This briefing document summarizes the key provisions and potential impacts of Ohio Senate Bill (S.B.) No. 29, as introduced. This bill proposes to amend Section 715.72 of the Revised Code to allow two or more municipalities to create a Joint Economic Development District (JEDD) without the mandatory involvement of a township, while also making other modifications to the existing law.
1. Main Theme: Expanding JEDD Formation Options for Municipalities
The central theme of S.B. No. 29 is to provide municipalities with greater flexibility in establishing JEDDs. The current law generally requires the participation of at least one township alongside one or more municipal corporations (Section 715.72(C)(3)(a)). This bill seeks to remove that requirement under specific circumstances, enabling purely inter-municipal JEDDs.
- Key Change: The bill amends Section 715.72(A)(1) and (C) to explicitly state that a “contracting party” can be “one or more a municipal corporations” and allows “two or more counties contracting parties” to enter into a contract. Importantly, it revises Section 715.72(C)(3) to state that “at least one of the contracting parties shall be a municipal corporation, and at least one of the contracting parties shall be either of the following: (a) A township; (b) A municipal corporation in which part or all of the area or areas to be included in the joint economic development district is or are located…” This new subsection (b) is the critical element allowing for JEDDs solely between municipalities under certain conditions related to economic distress criteria (referencing Section 5709.61).
- Contiguity Requirement for All-Municipal JEDDs: The bill introduces a specific contiguity requirement for JEDDs formed solely by municipalities: “(b) If all of the contracting parties are municipal corporations, the territory of each contracting party shall be partially or wholly located in the same county and contiguous to the territory of at least one other contracting party or contiguous to a township that is contiguous to another contracting party.” (Section 715.72(C)(1)(b)). This suggests a focus on regional collaboration within the same county.
2. Key Definitions and Clarifications:
The bill refines and adds several definitions relevant to JEDDs:
- “Contracting partiesparty”: Updated to explicitly include “one or more a municipal corporations” as potential participants (Section 715.72(A)(1)).
- “Business” and “Owner”: These definitions are provided to clarify who is subject to potential income taxes and who can represent a business in JEDD-related processes (Section 715.72(A)(4) and (5)).
- “Operates within” and “employed within”: These definitions link business net profits and employee income to the potential income tax levied within the district (Section 715.72(A)(7) and (8)).
- “Mixed-use development”: Defined to address the residency exception within JEDDs (Section 715.72(A)(9)). Electors residing in a mixed-use development within a JEDD are an exception to the general rule that no electors should reside in the district on the effective date of the contract (Section 715.72(E)(1)(b)).
- “Water or sewer service plan or agreement” and “Non-contracting municipal corporation”: These definitions relate to provisions addressing areas near non-participating municipalities and the provision of essential utilities (Section 715.72(A)(10) and (11)).
3. Petition and Consent Processes:
The bill maintains and clarifies the requirements for obtaining consent from property owners and business owners within a proposed JEDD:
- Petitions Required: Before a contract is approved, contracting parties must circulate petitions to “record owners of real property located within the proposed joint economic development district and owners of businesses operating within the proposed district” (Section 715.72(J)(1)).
- Content of Petitions: Petitions must state that relevant JEDD documents are available for public inspection and clearly indicate that signing the petition signifies consent to the proposed district.
- Exclusion Based on Proximity to Non-Contracting Municipalities: Property located within one-half mile of a non-contracting municipality or covered by a water/sewer service plan involving a non-contracting municipality is automatically excluded unless the property owner signs the petition (Section 715.72(J)(2)).
- Majority Consent: Approval of the JEDD contract requires signed petitions from “the majority of the record owners of real property located within the proposed joint economic development district and by a majority of the owners of businesses, if any, operating within the proposed district” (Section 715.72(K)(1)).
4. Income Tax Authority within JEDDs:
The bill outlines the potential for levying an income tax within a JEDD:
- Board Authority: The contract creating a JEDD “may grant to the board the power to adopt a resolution to levy an income tax within the entire district or within portions of the district designated by the contract” (Section 715.72(F)(5)(a)).
