City of Sidney
COMMUNITY REINVESTMENT AREA POLICY
Definition: A Community Reinvestment Area is a section within
the City which contains housing facilities or structures of historical significance,
where new housing construction and repair of existing facilities has been discouraged.
The Sidney City Council may decide to extend 100% tax abatements on all new real property investments, for terms described later in this policy statement.
Purpose: The purpose of designating Community Reinvestment
Areas within the City of Sidney is to provide the City with an effective tool
to encourage, manage, and guide certain desired economic development activity
within the designated areas. The expressed intent of the policy governing Sidney
Community Reinvestment Areas is that this vehicle be used to:
• Promote the establishment and retention of manufacturing, commercial and residential projects, whose location within the City will have a long term impact on the community, through the provision of quality employment opportunities and substantial private and public capital investment.
• Enable the City to remain competitive with other local communities in drawing quality economic development activity to Sidney.
• Promote the retention and expansion of well-established manufacturing and commercial enterprises in the City.
• Provide economic stimulus to other business activities of the City in the form of retail and wholesale goods, services, support facilities and satellite industries.
• Create development which is consistent with the Sidney Comprehensive Plan.
• Enable the accomplishment of capital improvements, such as the development of roads and public utilities, to service industrial and other facets of the community.
Community Reinvestment Area: The proposed boundaries for
the Community Reinvestment Areas are depicted on the attached maps.
West End Area
Eligible Businesses: The following enterprises may be eligible
to apply and receive tax incentives through the Sidney Community Revitalization
• Manufacturing businesses
• Research and development businesses that are engaged in the testing, evaluation, engineering, and marketing of materials or products that are subject to or associated with a manufacturing process, and exploration of the application of technology in manufacturing.
• Warehousing and distribution projects.
• Low to moderate income (as determined for HUD programs) housing projects.
• Retail and service industry projects, whose accomplishment can satisfy the intent of this policy.
Degree of Investment Required: Only applicants that agree
to make substantial investments in either real or personal property shall be
eligible to receive the benefits available under the City's Community Reinvestment
Area program, namely a tax exemption for real property investments. The matter
of substantial investment is defined below:
An abatement would not be granted where the project results in a net loss in investment for an existing business and subsequent loss of property tax revenue unless it is absolutely essential to the economic well being of the City.
Contract Required: As a condition of receiving tax incentives through the Community Reinvestment Area Program, the applicant must be willing to enter into a contract with the City. The terms of the contract shall address the applicant's commitment regarding the extent and timing for investment activity and retention and/or creation of new jobs during the term of the incentive. The contract shall provide that failure to perform to the specifications of the agreement may result in the revocation and/or repayment of the granted incentives. The decision to invoke the revocation or repayment of the incentive due to failure of the party receiving the incentive to perform in accordance with the terms of the contract shall be made by the Sidney City Council.
Abatement Guidelines: Projects involving the construction
of new structures and the remodeling of existing structures, determined to be
eligible for the Community Reinvestment Area Program by the Sidney City Council,
may be considered for 100% exemption from real property taxation for the following
1. Ten (10) years for the remodeling of every residential dwelling unit containing not more than two family units and upon which the cost of remodeling is at least $5,000 (five thousand dollars), as described in ORC Section 3735.67, and with such exemption being one hundred percent (100%) for each of the ten years.
2. Fifteen (15) years for the new construction of every residential dwelling unit containing no more than two (2) family units, and with such exemption being one hundred percent (100%) for each of the fifteen years.
3. Up to twelve (12) years and up to one hundred percent (100%) for the remodeling of existing commercial or industrial
facilities, the term and percentage of which shall be negotiated on a case-by-case bases in advance of construction occurring.
4. Up to fifteen (15) years and up to one hundred percent (100%) for the construction of commercial or industrial facilities, the term and percentage of which shall be negotiated on a case-by-case basis in advance of construction occurring.
5. If remodeling qualifies for an exemption, during the period of exemption, the exempted percentage of the dollar amount of the increase in market value of the structure shall be exempt from real property taxation. If new construction qualifies for an exemption, during the period of the exemption the exempted percentage of the structure shall not be considered to be an improvement on the land on which it is located for the purpose of real property taxation.
6. Apartment dwellings containing three (3) or more family units will be considered commercial structures for the CRA program.
The term of the abatement is based upon the amount of real (not including land) and personal property investment. The target investment is $5,000,000. The term of the abatement will be determined by dividing the amount of investment by the target investment and multiplying that number by the maximum years of abatement.
|$2,000,000 investment in real and personal property for a
new construction project. 2,000,000/5,000,000 = .4
15 years x .4 = 6 years
II. Percentage of Abatement
The maximum amount of abatement is 75%.
