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Sub. S. B. No. 165As Reported by the Senate Finance and Financial Institutions Committee
As Reported by the Senate Finance and Financial Institutions Committee
125th General Assembly | Regular Session | 2003-2004 |
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SENATORS Schuring, Schuler, Fedor, Dann
A BILLTo amend sections 166.06, 166.07, 166.21, 725.04, 1728.11, 1728.111, 3735.671, 5709.631, and 5709.831 and to enact section 9.661 of the Revised Code to authorize liens that may be used to secure the performance of obligations by recipients of development loans and local property tax incentives. BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 166.06, 166.07, 166.21, 725.04, 1728.11, 1728.111, 3735.671, 5709.631, and 5709.831 be amended and section 9.661 of the Revised Code be enacted to read as follows:
Sec. 9.661. (A) As used in this section:
(1) "Borrower" means any person obligated to repay a development loan pursuant to a development loan agreement or obligated to repay a loan guaranteed pursuant to a loan guarantee agreement.
(2) "Development inducement agreement" means an agreement making a grant or inducement under the authority of Section 13 of Article VIII, Ohio Constitution, including an inducement made under section 166.02 of the Revised Code or a grant made under section 184.02 of the Revised Code.
(3) "Development loan" means any loan made under the authority of Section 13 of Article VIII, Ohio Constitution, including any loan made under the authority of Chapter 122., 165., 166., 184., or 1724. of the Revised Code.
(4) "Development loan agreement" means an agreement making a development loan.
(5) "Grantee" means any grantee or other recipient of anything of value under a development inducement agreement.
(6) "Guaranteed loan" means a loan guaranteed by this state, a state agency, or a political subdivision under the authority of Section 13 of Article VIII, Ohio Constitution, including any loan guarantee authorized under Chapter 166. of the Revised Code.
(7) "Loan guarantee agreement" means an agreement providing for the guarantee of a guaranteed loan.
(8) "Secured party" means the state, a state agency, or a political subdivision that enters into a development loan agreement, loan guarantee agreement, or development inducement agreement.
(B) The obligations of a borrower under each development loan agreement or loan guarantee agreement may be secured by a lien of the secured party on the borrower's real property and personal property the acquisition of which was funded in whole or in part by the proceeds of the loan. Any such lien shall be in an amount not exceeding the amount financed under the development loan agreement, or the amount guaranteed under the loan guarantee agreement, and used to fund acquisition of the property. The lien may be in addition to any other security required by the development loan agreement or loan guarantee agreement, but the sum of the lien amount and the value of any such other security shall not exceed the amount financed, or the amount guaranteed, and used to fund acquisition of the property. Such a lien on real property shall attach, and may be perfected, collected, and enforced, in the same manner as a mortgage lien on real property, and otherwise shall have the same force and effect as a mortgage lien on real property. Such a lien on personal property shall attach, and may be perfected, collected, and enforced, in the same manner as a security interest in goods under Chapter 1309. of the Revised Code, and shall otherwise have the same force and effect as such a security interest.
(C) The obligations of a grantee under each development inducement agreement may be secured by a lien of the secured party on the grantee's real property and personal property the acquisition of which was funded in whole or in part by the grant or other thing of value. Any such lien shall be in an amount not exceeding the amount of the grant or other thing of value granted to the grantee under the agreement and used to fund acquisition of the property. The lien may be in addition to any other security required by the development inducement agreement, but the sum of the lien amount and the value of any such other security shall not exceed the amount of the grant, or the value of any other thing of value granted, and used to fund acquisition of the property. Such a lien on real property shall attach, and may be perfected, collected, and enforced, in the same manner as a mortgage lien on real property, and otherwise shall have the same force and effect as a mortgage lien on real property. Such a lien on personal property shall attach, and may be perfected, collected, and enforced, in the same manner as a security interest in goods under Chapter 1309. of the Revised Code, and shall otherwise have the same force and effect as such a security interest.
(D) A secured party may enforce such liens against real property by civil action in the court of common pleas of the county where the real property is located in the same manner as mortgage liens are enforced. A secured party may enforce such liens against personal property in the manner provided for the enforcement of security interests under Chapter 1309. of the Revised Code.
