Fiscal Note & Local Impact Statement
127 th General Assembly of Ohio
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STATE FUND |
FY 2009 |
FY 2010 |
FUTURE YEARS |
|
General Revenue Fund |
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Revenues |
- 0 - |
- 0 - |
|
|
Expenditures |
- 0 - |
Increase of approximately
$0.5 million |
Increase of approximately
$1 million |
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Other State Funds |
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|
Revenues |
- 0 - |
- 0 - |
- 0 - |
|
Expenditures |
- 0 - |
- 0 - |
- 0 - |
Note: The state
fiscal year is July 1 through June 30.
For example, FY 2009 is July 1, 2008 – June 30, 2009.
·
The
state could incur additional costs to reimburse local governments for revenues
forgone as a result of making cooperative housing in complexes with fewer than
250 units eligible for the homestead exemption and the 2.5% rollback.
·
A
paucity of data on numbers of cooperative housing units and valuations imply
that the cost estimates are approximate.
·
Under
current law, counties, at the option of county commissioners, may forgo
investment earnings on deposits to fund below-market loans from depository
institutions to elderly or disabled homeowners to pay property taxes on their
homesteads. By adding residents of
cooperative housing in complexes with fewer than 250 units to those eligible
for this assistance, the bill could increase the number of homeowners
qualifying for such help. Any fiscal
effects of this change are likely to be small.
·
No
direct fiscal effects on other political subdivisions.
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Summary
By making residents of
cooperative housing complexes with fewer than 250 units eligible for the
homestead exemption and the 2.5% rollback, the bill could increase the amount
of taxes forgone by local governments, which are reimbursed by the state. The annual cost could range around
$1 million but is fairly uncertain.
Other provisions of the bill appear to have little fiscal impact.
Provisions of the bill
S.B. 306 changes the
definition of a homestead, for purposes of the homestead exemption and the
county property tax payment linked deposit program, to include a housing
cooperative with two or more units.
Currently a unit in a housing cooperative may be included in these tax
reduction programs only if the cooperative has 250 or more units. This change appears also to extend the 2.5%
real property tax rollback to residents of these properties. In addition, the bill adds as an owner of a
homestead a settlor of an irrevocable inter vivos trust holding title to the
homestead occupied by the settlor.
The state reimburses local
governments for real property taxes forgone as a result of the homestead
exemption and the 2.5% rollback. Linked
deposit programs are at the discretion of county commissioners, and have no
direct fiscal effect on the state or on units of local government other than
counties. The fiscal effect, if any, of
adding qualifying settlors of irrevocable inter vivos trusts to this list of
owners of homesteads qualifying for these programs appears likely to be small.
Numbers of cooperative
housing units in Ohio
Data are scanty on which to
base an analysis of the cost of expanding the homestead exemption by reducing
the number of units in a housing cooperative needed to qualify from 250 or more
to 2 or more. Department of Taxation
data do not break out this information.
Census Bureau data, from infrequent surveys of housing characteristics
in metropolitan areas, show that the Cleveland metropolitan area, for 2004, had
1,000 housing units in housing cooperatives.
The metropolitan area data are rounded to the nearest 100 units. The Columbus metropolitan area had 2,000
cooperative housing units in 2002. The
Cincinnati metropolitan area had 300 cooperative housing units in 1998. No data are published in this series for the
entire state of Ohio or for other metropolitan areas in the state.
An Internet search
identified three housing cooperatives in Ohio, two in Cincinnati with a total
of 514 units and one in Dayton with 100 units.
There is, in addition, a housing cooperative in Cleveland and one in
Columbus. Other housing cooperatives
may operate in the state but not appear on the Internet or as members of trade
groups.
If the units in housing
cooperatives identified in the Census Bureau surveys are assumed still to be in
use as co-op housing units, then the number of co-op housing units in the state
would be at least 3,614, consisting of 1,000 in Cleveland and 2,000 in
Columbus, plus the 514 units identified on the Internet in Cincinnati and 100
in Dayton. This number is rough as it
is based on outdated information. The
Census Bureau surveys covered areas with about 44% of the state's population,
and if they are indicative of the number of co-op housing units elsewhere in
the state, proportional to population, then the total number of such units
statewide could be roughly double the above figure. Alternatively, co-op housing could be mainly concentrated in
large urban areas, and the smaller figure may be closer to the actual total.
Cost of the bill
If all 3,614 co-op units
were occupied by the elderly and disabled, the cost of the expansion of the
homestead exemption, at perhaps $400 or more per unit on average statewide,
could be in excess of $1 million.
If there are substantially more co-op housing units statewide, the cost
could be higher. More plausibly, only
some of the units are occupied by persons eligible for the expanded homestead
exemption. Statewide, about 25% of
owner-occupied housing units, of all types, belong to persons age 65 and older.
However, the redefinition in
the bill of a homestead, adding cooperative housing in a housing complex with 2
to 249 units, applies to R.C. 323.151 to 323.159, which covers not only the
homestead exemption for those age 65 and older and the disabled, but also the
2.5% rollback for all owner-occupied homes.
Most or all of the additional units included in the broadened definition
of homestead are likely occupied by persons qualifying for the 2.5% rollback, the
cost of which would depend on the values and gross taxes levied on the
cooperative housing complexes. This
annual cost would equal 35% of market value, times the effective tax rate,
times 2.5%. The annual cost of this
change might be $200,000 to $600,000.
Adding these cost ranges
together, the total cost of the bill might be around $1 million, more or
less, but the numbers are very rough.
The bill does not specify
when these changes would go into effect.
Assuming that the changes would be implemented for tax year 2009,
payable in 2010, the costs to the state to reimburse local governments for
revenues forgone would begin in the second half of FY 2010.
LSC fiscal staff: Phil Cummins, Economist