The percentage of abatement is based upon the number of new and retained jobs. The target number of new and retained jobs is 100. The percentage of abatement will be determined by dividing the number of new and retained jobs by the target of 100 and multiplying that number by 75%.
|30 new jobs
30/100 = .3
.3 x 75% = 22.5%
III. Bonus - Percentage of Abatement
For those businesses whose payroll exceeds $30,000 per new and/or retained job, additional abatement of up to 10% may be provided.
Payroll - $1,500,000
The term of the abatement is based upon the amount of real (not including
land) and personal property investment. The target investment is $5,000,000.
The term of the abatement will be determined by dividing the amount of investment
by the target investment and multiplying that number by the maximum years of
|• $2,000,000 investment in real and personal property
for a new construction project.
• 2,000,000/5,000,000 = .4
• 15 years x .4 = 6 years
• II. Percentage of Abatement
• The maximum amount of abatement is 75%.
The percentage of abatement is based upon the number of new and retained jobs.
The target number of new and retained jobs is 100. The percentage of abatement
will be determined by dividing the number of new and retained jobs by the target
of 100 and multiplying that number by 75%.
|• 30 new jobs
• 30/100 = .3
• .3 x 75% = 22.5%
• III. Bonus - Percentage of Abatement
For those businesses whose payroll exceeds $30,000 per new and/or retained
job, additional abatement of up to 10% may be provided.
|• Payroll - $1,500,000
• New jobs - 25
• Average per new job - $40,000
• 22.5% x 10% = 2.25%
• 22.5% + 2.25% = 24.75%
An Advisory Committee shall be established to advise the City Council on the mater of the term of the abatement to be granted. The Advisory Committee shall be made up of a member of the Sidney City Council, the Sidney City Manager, a member of the Sidney City School Board, the Sidney City School Superintendent, and the Executive Director of the Western Ohio Development Council. The Advisory Committee's recommendation shall be provided to Council prior to their action on an application.
Taxing Authority Compensation for Abated Revenues:
All property-taxing authorities in the City of Sidney have a stake in the promotion of a successful Community Reinvestment Area program. It is the policy of the City of Sidney to share with all property-taxing authorities income tax growth benefits the City may receive from projects that benefit from the application of the Community Reinvestment Area program.
The formula for distribution of income tax proceeds from CRA benefiting projects is as follows:
|1. The City agrees to deposit 75% of income tax collections
that are specifically associated with any new business or incremental expansion
of an existing business that has benefited from the granting of a Community
Revitalization Area tax abatement into a trust account.
2. Commencing from a point in time which is at least 12 months from the beginning of economic activity associated with a benefiting project and throughout the term of the Commercial Revitalization Area tax abatement, the City shall distribute to the Sidney City Schools and other tax authorities monies from the trust account on the following basis:
o Step 1. The property taxes that would have been due on the benefiting real property had the abatement not been granted are calculated by the City Finance Officer. The calculation shall occur at the times of the year when real property tax payments would otherwise be paid. In determining the property tax receipts that would have otherwise been due, the City's Finance Officer shall use the property valuation prepared by the Shelby County Auditor and the tax millage rates that are in effect at the relevant time.
o Step 2. The proceeds within the trust fund shall be distributed to all taxing authorities in the City of Sidney on a rationale of relative millage levied on real property in Sidney. This distribution, if suitable funds are available, shall occur in the second week of May. An example of the rationale for distribution of the proceeds is provided below:
|3. Any distribution from the trust fund would not exceed the
amount the taxing authority would have otherwise received had the project
proceeded without abatement. Excess proceeds shall be distributed to the
City of Sidney. In the event that evidence indicates that income tax collections
from an applicant are declining from the pre-abatement level for the subject
property or benefiting business, the City shall meet with representatives
from the various tax authorities to discuss a modification to the distribution
formula. If agreement is reached on the modification to distribution by
the various taxing authorities, the matter shall be forwarded onto the City
Council for their resolution.
4. In the event that the compensation received during the entire term of the abatement through this tax-sharing program is less than the amount the taxing authorities would have received had there been no abatement, then this distribution program shall continue for an additional year beyond the term of the tax abatement.
Interested parties are required to complete an application for consideration for benefits under this program. The application forms will be available in the Office of the City Manager. Each application shall be reviewed by the Housing Officer, the City Manager, who will be charged with making a recommendation to the entire City Council on the appropriateness of the application, pursuant to the requirements of the Ohio Revised Code governing Community Reinvestment Areas.
There shall be a $750 application fee for Community Reinvestment Area benefit consideration. Upon approval of an application, the fee shall be distributed in equal parts to the City of Sidney, the Western Ohio Development Council, and the Sidney City Schools.