Sec. 166.06. (A) Subject to any limitations as to
aggregate
amounts thereof that may from time to time be
prescribed by the
general assembly and to other applicable
provisions of this
chapter, the director of development may, on
behalf of the state,
enter into contracts to guarantee the
repayment or payment of not
more than ninety per cent of the
unpaid principal amount of loans
made, including bonds, notes, or
other certificates issued or
given to provide funds, to pay
allowable costs of eligible
projects. Such guarantees shall be
secured solely by and payable
solely from the loan guarantee fund
created by this section and
unencumbered and available moneys
in the facilities
establishment fund in the manner and
to the extent provided in
such guarantee contracts consistent
with this section. Such
guarantees shall not constitute general
obligations of the state
or of any political subdivision, and
moneys raised by taxation
shall not be obligated or pledged for
the payment of such
guarantees. (B) Before guaranteeing any such repayments or payments
the
director shall determine that: (1) The project is an eligible project and is economically
sound; (2) The principal amount to be guaranteed does not exceed
ninety per cent of the allowable costs of the eligible project as
determined by
the director. To assist the director in making
this determination, the director may, in the director's
discretion, engage an independent engineer, architect, appraiser,
or other professional pursuant to a contract to be paid solely
from the facilities
establishment fund,
subject to
controlling board approval. (3) The principal amount to be guaranteed has a
satisfactory
maturity date or dates, which in no case shall be
later than
twenty years from the effective date of the
guarantee; (4) The rate of interest on the loan to be guaranteed and
on
any other loan made by the same parties or related persons for
the
eligible project is not excessive; (5) The principal obligor, or primary guarantor, is
responsible and is reasonably expected to be able to meet the
payments under the loan, bonds, notes, or other certificates; (6) The loan or documents pertaining to the bonds, notes,
or
other certificates to be guaranteed contains
provisions
for payment by the
principal
obligor, and is in such form and contains such terms and
provisions for the protection of the lenders as are generally
consistent with commercial practice, including, where applicable,
provisions with respect to property insurance, repairs,
alterations, payment of taxes and assessments, delinquency
charges, default remedies, acceleration of maturity, prior,
additional and secondary liens, and other matters as the director
may approve. (C) The contract of guarantee may make provision for the
conditions of, time for and manner of fulfillment of the
guarantee
commitment, subrogation of the state to the rights of
the parties
guaranteed and exercise of such parties' rights by
the state,
giving the state the options of making payment of the
principal
amount guaranteed in one or more installments and, if
deferred, to
pay interest thereon from the loan guarantee fund
and the facilities establishment fund, any other
terms or conditions
customary to such guarantees and as the
director may approve, and
may contain provisions for securing the
guarantee in the manner
consistent with this section, including, at the discretion of the director, a lien provided for under section 9.661 of the Revised Code, and may contain covenants on
behalf of the state
for the maintenance of the loan guarantee fund
created by this
section and of receipts to it permitted by this
chapter,
including covenants on behalf of the state to issue
obligations
under section 166.08 of the Revised Code to provide
moneys to the
loan guarantee fund to fulfill such guarantees and
covenants
authorized by division (R)(1) of section 166.08 of the
Revised
Code, and covenants restricting the aggregate amount of
guarantees that may be contracted under this section and
obligations that may be issued under section 166.08 of the
Revised
Code, and terms pertinent to either, to better secure the
parties
guaranteed. (D) The "loan guarantee fund" of the economic development
program is hereby created as a special revenue fund and a trust
fund which shall be in the custody of the treasurer of state but
shall be separate and apart from and not a part of the state
treasury to consist of all grants, gifts, and contributions of
moneys or rights to moneys lawfully designated for or deposited
in
such fund, all moneys and rights to moneys lawfully
appropriated
and transferred to such fund, including moneys
received from the
issuance of obligations under section 166.08 of
the Revised Code,
and moneys deposited to such fund pursuant to
division (F) of this
section; provided that the loan guarantee
fund shall not be
comprised, in any part, of moneys raised by
taxation. (E) The director may fix service charges for making a
guarantee. Such charges shall be payable at such times and place
and in such amounts and manner as may be prescribed by the
director. (F) The treasurer of state shall serve as agent for the
director in the making of deposits and withdrawals and
maintenance
of records pertaining to the loan guarantee fund.
Prior to the
director's entry into a contract providing for the making of a
guarantee payable from the loan guarantee fund, the treasurer of
state shall cause to be transferred from the facilities
establishment fund to the loan guarantee fund an amount sufficient
to make the aggregate balance therein, taking into account the
proposed loan guarantee, equal to the loan guarantee reserve
requirement. Thereafter, the treasurer of state shall cause the
balance in the loan guarantee fund to be at least equal to the
loan guarantee reserve requirement. Funds from the loan guarantee
fund shall be disbursed under a
guarantee made pursuant to this
section to satisfy a guaranteed
repayment or payment which is in
default. The treasurer of state
shall first withdraw and transfer
moneys then on deposit in the
loan guarantee fund. Whenever these
moneys are inadequate to
meet the requirements of a guarantee, the
treasurer of state
shall, without need of appropriation or further
action by the
director, provide for a withdrawal and transfer to
the loan
guarantee fund and then to the guaranteed party of moneys
in such
amount as is necessary to meet the guarantee
from unencumbered and available moneys in the facilities
establishment fund. Such disbursements shall be made in the
manner and at the
times provided in such guarantees.
Within ninety
days following a disbursement of moneys from the loan guarantee
fund, the treasurer of state, without need of appropriation or
further action by the director, shall provide for a withdrawal and
transfer to the loan guarantee fund from unencumbered and
available moneys in the facilities establishment fund, including
moneys from the repayment of loans made from that fund, of an
amount sufficient to cause the balance in the loan guarantee fund
to be at least equal to the loan guarantee reserve requirement. (G) Any guaranteed parties under this section, except to
the
extent that their rights are restricted by the guarantee
documents, may by any suitable form of legal proceedings, protect
and enforce any rights under the laws of this state or granted by
such guarantee or guarantee documents. Such rights include the
right to compel the performance of all duties of the director and
the treasurer of state required by this section or the guarantee
or guarantee documents; and in the event of default with respect
to the payment of any guarantees, to apply to a court having
jurisdiction of the cause to appoint a receiver to receive and
administer the moneys pledged to such guarantee with full power
to
pay, and to provide for payment of, such guarantee, and with
such
powers, subject to the direction of the court, as are
accorded
receivers in general equity cases, excluding any power
to pledge
or apply additional revenues or receipts or other
income or moneys
of the state or governmental agencies of the
state to the payment
of such guarantee. Each duty of the
director and the treasurer of
state and their officers and
employees, and of each governmental
agency and its officers,
members, or employees, required or
undertaken pursuant to this
section or a guarantee made under
authority of this section, is
hereby established as a duty of the
director and the treasurer of
state, and of each such officer,
member, or employee having
authority to perform such duty,
specifically enjoined by the law
resulting from
an office,
trust, or station within the
meaning
of section 2731.01 of the
Revised Code. The persons who are at
the time the director and
treasurer of state, or their officers
or employees, are not liable
in their personal capacities on any
guarantees or contracts to
make guarantees by the director. (H) The determinations of the director under divisions (B)
and (C) of this section shall be conclusive for purposes of the
validity of a guarantee evidenced by a contract signed by the
director, and such guarantee shall be incontestable as to moneys
advanced under loans to which such guarantees are by their terms
applicable.
