An Ohio House committee heard proponent and opponent testimony on legislation that would create a new tax credit for large development projects.
The bill, Substitute Senate Bill 39, would create an insurance company tax credit of up to 10 percent of development projects that cost more than $50 million and are either 15 or more stories in height or 350,000 square feet. The bill, which is being sponsored by Sen. Kirk Schuring, R-Canton, passed the Ohio Senate, 32-1.
The Ohio House Economic And Workforce Development Committee heard proponent testimony from groups that would work on projects that would receive the benefits, including Chris Dobrozi of Neyer Properties and Emil Liszniansky of Envision Group LLC.
Neyer Properties owns a large portion of land in the Cincinnati Innovation District. Dobrozi testified that this additional tax credit would help the group fund long-term investments in that region, which it might not otherwise be able to do because of stagnant rent rates and increasing construction costs.
Dobrozi said that the credit would incentivize 30-40 year-term investments from Neyer Properties in the region. The group is also working with the University of Cincinnati to retain graduates to work in the area, which he said the credit would help make possible.
Liszniansky testified that Ohio has a lot of potential for economic development, but that potential investments are prevented by physical constraints and market forces unique to the Midwest, such as an aging infrastructure and the loss of a manufacturing tax base. He said that this credit would help incentivize development in spite of these constraints, create a good environment for employers and create jobs.
Dobrozi said that the credit would help keep investments in Ohio.
Wendy Patton, speaking on behalf of Policy Matters Ohio, testified against the legislation. Policy Matter Ohio is a progressive think tank. She argued that the bill does not provide reasonable checks or constraints.
“The bill lacks needed guardrails,” Patton said. “Provisions directed to make sure that it is not a revenue loser are short on specifics that have no clawback mechanism. If the projects it supports are so crucial, the General Assembly should fund them through the capital budget. The cost is uncertain, making its approval less than fiscally responsible at this point and it adds yet another new economic development tax credit when the tax expenditure review committee has not yet undertaken a rigorous review of such tax expenditures.”
Each project, Patton said, would cost $5 million or more and there is no cap on how much money a company could get in tax credits. Although the state requires that the company provide a cost estimate, she said that there are no guardrails to prevent massive credits to a company whose costs exceed their expected expenses.
Patton suggested that the legislation have more guardrails and that studies be conducted to determine how much money would be given out in tax credits because the state has not provided an estimate to how much this will cost the state in potential tax revenue.