Tax Abatements and Incentives

The most common tax abatements and incentives offered by Ohio’s cities, townships, and counties are Tax Increment Financing (TIF), Community Reinvestment Areas (CRAs) and Enterprise Zones (EZs).

Tax Increment Financing (TIF) is an economic development mechanism available to local governments in Ohio to finance public infrastructure improvements and, in certain circumstances, residential rehabilitation. Local jurisdictions seeking to establish a TIF project must enact legislation that (a) designates the parcel(s) to be exempted from taxation, (b) declares improvements to private property within the specified area as serving a public purpose, (c) delineates the public infrastructure improvements to be made that will directly benefit the parcel and (d) specifies the equivalent funds to be created for those redirected monies (called Payment in Lieu of Taxes or PILOT payments to those funds). Only those public infrastructure improvements directly serving the increased demand arising from the real property improvements to the parcel(s) or an Incentive District are eligible for TIF financing. 

TIFs can be applied to commercial/industrial and residential properties. Only the improvements to a property that occur after the TIF is established are abated by the TIF. Note also that a TIF ‘redirects’ the taxes paid by the property owner(s) to a TIF fund established by the city, township or county to pay for the public improvements supported by the TIF (i.e., the property owners still pay their tax bill, but the payments are diverted to the TIF fund to pay for the public infrastructure—as previously noted, these are called PILOT payments). 

For much more information about TIFs, please visit the Ohio Department of Development’s website. 

The Ohio Department of Development defines a CRA as an economic development tool administered by municipal and county governments that provides real property tax exemptions for property owners who renovate existing or construct new buildings. Community Reinvestment Areas are areas of land in which property owners can receive tax incentives for investing in real property improvements. To use the CRA program, a city, village, or county petitions the Ohio Department of Development for confirmation of a geographical area in which investment in housing has traditionally been discouraged.  

For much more information about CRAs, please visit the Ohio Department of Development’s website. 

The Ohio Enterprise Zone Program is an economic development tool administered by municipal and county governments that provides real property tax exemptions to businesses making investments in Ohio. Local communities may offer tax incentives for non-retail projects that are establishing or expanding operations in the State of Ohio.  

For much more information about EZs, please visit the Ohio Department of Development’s website. 

The Ohio Revised Code establishes the legal approval process that cities, townships, and counties need to follow to establish CRAs, TIFs or EZs. While municipalities are always encouraged to work in partnership with local school districts to avoid any unnecessary loss of school district tax revenue, municipalities may create CRAs, TIFs and EZs that do not require the permission or need the approval of a school district. Ohio Law specifies a maximum exemption percentage and a maximum number of years for which cities, townships and counties may directly enact tax abatement, without school district approval, as follows¹: 

Table 1: General Terms Under Which Cities, Townships or Counties May Enact Tax Incentives Without School District Approval
TIFs	Residential CRA	Commercial CRA	EZ
Up to 75% abatement; OR  10 years or less; OR  Non-school TIF, meaning all tax monies owed to school district to be paid as if TIF was not in place	Up to 100% abatement; OR  Up to 15 years	Up to 75% abatement; OR  Up to 15 years	Cities  Average abated value over life of project period cannot exceed 60%; OR  Up to 15 years  Counties:  Up to 60%; OR  Up to 15 years

 

When cities, townships and counties seek to go beyond the general terms and conditions noted in Table 1, the Ohio Revised Code requires these entities to negotiate with school boards to create compensation agreements to ameliorate any additional tax revenue losses to school districts beyond the generalized maximums (in terms of percentage of taxes abated and/or for how long). The Ohio Revised Code specifies the terms and conditions that must be negotiated, and generally allow for the city, township, county, or the developer of the property to create a compensation agreement with the school district. 

The compensation can be direct (monetary), or it can be indirect. The entities are free to create mutually acceptable terms and conditions to compensate the school district, and it is common for these agreements to include things like: 

• Donations (e.g., land, facilities) 
• Leases or other use-agreements (e.g., a hospital system allowing a school district to lease space in a medical office facility for free or at drastically reduced rates) 
• One-time monetary contributions 

Yes. Many times, cities, townships and counties understand that the economic growth and development of an area increases the opportunities (i.e., jobs) in the area. These opportunities increase the population, which impacts the number of students schools must serve. Many cities, townships and counties realize that the abatements, especially those that directly impact population growth (e.g., residential TIFs or residential CRAs), can be counterproductive—in essence asking the school district to do more with less. Hence, it is common for school districts to be held harmless by these entities via ‘non-school’ abatements, whereby the school district continues to get 100% of the taxes it would otherwise get, abatement(s) notwithstanding. 