Sec. 166.07. (A) The director of development, with the
approval of the controlling board and subject to the other
applicable provisions of this chapter, may lend moneys in the
facilities establishment fund to persons for the purpose of
paying
allowable costs of an eligible project if the director
determines
that: (1) The project is an eligible project and is economically
sound; (2) The borrower is unable to finance the necessary
allowable costs through ordinary financial channels upon
comparable terms; (3) The amount to be lent from the facilities
establishment
fund will not exceed seventy-five per cent of the
total allowable
costs of the eligible project, except that if
any part of the
amount to
be lent from the facilities establishment fund is
derived
from the
issuance and sale of project financing
obligations the amount to
be
lent will not exceed ninety per cent
of the total allowable
costs of the
eligible project; (4) The eligible project could not be achieved in the
local
area in which it is to be located if the portion of the
project to
be financed by the loan instead were to be financed
by a loan
guaranteed under section 166.06 of the Revised Code; (5)
The
repayment of the loan from the facilities
establishment fund
will be adequately secured by a
mortgage, lien, assignment, or pledge, or lien provided for under section 9.661 of the Revised Code, at such level of priority
as the director may require; (6) The borrower will hold at least a ten per cent equity
interest in the
eligible project at the time the loan is made. (B) The determinations of the director under division (A)
of
this section shall be conclusive for purposes of the validity
of a
loan commitment evidenced by a loan agreement signed by the
director. (C) Fees, charges, rates of interest, times of payment of
interest and principal, and other terms, conditions, and
provisions of and security for loans made from the facilities
establishment fund pursuant to this section shall be such as the
director determines to be appropriate and in furtherance of the
purpose for which the loans are made. The moneys used in making
such loans shall be disbursed from the facilities establishment
fund upon order of the director. The director shall give special
consideration in setting the required job creation ratios and
interest rates
for loans that are for voluntary actions. (D) The director may take actions necessary or appropriate
to collect or
otherwise deal with any
loan made under this
section, including any action authorized by section 9.661 of the Revised Code. (E) The director may fix service charges for the making of
a
loan. Such charges shall be payable at such times and place
and
in such amounts and manner as may be prescribed by the
director.
Sec. 166.21. (A) The director of development, with the approval of the controlling board and subject to other applicable provisions of this chapter, may lend moneys in the research and development loan fund to persons for the purpose of paying allowable costs of eligible research and development projects, if the director determines that all of the following conditions are met:
(1) The project is an eligible research and development project and is economically sound;
(2) The amount to be lent from the research and development loan fund will not exceed seventy-five per cent of the total costs of the eligible research and development project;
(3) The repayment of the loan from the research and development loan fund will be secured by a mortgage, lien, assignment, pledge, lien provided for under section 9.661 of the Revised Code, or other interest in property or other assets of the borrower, at such level of priority and value as the director considers necessary, provided that, in making such a determination, the director shall take into account the value of any rights granted by the borrower to the director to control the use of any assets of the borrower under the circumstances described in the loan documents.
(B) The determinations of the director under division (A) of this section shall be conclusive for purposes of the validity of a loan commitment evidenced by a loan agreement signed by the director.
(C) Fees, charges, rates of interest, times of payment of interest and principal, and other terms and conditions of, and security for, loans made from the research and development loan fund shall be such as the director determines to be appropriate and in furtherance of the purpose for which the loans are made. The moneys used in making loans shall be disbursed from the fund upon order of the director. Unless otherwise specified in any indenture or other instrument securing obligations under division (D) of section 166.08 of the Revised Code, any payments of principal and interest from loans made from the fund shall be paid to the fund and used for the purpose of making loans under this section.
(D)(1) As used in this division, "qualified research and development loan payments" means payments of principal and interest on a loan made from the research and development loan fund.
(2) Each year, the director may, upon request, issue a certificate to a borrower of moneys from the research and development loan fund indicating the amount of the qualified research and development loan payments made by or on behalf of the borrower during the calendar year immediately preceding the tax year, as defined in section 5733.04 of the Revised Code, or taxable year, as defined in section 5747.01 of the Revised Code, for which the certificate is issued. In addition to indicating the amount of qualified research and development loan payments, the certificate shall include a determination of the director that as of the thirty-first day of December of the calendar year for which the certificate is issued, the borrower is not in default under the loan agreement, lease, or other instrument governing repayment of the loan, including compliance with the job creation and retention commitments that are part of the qualified research and development project. The director shall not issue a certificate in an amount that exceeds one hundred fifty thousand dollars.
(E) The director may take actions necessary or appropriate to collect or otherwise deal with any loan made under this section.
(F) The director may fix service charges for the making of a loan. The charges shall be payable at such times and place and in such amounts and manner as may be prescribed by the director.
(G)(1) There shall be credited to the research and development loan fund moneys received by this state from the repayment of loans, including interest thereon, made from the fund, and moneys received from the sale, lease, or other disposition of property acquired or constructed with moneys in the fund derived from the proceeds of the sale of obligations under section 166.08 of the Revised Code. Moneys in the fund shall be applied as provided in this chapter pursuant to appropriations made by the general assembly.
(2) In addition to the requirements in division (G)(1) of this section, moneys referred to in that division may be deposited to the credit of separate accounts established by the director of development within the research and development loan fund or in the bond service fund and pledged to the security of obligations, applied to the payment of bond service charges without need for appropriation, released from any such pledge and transferred to the research and development loan fund, all as and to the extent provided in the bond proceedings pursuant to written directions of the director of development. Accounts may be established by the director in the research and development loan fund for particular projects or otherwise. The director may withdraw from the fund or, subject to provisions of the applicable bond proceedings, from any special funds established pursuant to the bond proceedings, or from any accounts in such funds, any amounts of investment income required to be rebated and paid to the federal government in order to maintain the exemption from federal income taxation of interest on obligations issued under this chapter, which withdrawal and payment may be made without the necessity for appropriation.
