council in the municipal corporation 398
or county during the calendar year for which the report is 399
submitted, including all of the following information: 400
(a) The number of agreements the terms of which an 402
enterprise has complied with, indicating separately for each such 403
agreement the value of the real and personal property exempted 404
pursuant to the agreement and a comparison of the stipulated and 405
actual schedules for hiring new employees, for retaining existing 406
employees, for the amount of payroll of the enterprise 407
attributable to these employees, and for investing in 408
establishing, expanding, renovating, or occupying a facility; 409
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(b) The number of agreements the terms of which an 411
enterprise has failed to comply with, indicating separately for 412
each such agreement the value of the real and personal property 413
exempted pursuant to the agreement and a comparison of the 414
stipulated and actual schedules for hiring new employees, for 415
retaining existing employees, for the amount of payroll of the 416
enterprise attributable to these employees, and for investing in 417
establishing, expanding, renovating, or occupying a facility; 418
(c) The number of agreements about which the tax incentive 420
review council made recommendations to the legislative authority 421
of the municipal corporation or county, and the number of such 422
THOSE recommendations that have not been followed; 424
(d) The number of agreements rescinded during the calendar 426
year for which the report is submitted. 427
(5) The number of enterprises that are subject to 429
agreements that expanded within each zone, including the number 430
of new employees hired and existing employees retained by each 431
such enterprise, and the number of new enterprises that are 432
subject to agreements and that established within each zone, 433
including the number of new employees hired by each such 434
enterprise.; 435
(6)(a) The number of enterprises that are subject to 437
agreements and that closed or reduced employment at any place of 438
business within the state for the primary purpose of 439
establishing, expanding, renovating, or occupying a facility, 440
indicating separately for each such enterprise the political 441
subdivision in which the enterprise closed or reduced employment 442
at a place of business and the number of full-time employees 443
transferred and retained by each such place of business.; 444
(b) The number of enterprises that are subject to 446
agreements and that closed or reduced employment at any place of 447
business outside the state for the primary purpose of 448
establishing, expanding, renovating, or occupying a facility. 449
(7) For each agreement in effect during any part of the 451
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preceding year, the number of employees employed by the 452
enterprise at the project site immediately prior to formal 453
approval of the agreement, the number of employees employed by 454
the enterprise at the project site on the thirty-first day of 455
December of the preceding year, the payroll of the enterprise for 456
the preceding year, the amount of taxes paid on tangible personal 457
property situated at the project site and the amount of such 458
THOSE taxes that were not paid because of the exemption granted 460
under the agreement, and the amount of taxes paid on real 461
property constituting the project site and the amount of such 462
THOSE taxes that were not paid because of the exemption granted 464
under the agreement. If an agreement was entered into under 465
section 5709.632 of the Revised Code with an enterprise described 466
in division (B)(2) of that section, the report shall include the 467
number of employee positions at all of the enterprise's locations 468
in this state. If an agreement is conditioned on a waiver issued 469
under division (B) of section 5709.633 of the Revised Code on the 470
basis of the circumstance described in division (B)(3)(a) or (b) 471
of that section, the report shall include the number of employees 472
at the facilities referred to in division (B)(3)(a)(i) or (b)(i) 473
of that section, respectively. 474
(B) Upon the failure of a municipal corporation or county 476
to comply with division (A) of this section: 477
(1) Beginning on the first day of April of the calendar 479
year in which the municipal corporation or county fails to comply 480
with that division, the municipal corporation or county shall not 481
enter into any agreements with an enterprise under section 482
5709.62, 5709.63, or 5709.632 of the Revised Code until the 483
municipal corporation or county has complied with division (A) of 484
this section. 485
(2) On the first day of each ensuing calendar month until 487
the municipal corporation or county complies with that division 488
(A) OF THIS SECTION, the director of development shall either 490
order the proper county auditor to deduct from the next 491
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succeeding payment of taxes to the municipal corporation or 492
county under section 321.31, 321.32, 321.33, or 321.34 of the 493
Revised Code an amount equal to five hundred ONE THOUSAND dollars 494
for each calendar month the municipal corporation or county fails 496
to comply with that division, or order the county auditor to 497
deduct such an THAT amount from the next succeeding payment to 499
the municipal corporation or county from the undivided local
government fund under section 5747.51 of the Revised Code. At 500
the time such a payment is made, the county auditor shall comply 501
with the director's order by issuing a warrant, drawn on the fund 502
from which such THE money would have been paid, to the director 504
of development, who shall deposit the warrant into the state 505
urban jobs and enterprise zone program administration fund 506
created in division (C) of this section. 507
(C) The director, by rule, shall establish the state's 509
application fee for applications submitted to a municipal 510
corporation or county to enter into an agreement under section 511
5709.62, 5709.63, or 5709.632 of the Revised Code. In 512
establishing the amount of the fee, the director shall consider 513
the state's cost of administering the enterprise zone program, 514
including the cost of reviewing the reports required under 515
division (A) of this section. The director may change the amount 516
of the fee at such THE times and in such THE increments as he 518
deems THE DIRECTOR CONSIDERS necessary. Any municipal 519
corporation or county that receives an application shall collect 520
the application fee and remit the fee for deposit in the state 521
treasury to the credit of the state enterprise zone program 522
administration fund, which is hereby created. Money credited to 523
the fund shall be used by the department of development to pay 524
the costs of administering the enterprise zone program, including 525
the cost of reviewing the reports required under division (A) of 526
this section.
(D) On or before the thirtieth day of June each year, the 528
director of development shall certify to the tax commissioner the 529
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information described under division (A)(7) of this section, 530
derived from the reports submitted to the director under this 531
section. 532
On the basis of the information certified under this 534
division, the tax commissioner annually shall submit a report to 535
the governor, the speaker of the house of representatives, the 536
president of the senate, and the chairpersons of the ways and 537
means committees of the respective houses of the general 538
assembly, indicating for each enterprise zone the amount of state 539
and local taxes that were not required to be paid because of 540
exemptions granted under agreements entered into under section 541
5709.62, 5709.63, or 5709.632 of the Revised Code and the amount 542
of additional taxes paid from the payroll of new employees. 543
Section 2. That existing sections 1724.05, 1724.06, 545
1726.11, 1726.12, 5709.67, and 5709.68 of the Revised Code are 546
hereby repealed. 547