Yes. As an area that has grown tremendously over the last thirty years, the Olentangy Schools have been impacted by tax incentive legislation passed by the four cities (Columbus, Delaware, Powell, Westerville), seven townships (Berlin, Berkshire, Concord, Delaware, Genoa, Liberty, Orange) and Delaware County, which our District overlaps. 

As noted above, the District and the region have experienced phenomenal growth over the past thirty years. That growth has spurred greater economic opportunities for our region and has overall made our area a desirable place to live and work based on the community resources and amenities available. Chief among those resources and services is the high-quality education offered by the Olentangy Schools.  

But the District has also grown tremendously, and over that period has grown to the 4th largest school district in the state of Ohio. The District must always be poised to educate all students who legally live within District boundaries, and its leaders must be wise stewards of District resources to continue to facilitate maximum learning for every student. 

With that as a pretext, District leadership actively engages with the elected officials of the overlapping municipalities, including actively discussing how economic development impacts the school district and our region. In return, the elected officials in those overlapping municipalities are actively engaged in promoting the success of the District.  

Yet despite the common interests of promoting our schools and our broader communities, there are differing needs and perspectives that must often be melded together for optimal benefit. This means that at times, tools like tax abatements are viable tools that can make communities stronger overall. 

District leadership actively works with the cities, townships and Delaware County when economic development incentives are proposed. The discussion focuses on how the proposed development will impact the District, and seeks to answer questions such as: 

• Is it a residential development, or is it commercial or industrial? Residential development comes with more students to educate, whereas commercial/industrial development can alleviate the tax burden on existing residential homeowners. 
• How will any increase in student enrollment impact our capital needs? 
• How will any increase in student enrollment impact our operational/staffing needs? 
• What are the terms of the proposed tax incentive in terms of years and abatement percentage? Tantamount to that question, what types of compensation, if any, is the municipality offering via a compensation agreement (or is it even required to offer anything)? 
• Will the development lead to subsequent development that can be beneficial to the District? Development can beget development, and where the subsequent developments are commercial/industrial, the existing tax burden can be more equally spread over a broader tax base. 
• What types of public infrastructure developments (e.g., roadways, utilities, bike paths, sidewalks, etc.) are proposed with the tax incentive? How might the District and the broader community benefit from those public improvements? 

Generally, the District is most likely to be supportive of tax incentives that: 

1. Are non-school—that is, the District will continue to get 100% of all tax revenue it would otherwise get notwithstanding the tax incentive. Recognizing that factors and circumstances may not allow the school district to get a non-school agreement in place, the school district seeks to minimize lost tax revenue by creating mutually agreeable compensation agreements with overlapping cities, townships and Delaware County.  
2. Are commercial/industrial in nature. Tax incentives for residential developments will almost certainly lead to student population growth. While the District eagerly educates any student who legally lives within our District boundaries, we must also effectively plan for the resources needed to do so. Residential abatements increase enrollment while reducing the resources needed to provide a high-quality education and the District therefore does not support them. 
3. Expand vital community infrastructure like roadways, bike paths, sidewalks, etc., as these public improvements can have positive impacts on District operations (e.g., expanding walk zones, transportation efficiencies, etc.). 
4. Create or beget additional commercial/industrial tax base growth. For example, many types of mixed-use development can target the right blend of residential/commercial properties that do not hinder the District’s ability to effectively plan for new students while simultaneously promoting additional commercial growth that can increase District resources while effectively reducing the burden on existing residential homeowners.  

The charts below show the active TIFs and CRAs for Olentangy Schools, including the issuing entity (township, city, county); the total value that is abated; the total taxes collected by Olentangy; the taxes foregone by Olentangy; any additional compensation paid to Olentangy from the TIF or CRA; and other general information about the TIF/CRA (e.g., basic terms/conditions). 

Chart 1 - Active TIFs
Chart 2 - Active CRAs

Further, in the first column on the Charts, the TIF project number and/or the CRA project are hyperlinks that will take the reader to the TIF or CRA legislation that was passed by the pertinent township, city or county, and also includes any compensation agreements between the entity and Olentangy Schools.

Finally, on the TIF chart, TIFs that are listed first in red font are residential TIFs—the rest are commercial TIFs. All CRAs listed on the CRA Chart are commercial.