Sec. 725.04. A development agreement shall contain an agreement binding on
the owner or owners of the improvements, and all subsequent owners of the
improvements, to make semiannual urban renewal service payments, in lieu of
taxes upon the improvements during the exemption period, equal annually in the
aggregate to the amount of real property taxes that would have been paid on
the portion of the assessed valuation of the improvements declared to be a
public purpose had an exemption period not been specified by the municipal
corporation. All semiannual urban renewal service payments shall be collected
at the same time that real property taxes are collected. The entire amount of
these urban renewal service payments, when collected, shall be deposited in an
urban renewal debt retirement fund established pursuant to section 725.03 of
the Revised Code. If the municipal corporation owns the improvements, it may require the lessee
of the improvements to make the semiannual urban renewal service payments
required under this section. The legislative authority of the municipal corporation may secure the urban renewal service payments by a lien on the improvements. Such a lien shall attach, and may be perfected, collected, and enforced, in the same manner as a mortgage lien on real property, and shall otherwise have the same force and effect as a mortgage lien on real property.
Sec. 1728.11. The community urban redevelopment
corporation entering into a financial agreement with a municipal
corporation other than an impacted city shall make payment to the
county treasurer on or before the final date for payment of real
estate taxes in the county for each half year of a semi-annual
service charge in lieu of taxes on the real property of the
corporation in the project, whether acquired by purchase or
lease, in a semi-annual amount of not less than seven and
one-half per cent of the annual gross revenues from each unit of
the project, if the project is undertaken in units, or from the
total project if the project is not to be undertaken in units,
for each of the years of operation commencing with the date of
the completion of such unit or of the project, as the case may
be. Where, because of the nature of the development, ownership,
use, or occupancy of the project or any unit thereof if the
project is to be undertaken in units, the total annual gross
rental cannot be reasonably ascertained, the governing body shall
provide in the financial agreement that the annual service charge
shall be a sum of not less than two per cent of the total project
cost or total project unit cost, calculated from the first day of
the month following the substantial completion of the project or
any unit thereof if the project is undertaken in units. In no
event shall such payment together with the taxes on the land, in
any year after first occupancy of the project, be less than the
total taxes assessed on all real property in the area covered by
the project in the calendar year immediately preceding the
acquisition of the said area by the municipality or its agency. Against such annual charge the corporation is entitled to
credit for the amount, without interest, of the real estate taxes
on land paid by it in the last two preceding semi-annual
installments. On or before the fifteenth of January in each year
each taxing district shall report to the county auditor, in such
form as is approved by the tax commissioner, the amount of the
service charge in excess of the taxes on the land chargeable for
the preceding calendar year for each project or unit thereof
subject to Chapter 1728. of the Revised Code. Such payments
shall be distributed by the county auditor to the taxing
subdivision levying taxes in the subdivisions in which the
property is located, in the same proportions in which the current
general property tax is distributed. The county treasurer may secure the service charge payments, minus the credit, by a lien on the real property of the corporation in the project. Such a lien shall attach, and may be perfected, collected, and enforced, in the same manner as a mortgage lien on real property, and shall otherwise have the same force and effect as a mortgage lien on real property. At the end of thirty years for one, two, or three family
residential dwelling units and twenty years for all other uses of
the improvements from the date of the execution of a financial
agreement or earlier by agreement of the parties thereto, the tax
exemption upon any unit, if the project is undertaken in units,
or upon the entire project, if the project is not undertaken in
units, ceases and the improvements and any other property of the
corporation as well as the land shall be assessed and taxed,
according to general law, like other property within the
municipal corporation. At the same date all restrictions and limitations upon the
corporation shall terminate and be at an end upon the
corporation's rendering its final account with the municipal
corporation.
Sec. 1728.111. The community urban redevelopment
corporation entering into a financial agreement with an impacted
city shall pay to the county treasurer of an annual
service charge in lieu of taxes on the improvements made by the
corporation in the project that are exempted from taxation
pursuant to section 1728.10 of the Revised Code. The annual
service charge shall be charged and paid in two equal
installments at the same time and in the same manner as real
property taxes. The amount of the annual service charge shall be
set forth in the financial agreement and shall be not more than
the annual amount of real property taxes that would have been
charged against the percentage of the assessed valuation of such improvements
exempted from taxation had that percentage not been exempted from
taxation, and not less than an amount which, together with the
taxes on the land in any year, equals the total taxes assessed on
all real property in the area covered by the project in the
calendar year immediately preceding the initial acquisition of
the area or any part thereof by the municipality or the
corporation, whichever occurred first. The county treasurer may secure the service charge payments by a lien on the exempted improvements. Such a lien shall attach, and may be perfected, collected, and enforced, in the same manner as a mortgage lien on real property, and shall otherwise have the same force and effect as a mortgage lien on real property. The service charge in lieu of taxes shall be distributed by
the county auditor to the taxing subdivision levying taxes in the
subdivisions in which the property is located, in the same
proportions in which the current general property tax is
distributed, or upon the adoption of a resolution by the
municipal legislative authority, which shall be certified to the
county auditor, the full amount of the service charge shall be
distributed at the same time and in the same manner as real
property tax payments to the municipal corporation, and shall be
deposited in an urban redevelopment tax increment equivalent fund
established pursuant to section 1728.112 of the Revised Code. At the end of thirty years for one, two, or three family
residential dwelling units and twenty years for all other uses of
the improvements from the date of the execution of a financial
agreement, or earlier by agreement of the parties thereto, the
exemption from taxation of any unit if the project is undertaken in
units, or of the entire project if the project is not
undertaken in units, ceases and the improvements and any other
property of the corporation as well as the land shall be assessed
and taxed like other property within
the municipal corporation. At the same date all restrictions and limitation upon the
corporation shall terminate upon the
corporation's rendering its final account with the municipal
corporation.
