The following Enterprise Zone Guidelines are hereby adopted by and for the City for the purpose of encouraging investment and the creation of jobs within the Enterprise Zone in the City:
CITY OF NORTHWOOD ENTERPRISE ZONE GUIDELINES
INTRODUCTION
INTRODUCTION
In an effort to encourage investment in the City's industrial base, the City of Northwood has designated an Enterprise Zone pursuant to State law. An Enterprise Zone is an area within which special tax incentives may be offered by contract to businesses that agree to invest in capital improvements and create or retain jobs. Tax incentives will be offered provided program guidelines are met and a substantial investment is made. Jobs must be either created or retained. Each contract with a business within the Zone relating to jobs, investment and tax incentives must be submitted to the City for its approval.
PURPOSE
The purpose of the Enterprise Zone is to encourage as much investment and job creation as possible within the boundaries of the Enterprise Zone. Retaining jobs is also a priority. Each contract negotiated with a local business shall be designed to encourage capital investments while creating or retaining jobs. In return, the City of Northwood will agree to provide only the amount of tax incentives necessary under the circumstances of each transaction to allow the project to go forward.
ELIGIBLE BUSINESSES
Only those businesses that are "qualified by financial responsibility and business experience to create and preserve employment opportunities in the Zone and to improve the economic climate of the municipal corporation..." (Ohio R.C. 5709.63(A)) may apply for the tax incentives available. Furthermore, only businesses engaged in manufacturing, warehousing, research and development and distribution will be eligible to apply for tax incentives. No housing, commercial (retail) or institutional uses may benefit from the Enterprise Zone Program.
INCENTIVES OFFERED
In order to maximize the collection of new tax revenues, only the minimum abatement necessary to bring about the investment will be offered. The incentives that can be offered are only in terms of new real and personal property related to the specific project. State law permits up to seventy-five percent abatement for a period of up to ten years in a municipal corporation. The level of incentives can be "stepped" to allow for a higher initial incentive level. However, the average incentive level can be a maximum of sixty percent for the term of the agreement. In very unusual circumstances, the municipal corporation can offer tax incentives in excess of seventy-five percent, but these incentives must be approved by the local school board. Optional services or assistance may be provided to a prospective business by the municipality or county for a period of up to ten years, as well.
EXPANDED INCENTIVES
The Ohio Enterprise Zone law allows a local government to expand the potential incentives to include existing taxable assets in only two particular situations.
1. If a business plans to purchase and operate a large manufacturing operation that has employed an average of 1,000 employees per year during the past five years, which operation has closed or has announced closure proceedings, the local government may grant an exemption of up to 100 percent of the existing real and personal property for up to ten years.
2. If a business agrees to remediate an environmentally-contaminated facility, expending at least 250 percent of the existing value of the facility on a new investment project, including at least a ten percent investment on remediation activities, then the local government can exempt up to fifty percent of the existing real property and 100 percent of the new real and personal property investment described as the project.
INCOME TAX SHARING
Substitute Senate Bill 19 (SSB 19), which became effective July 22, 1994, requires that all tax incentive negotiations with companies generating one million dollars ($1,000,000) or more of new annual payroll, and located within a municipal corporation which imposes a local income tax, must include a compensation agreement with the Board of Education of the affected school district having jurisdiction over the project site. If the municipal corporation and the Board of Education cannot reach an agreement within six months of the formal legislative approval of the Enterprise Zone Agreement, then the Board of Education shall be compensated with fifty percent of the local income tax generated by the new employees. Procedures to arrive at this compensation agreement are defined in Exhibit A, attached to Ordinance 96-4, passed February 8, 1996.
SCHOOL BOARD NOTIFICATION
House Bill (HB) 627 has been passed by the Ohio Legislature. Among many other issues, the Bill changes the required notice period to boards of education where the incentive package exceeds the statutory limits. The notice period is changed from thirty calendar days to forty-five working days. This change affects not only the Enterprise Zone Program, but also the Urban Renewal, Impacted Cities, "new" Community Reinvestment Area and Tax Increment Financing Programs. The new legislation gives the affected Board of Education the express ability to waive the notice provision or to approve the project which would end the notice period prospectively. HB 627 was approved as emergency legislation and takes effect immediately upon the Governor's signature, which is expected within the next week. Local jurisdictions considering tax exemption packages which exceed the statutory cap should implement the new notice provision on all pending projects to avoid compliance controversy. ODOD will be updating the Enterprise Zone Program Manual and provide Enterprise Zone Managers a detailed summary of the revision within the near future.
GENERAL APPLICATION PROCESS
An application for Enterprise Zone benefits will be processed through the following steps:
1. The company must file an application with the Enterprise Zone Manager on a form provided by the Office. A one-time fee of five hundred dollars ($500.00), made payable to the Ohio Department of Development, is to be submitted with the Proposed Agreement Between Local Government or County and Enterprise.
2. After the Enterprise Zone Manager determines that the project is eligible, the negotiation team will meet and recommend an abatement level and tax sharing agreement, if required.
3. Based on the recommendation of the negotiation team, a proposed Enterprise Zone Agreement will be prepared and submitted to Council for approval. Required notice shall be provided to the Board(s) of Education prior to Council action.
4. The proposed Agreement, after being approved by Council, will be submitted to the County Commissioners for approval, again with appropriate notice to the Board(s) of Education. County Commissioners action on a proposed Agreement may be provided to the Boards of Education. A single notice of both the dates of the proposed Council action and the proposed County Commissioners action on a proposed Agreement may be provided to the Boards of Education.
5. Upon approval of the proposed Agreement by both the City and the County, an executed agreement will be sent to the Ohio Departments of Development and Taxation within fifteen days.
6. The project will be reviewed annually by the Tax Incentive Review Council (TIRC) for conformance with the Agreement. The enterprise zone manager will provide staff assistance for the TIRC in obtaining and reviewing necessary facts as to conformance with the Agreement. An annual processing fee may be required. Failure to comply with the Agreement may result in the loss of approved incentives granted.
ENTERPRISE ZONE
SUPPLEMENTAL DOCUMENTATION
SUPPLEMENTAL DOCUMENTATION
The City of Northwood, must find "...that the enterprise submitting the proposal is qualified by financial responsibility and business experience to create and preserve employment opportunities in the zone..." according to Ohio R.C. 5709.62(C). In order to meet these and other obligations, we are requiring the following documentation:
1. Company financial statements for the previous three fiscal years, including both profit and loss statements and balance sheet, or three-year pro forma projections if a start-up;
2. A brief history of the company and a description of the business;
3. A copy of the most recent tangible personal property tax filing to the County or the State;
4. A legal description of the property, including taxing district and parcel numbers.
Definition
Facility: An enterprise's place of business in a zone, including land, buildings, machinery, equipment and other material used in the business.
(Res. 89-21. Passed 11-9-89; Ord. 96-4. Passed 2-8-96.)