Community Reinvestment Areas (CRAs) can provide significant tax breaks

tiffin-entrance

In 2004, Northwest Ohio Orthopedics & Sports Medicine (3101 W. US 224, Tiffin) received a 100%, 15-year CRA exemption on their $7.8M facility. So far, it has saved the company $440,000, and it will last until 2019. The company employs 42.

What it is – A Community Reinvestment Area (CRA) is an area of land in which local government has the authority to grant tax exemption on real property improvements. That is to say that if someone is considering renovating an existing building or doing new construction, they could be eligible to receive a tax break on the increased taxes for the “real property improvement.”

How taxes on real property work – Real estate taxes in Ohio are local. In Tiffin, for example, the true (also known as “effective”) real property tax rates for commercial and industrial property are 66.143 mills (or 6.6% or $6.61 per $100.) Only 35% of the appraised value of the property is subject to the tax, which means effectively that there is a 2.32% tax on the value of any property (land, building.) This means that if the County Auditor (the entity who determines the value of property for purposes of taxation) were to assess the value of a new building at $1,000,000, the owner who had it built would have to pay $23,000 a year in new property taxes. Over ten years, that could cost upwards of $230,000 or almost a quarter of a million dollars. (See all Seneca County property tax rates.)

What will my benefit be? – CRAs can provide exemptions up to 100 percent, up to 15 years on that new value. Some CRAs have negotiated rates and terms, similar to Enterprise Zones. This is the case with Hopewell Township and Fostoria. Some CRAs (those created before 1994) have standard exemption rates. This is the case of Tiffin’s first four zones, as follows:

  • 15 years, 100 percent – new construction on residential, commercial, or industrial
  • 12 years, 100 percent – renovation of residential (more than 2 units), commercial, or industrial
  • 10 years, 100 percent – renovation of residential (two units or less)

The fifth CRA was established in 2016. Projects can qualify for up to the amounts listed above, with City Council approval.

Where are they? – There are six CRAs in Seneca County – Tiffin has five CRAs, there is one in Hopewell Township, and there is one in Fostoria:

  • Tiffin CRA 1 is located downtown (legislation, map)
  • Tiffin CRA 2 is located at Eagle Rock Business Park (legislation, map)
  • Tiffin CRA 3 is located in northeast Tiffin (legislation, map)
  • Tiffin CRA 4 is located in the area of Northstar Industrial Park (legislation, map)
  • Tiffin CRA 5 is located in the West Market St. district (legislation, map)
  • Hopewell Township CRA 3 (contact)
  • Fostoria CRA 2 (in both Seneca and Hancock Counties) (contact)

How do I know if my project is eligible? – If you are considering a project (involving the creation of jobs and/or investment), we recommend going through the SIEDC Incentives Process (future post). This process will help you determine (1) if you’re project is eligible for CRA (for example, it might not be located in one) and (2) what the total package of incentives will be (for example, you might be eligible for state incentives and/or other local incentives. As with most incentives, it is important to note that “moving forward with the project” (i.e., turning dirt or making public announcements) may disqualify a project from receiving CRA.

How do I get one, if I do qualify? – There are four main steps for projects in Tiffin’s CRAs:

  • Pre-Step – Design Review [~ 3 weeks] (for Tiffin CRA 1/downtown only) – you must first obtain a “Certificate of Appropriateness” from the Architectural Board of Review (see ABR Process).
  • Step 1 – Application [~1 week] (for all five Tiffin CRAs) – Fill out application (pre-1994) or (post-1994), email to SIEDC for review. SIEDC then submits to City Engineer.
  • Step 2 – Program Review [~10 days] The City Engineer reviews it (week to 10 days) and sends out a notification letter to the affected school district.
  • Step 3 – School Notification [14 days] – There is a 14-day waiting period after the letter is received by the school district.
  • Step 4 – Auditor Notification [~1 week] – After the 14 day waiting period, the Engineer forwards the application to the County Auditor for review.
  • Step 5 – Review & Certification [~1 week] – Once the Auditor reviews the application for eligibility and completeness (about a week), either (1) it is approved and a letter is sent to the applicant notifying them of that or (2) it is not, in which case the applicant is notified of any deficiencies and/or corrections that need to be made.
  • Once the letter is received, a company can move forward with their project.

How long does it take? – The CRA process typically takes 45 to 50 days. If it has to go through the ABR Process (Tiffin CRA 1), add another 3 weeks to the estimate (70 days.)

 

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