Sec. 3735.671. (A) If construction or remodeling of
commercial or industrial property is to be exempted from taxation
pursuant to section 3735.67 of the Revised Code, the legislative
authority and the owner of the property, prior to the
commencement of construction or remodeling, shall enter into a
written agreement, binding on both parties for a period of time
that does not end prior to the end of the period of the
exemption, that includes all of the information and statements
prescribed by this section. Agreements may include terms not
prescribed by this section, but such terms shall in no way
derogate from the information and statements prescribed by this
section. (1) Except as otherwise provided in division (A)(2) or (3) of
this section, an agreement entered into under this section shall
not be approved by the legislative authority unless the board of
education of the city, local, or exempted village school district
within the territory of which the property is or will be located
approves the agreement. For the purpose of obtaining such
approval, the legislative authority shall certify a copy of the
agreement to the board of education not later than
forty-five
days
prior to approving the agreement, excluding Saturday,
Sunday, and a legal holiday as defined in section 1.14 of the
Revised Code. The board of education, by
resolution adopted by a majority of the board, shall approve or
disapprove the agreement and certify a copy of the resolution to
the legislative authority not later than fourteen days prior to
the date stipulated by the legislative authority as the date upon
which approval of the agreement is to be formally considered by
the legislative authority. The board of education may include in
the resolution conditions under which the board would approve the
agreement. The legislative
authority may approve an agreement at any time after the board
of education certifies its resolution approving the agreement to
the legislative authority, or, if the board approves the
agreement conditionally, at any time after the conditions are
agreed to by the board and the legislative authority. (2) Approval of an agreement by the board of education is
not required under division (A)(1) of this
section if, for each tax year the real
property is exempted from taxation, the sum of the following
quantities, as estimated at or prior to the time the agreement is
formally approved by the legislative authority, equals or exceeds
fifty per cent of the amount of taxes, as estimated at or prior
to that time, that would have been charged and payable that year
upon the real property had that property not been exempted from
taxation: (a) The amount of taxes charged and payable on any portion
of the assessed valuation of the new structure or remodeling that
will not be exempted from taxation under the agreement; (b) The amount of taxes charged and payable on tangible
personal property located on the premises of the new structure or
of the structure to be remodeled under the agreement, whether
payable by the owner of the structure or by a related member, as
defined in section 5733.042 of the Revised Code without regard to
division (B) of that section. (c) The amount of any cash payment by the owner of the new
structure or structure to be remodeled to the school district,
the dollar value, as mutually agreed to be the owner and the
board of education, of any property or services provided by the
owner of the property to the school district, whether by gift,
loan, or otherwise, and any payment by the legislative authority
to the school district pursuant to section 5709.82 of the Revised
Code. The estimates of quantities used for purposes of division
(A)(2) of this section shall be estimated by the legislative
authority. The legislative authority shall certify to the board
of education that the estimates have been made in good faith.
Departures of the actual quantities from the estimates subsequent
to approval of the agreement by the board of education do not
invalidate the agreement. (3) If a board of education has adopted a resolution waiving
its right to approve agreements and the resolution
remains in effect, approval of an agreement by the
board is not required under this division. If a board of
education has adopted a resolution allowing a legislative
authority to deliver the notice required under this division
fewer than forty-five business days prior to the legislative
authority's execution of the agreement, the legislative
authority shall deliver the notice to the board not later than
the number of days prior to such execution as prescribed by the
board in its resolution. If a board of education adopts a
resolution waiving its right to approve agreements or shortening
the notification period, the board shall certify a copy of the
resolution to the legislative authority. If the board of
education rescinds such a resolution, it shall certify notice of
the rescission to the legislative authority. (B) Each agreement shall include the following
information: (1) The names of all parties to the agreement; (2) A description of the remodeling or construction,
whether or not to be exempted from taxation, including existing
or new structure size and cost thereof; the value of machinery,
equipment, furniture, and fixtures, including an itemization of
the value of machinery, equipment, furniture, and fixtures used
at another location in this state prior to the agreement and
relocated or to be relocated from that location to the property,
and the value of machinery, equipment, furniture, and fixtures at
the facility prior to the execution of the agreement; the value
of inventory at the property, including an itemization of the
value of inventory held at another location in this state prior
to the agreement and relocated or to be relocated from that
location to the property, and the value of inventory held at the
property prior to the execution of the agreement; (3) The scheduled starting and completion dates of
remodeling or construction of real property or of investments
made in machinery, equipment, furniture, fixtures, and inventory; (4) Estimates of the number of employee positions to be
created each year of the agreement and of the number of employee
positions retained by the owner due to the remodeling or
construction, itemized as to the number of full-time, part-time,
permanent, and temporary positions; (5) Estimates of the dollar amount of payroll attributable
to the positions set forth in division (B)(4) of this section,
similarly itemized; (6) The number of employee positions, if any, at the
property and at any other location in this state at the time the
agreement is executed, itemized as to the number of full-time,
part-time, permanent, and temporary positions. (C) Each agreement shall set forth the following
information and incorporate the following statements: (1) A description of real property to be exempted from
taxation under the agreement, the percentage of the assessed
valuation of the real property exempted from taxation, and the
period for which the exemption is granted, accompanied by the
statement: "The exemption commences the first year for which the
real property would first be taxable were that property not
exempted from taxation. No exemption shall commence after
.......... (insert date) nor extend beyond .......... (insert
date)." (2) ".......... (insert name of owner) shall pay such real
property taxes as are not exempted under this agreement and are
charged against such property and shall file all tax reports and
returns as required by law. If .......... (insert name of owner)
fails to pay such taxes or file such returns and reports,
exemptions from taxation granted under this agreement are
rescinded beginning with the year for which such taxes are
charged or such reports or returns are required to be filed and
thereafter." (3) ".......... (insert name of owner) hereby certifies
that at the time this agreement is executed, .......... (insert
name of owner) does not owe any delinquent real or tangible
personal property taxes to any taxing authority of the State of
Ohio, and does not owe delinquent taxes for which ..........
(insert name of owner) is liable under Chapter 5733., 5735.,
5739., 5741., 5743., 5747., or 5753. of the Ohio Revised Code,
or, if such delinquent taxes are owed, .......... (insert name of
owner) currently is paying the delinquent taxes pursuant to an
undertaking enforceable by the State of Ohio or an agent or
instrumentality thereof, has filed a petition in bankruptcy under
11 U.S.C.A. 101, et seq., or such a petition has been filed
against .......... (insert name of owner). For the purposes of
this certification, delinquent taxes are taxes that remain unpaid
on the latest day prescribed for payment without penalty under
the chapter of the Revised Code governing payment of those
taxes." (4) ".......... (insert name of municipal corporation or
county) shall perform such acts as are reasonably necessary or
appropriate to effect, claim, reserve, and maintain exemptions
from taxation granted under this agreement including, without
limitation, joining in the execution of all documentation and
providing any necessary certificates required in connection with
such exemptions." (5) "If for any reason .......... (insert name of
municipal corporation or county) revokes the designation of the
area, entitlements granted under this agreement shall continue
for the number of years specified under this agreement, unless
.......... (insert name of owner) materially fails to fulfill its
obligations under this agreement and ................... (insert
name of municipal corporation or county) terminates or modifies
the exemptions from taxation pursuant to this agreement." (6) "If .......... (insert name of owner) materially fails
to fulfill its obligations under this agreement, or if ..........
(insert name of municipal corporation or county) determines that
the certification as to delinquent taxes required by this
agreement is fraudulent, .......... (insert name of municipal
corporation or county) may terminate or modify the exemptions
from taxation granted under this agreement." (7) ".......... (insert name of owner) shall provide to
the proper tax incentive review council any information
reasonably required by the council to evaluate the applicant's
compliance with the agreement, including returns filed pursuant
to section 5711.02 of the Ohio Revised Code if requested by the
council." (8) "This agreement is not transferable or assignable
without the express, written approval of .......... (insert name
of municipal corporation or county)." (9) "Exemptions from taxation granted under this agreement
shall be revoked if it is determined that ........... (insert
name of owner), any successor to that person, or any related
member (as those terms are defined in division (E) of section
3735.671 of the Ohio Revised Code) has violated the prohibition
against entering into this agreement under division (E) of
section 3735.671 or section 5709.62 or 5709.63 of the Ohio
Revised Code prior to the time prescribed by that division or
either of those sections." (10) ".......... (insert name of owner) and ...........
(insert name of municipal corporation or county) acknowledge that
this agreement must be approved by formal action of the
legislative authority of .......... (insert name of municipal
corporation or county) as a condition for the agreement to take
effect. This agreement takes effect upon such approval." The statement described in division (C)(6) of this section
may include the following statement, appended at the end of the
statement: ", and may require the repayment of the amount of
taxes that would have been payable had the property not been
exempted from taxation under this agreement." If the agreement includes a statement requiring repayment of exempted taxes, it also may authorize the legislative authority to secure repayment of such taxes by a lien on the exempted property in the amount required to be repaid. Such a lien shall attach, and may be perfected, collected, and enforced, in the same manner as a mortgage lien on real property, and shall otherwise have the same force and effect as a mortgage lien on real property. (D) Except as otherwise provided in this division, an
agreement entered into under this section shall require that the
owner pay an annual fee equal to the greater of one per cent of
the amount of taxes exempted under the agreement or five hundred
dollars; provided, however, that if the value of the incentives
exceeds two hundred fifty thousand dollars, the fee shall not
exceed two thousand five hundred dollars. The fee shall be
payable to the legislative authority once per year for each year
the agreement is effective on the days and in the form specified
in the agreement. Fees paid shall be deposited in a special fund
created for such purpose by the legislative authority and shall
be used by the legislative authority exclusively for the purpose
of complying with section 3735.672 of the Revised Code and by the
tax incentive review council created under section 5709.85 of the
Revised Code exclusively for the purposes of performing the
duties prescribed under that section. The legislative authority
may waive or reduce the amount of the fee, but such waiver or
reduction does not affect the obligations of the legislative
authority or the tax incentive review council to comply with
section 3735.672 or 5709.85 of the Revised Code. (E) If any person that is party to an agreement granting
an exemption from taxation discontinues operations at the
structure to which that exemption applies prior to the expiration
of the term of the agreement, that person, any successor to that
person, and any related member shall not enter into an agreement
under this section or section 5709.62, 5709.63, or 5709.632 of
the Revised Code, and no legislative authority shall enter into
such an agreement with such a person, successor, or related
member, prior to the expiration of five years after the
discontinuation of operations. As used in this division,
"successor" means a person to which the assets or equity of
another person has been transferred, which transfer resulted in
the full or partial nonrecognition of gain or loss, or resulted
in a carryover basis, both as determined by rule adopted by the
tax commissioner. "Related member" has the same meaning as
defined in section 5733.042 of the Revised Code without regard to
division (B) of that section. The director of development shall review all agreements
submitted to the director under division (F) of this section for
the purpose of enforcing this division. If the director
determines there has been a violation of this division, the
director shall notify the legislative authority of such
violation, and the legislative authority immediately shall revoke
the exemption granted under the agreement. (F) When an agreement is entered into under this section,
the legislative authority authorizing the agreement shall forward
a copy of the agreement to the director of development within fifteen days after the agreement is
entered into.
Sec. 5709.631. Each agreement entered into under sections
5709.62, 5709.63, and 5709.632 of the Revised Code on or after
April 1, 1994, shall be in writing and shall include all of the
information and statements prescribed by this section.
Agreements may include terms not prescribed by this section, but
such terms shall in no way derogate from the information and
statements prescribed by this section. (A) Each agreement shall include the following
information: (1) The names of all parties to the agreement; (2) A description of the investments to be made by the
applicant enterprise or by another party at the facility whether
or not the investments are exempted from taxation, including
existing or new building size and cost thereof; the value of
machinery, equipment, furniture, and fixtures, including an
itemization of the value of machinery, equipment, furniture, and
fixtures used at another location in this state prior to the
agreement and relocated or to be relocated from that location to
the facility and the value of machinery, equipment, furniture,
and fixtures at the facility prior to the execution of the
agreement that will not be exempted from taxation; the value of
inventory at the facility, including an itemization of the value
of inventory held at another location in this state prior to the
agreement and relocated or to be relocated from that location to
the facility, and the value of inventory held at the facility
prior to the execution of the agreement that will not be exempted
from taxation; (3) The scheduled starting and completion dates of
investments made in building, machinery, equipment, furniture,
fixtures, and inventory; (4) Estimates of the number of employee positions to be
created each year of the agreement and of the number of employee
positions retained by the applicant enterprise due to the
project, itemized as to the number of full-time, part-time,
permanent, and temporary positions; (5) Estimates of the dollar amount of payroll attributable
to the positions set forth in division (A)(4) of this section,
similarly itemized; (6) The number of employee positions, if any, at the
project site and at any other location in the state at the time
the agreement is executed, itemized as to the number of
full-time, part-time, permanent, and temporary positions. (B) Each agreement shall set forth the following
information and incorporate the following statements: (1) A description of real property to be exempted from
taxation under the agreement, the percentage of the assessed
valuation of the real property exempted from taxation, and the
period for which the exemption is granted, accompanied by the
statement: "The exemption commences the first year for which the
real property would first be taxable were that property not
exempted from taxation. No exemption shall commence after
.......... (insert date) nor extend beyond .......... (insert
date)." The tax commissioner shall adopt rules prescribing the
form the description of such property shall assume to
ensure that the property to be exempted from taxation under the
agreement is distinguishable from property that is not to be
exempted under that agreement. (2) A description of tangible personal property to be
exempted from taxation under the agreement, the percentage of the
assessed value of the tangible personal property exempted from
taxation, and the period for which the exemption is granted,
accompanied by the statement: "The minimum investment for tangible personal property to qualify for the exemption is $.......... (insert dollar amount) to purchase machinery and equipment first used in business at the facility as a result of the project, $.......... (insert dollar amount) for furniture and fixtures and other noninventory personal property first used in business at the facility as a result of the project, and $.......... (insert dollar amount) for new inventory. The maximum investment for tangible personal property to qualify for the exemption is $.......... (insert dollar amount) to purchase machinery and equipment first used in business at the facility as a result of the project, $.......... (insert dollar amount) for furniture and fixtures and other noninventory personal property first used in business at the facility as a result of the project, and $.......... (insert dollar amount) for new inventory. The exemption commences the first
year for which the tangible personal property would first be
taxable were that property not exempted from taxation. No
exemption shall commence after tax return year .......... (insert year) nor
extend beyond tax return year .......... (insert year). In no instance shall any tangible personal property be exempted from taxation for more than ten return years unless the project that is part of the agreement involves the enrichment and commercialization of uranium or uranium products or the research and development activities related to that enrichment or commercialization, in which case the tangible personal property may be exempted from taxation for up to fifteen return years." No exemption shall be allowed for any type of tangible personal property if the total investment is less than the minimum dollar amount specified for that type of property. If, for a type of tangible personal property, there are no minimum or maximum investment dollar amounts specified in the statement or the dollar amounts are designated in the statement as not applicable, the exemption shall apply to the total cost of that type of tangible personal property first used in business at the facility as a result of the project. The tax commissioner
shall adopt rules prescribing the form the description of such
property shall assume to ensure that the property to be
exempted from taxation under the agreement is distinguishable
from property that is not to be exempted under that agreement. (3) ".......... (insert name of enterprise) shall pay such
real and tangible personal property taxes as are not exempted
under this agreement and are charged against such property and
shall file all tax reports and returns as required by law. If
.......... (insert name of enterprise) fails to pay such taxes or
file such returns and reports, all incentives granted under this
agreement are rescinded beginning with the year for which such
taxes are charged or such reports or returns are required to be
filed and thereafter." (4) ".......... (insert name of enterprise) hereby
certifies that at the time this agreement is executed, ..........
(insert name of enterprise) does not owe any delinquent real or
tangible personal property taxes to any taxing authority of the
State of Ohio, and does not owe delinquent taxes for which
.......... (insert name of enterprise) is liable under Chapter 5727.,
5733., 5735., 5739., 5741., 5743., 5747., or 5753. of the Revised
Code, or, if such delinquent taxes are owed, .......... (insert
name of enterprise) currently is paying the delinquent taxes
pursuant to a delinquent tax contract enforceable
by the State of Ohio or an
agent or instrumentality thereof, has filed a petition in
bankruptcy under 11 U.S.C.A. 101, et seq., or such a petition has
been filed against .......... (insert name of enterprise). For
the purposes of the certification, delinquent taxes are taxes
that remain unpaid on the latest day prescribed for payment
without penalty under the chapter of the Revised Code governing
payment of those taxes." (5) ".......... (insert name of municipal corporation or
county) shall perform such acts as are reasonably necessary or
appropriate to effect, claim, reserve, and maintain exemptions
from taxation granted under this agreement including, without
limitation, joining in the execution of all documentation and
providing any necessary certificates required in connection with
such exemptions." (6) "If for any reason the enterprise zone designation
expires, the Director of the Ohio Department of Development
revokes certification of the zone, or .......... (insert name of
municipal corporation or county) revokes the designation of the
zone, entitlements granted under this agreement shall continue
for the number of years specified under this agreement, unless
.......... (insert name of enterprise) materially fails to
fulfill its obligations under this agreement and ..........
(insert name of municipal corporation or county) terminates or
modifies the exemptions from taxation granted under this
agreement." (7) "If .......... (insert name of enterprise) materially
fails to fulfill its obligations under this agreement, or if
.......... (insert name of municipal corporation or county)
determines that the certification as to delinquent taxes required
by this agreement is fraudulent, .......... (insert name of
municipal corporation or county) may terminate or modify the
exemptions from taxation granted under this agreement." (8) ".......... (insert name of enterprise) shall provide
to the proper tax incentive review council any information
reasonably required by the council to evaluate the enterprise's
compliance with the agreement, including returns or annual reports
filed pursuant
to section 5711.02 or 5727.08 of the Ohio Revised Code if
requested by the
council." (9) ".......... (insert name of enterprise) and ..........
(insert name of municipal corporation or county) acknowledge that
this agreement must be approved by formal action of the
legislative authority of .......... (insert name of municipal
corporation or county) as a condition for the agreement to take
effect. This agreement takes effect upon such approval." (10) "This agreement is not transferable or assignable
without the express, written approval of .......... (insert name
of municipal corporation or county)." (11) "Exemptions from taxation granted under this
agreement shall be revoked if it is determined that
............... (insert name of enterprise), any successor
enterprise, or any related member (as those terms are defined in
section 5709.61 of the Ohio Revised Code) has violated the
prohibition against entering into this agreement under division
(E) of section 3735.671 or section 5709.62, 5709.63, or 5709.632
of the Ohio Revised Code prior to the time prescribed by that
division or either of those sections." The statement described in division (B)(7) of this section
may include the following statement, appended at the end of the
statement: "and may require the repayment of the amount of taxes
that would have been payable had the property not been exempted
from taxation under this agreement." If the agreement includes a statement requiring repayment of exempted taxes, it also may authorize the legislative authority to secure repayment of such taxes by a lien on the exempted property in the amount required to be repaid. Such a lien on exempted real property shall attach, and may be perfected, collected, and enforced, in the same manner as a mortgage lien on real property, and shall otherwise have the same force and effect as a mortgage lien on real property. Notwithstanding section 5719.01 of the Revised Code, such a lien on exempted tangible personal property shall attach, and may be perfected, collected, and enforced, in the same manner as a security interest in goods under Chapter 1309. of the Revised Code, and shall otherwise have the same force and effect as such a security interest. (C) If the director of development had to issue a waiver
under section 5709.633 of the Revised Code as a condition for the
agreement to be executed, the agreement shall include the
following statement: "Continuation of this agreement is subject to the validity
of the circumstance upon which .......... (insert name of
enterprise) applied for, and the Director of the Ohio Department
of Development issued, the waiver pursuant to section 5709.633 of
the Ohio Revised Code. If, after formal approval of this
agreement by .......... (insert name of municipal corporation or
county), the Director or ............. (insert name of municipal
corporation or county) discovers that such a circumstance did not
exist, ........... (insert name of enterprise) shall be deemed to
have materially failed to comply with this agreement." If the director issued a waiver on the basis of the
circumstance described in division (B)(3) of section 5709.633 of
the Ohio Revised Code, the conditions enumerated in divisions
(B)(3)(a)(i) and (ii) or divisions (B)(3)(b)(i) and (ii) of that
section shall be incorporated in the information described in
divisions (A)(2), (3), and (4) of this section.
Sec. 5709.831. (A) As used in this section:
(1) "Exempted improvements" means improvements exempted from taxation under section 5709.40, 5709.41, 5709.73, or 5709.78 of the Revised Code.
(2) "Political subdivision" means the county, township, or municipal corporation granting an exemption from taxation under section 5709.40, 5709.41, 5709.73, or 5709.78 of the Revised Code.
(B) The legislative authority of a municipal
corporation, township, or county political subdivision that grants an exemption from
taxation for an improvement under section 5709.40, 5709.41,
5709.73, or 5709.78 of the Revised Code may require the owner of
the improvement to reimburse the local taxing authorities within
whose taxing jurisdiction the exempted improvement is located for
the amount of real property taxes that would have been payable to
the taxing authorities had the improvement not been exempted from
taxation. If the legislative authority requires the owner of the
exempted improvements to make payments in lieu of taxes, the
legislative authority may require such reimbursement only to the
extent that the owner failed to make those payments as required. The legislative authority may secure any reimbursement authorized by this section by a lien on the exempted property, which shall attach, and may be perfected, collected, and enforced, in the same manner as a mortgage lien on real property, and which shall otherwise have the same force and effect as a mortgage lien on real property.
Section 2. That existing sections 166.06, 166.07, 166.21, 725.04, 1728.11, 1728.111, 3735.671, 5709.631, and 5709.831 of the Revised Code are hereby repealed.
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