- Tax Usage: The income tax is to be used “to carry out the economic development plan for the district… and for any other lawful purpose of the contracting parties pursuant to the contract, including the provision of utility services…”
- Tax Base and Rate: The income tax is based on “both the income earned by persons employed or residing within the district and the net profit of businesses operating within the district.” The rate cannot exceed “the highest rate being levied by a municipal corporation that is a contracting party” (Section 715.72(F)(5)(b)).
- Administration and Long-Term Maintenance: If an income tax is levied, the board must enter an agreement with a contracting municipality for administration, collection, and enforcement. A percentage of the collected tax must be annually set aside for “the long-term maintenance of the district” (Section 715.72(F)(5)(d)).
5. Governance and Board of Directors:
The bill specifies the structure and powers of the JEDD board of directors:
- Composition: The composition of the board depends on whether businesses operate and people are employed within the district. It includes representatives from contracting municipalities, townships (if any), business owners, employees (if any), and counties (if any). A default member is selected by the other members if a county is not a contracting party (Section 715.72(P)(1) and (2)).
- Appointment and Terms: Members are appointed as outlined in the district contract, with staggered initial terms and subsequent four-year terms. Consecutive term limits are imposed.
- Chairperson: The county representative (if any) or the member selected by the other members serves as chairperson.
- Limited Powers: The board “has no powers except as described in this section and in the contract creating the district” (Section 715.72(P)(3)).
- Public Body Status: The board is defined as a public body under Ohio law.
6. Public Hearings and Notification:
The bill mandates public hearings and notifications throughout the JEDD creation and amendment processes:
- Public Hearings: Each contracting party’s legislative authority must hold a public hearing concerning the contract and district, providing at least 30 days’ notice (Section 715.72(I)(1)).
- Document Availability: Key JEDD documents, including the contract, economic development plan, service schedule, district description, and tax collection schedule (if applicable), must be available for public inspection during the 30-day notice period and until contract approval.
- Notification to Non-Contracting Municipalities: Non-contracting municipalities within one-half mile or identified in water/sewer service plans must receive written notice at least 30 days before the first public hearing.
7. Exemption Process for Existing Businesses:
The bill provides a mechanism for certain existing businesses to seek exemption from a newly levied JEDD income tax:
- Eligibility: Businesses operating in an unincorporated area of the district before the contract’s effective date, whose owners did not sign a petition, and who derive negligible benefit from the JEDD’s planned improvements can file a complaint for exemption with the court of common pleas (Section 715.72(Q)(1)).
- Timeline: Complaints must be filed within six months of the district contract’s effective date.
- Court Determination: The court reviews the complaint and any answers from the contracting parties, potentially holding a hearing. The exemption is granted if all eligibility criteria are met. The court’s decision is final and not subject to appeal under Chapter 2506 of the Revised Code.
8. Restrictions on Annexation:
The bill includes provisions restricting annexation of unincorporated territory within a JEDD during the contract’s term, unless all relevant township trustees consent (Section 715.72(R)(1)). The contract can further prohibit annexation by a contracting municipality beyond this period (Section 715.72(R)(2)).
9. Zoning and Land Use Regulations:
JEDD contracts can include agreements regarding zoning and land use regulations, building codes, and public improvements. However, the bill explicitly states that “no contract, however, shall exempt the territory within the district from the procedures of land use regulation applicable pursuant to municipal corporation, township, and county regulations, including, but not limited to, zoning procedures” (Section 715.72(S)).
10. Tax Exemptions:
The bill restricts the ability of political subdivisions to grant certain tax exemptions on property within a JEDD without the consent of all contracting parties. This prohibition does not apply to exemptions filed, pending, or approved before the JEDD contract’s effective date (Section 715.72(U)).
Potential Impacts:
- Increased Inter-Municipal Collaboration: The bill could encourage greater economic development collaboration directly between municipalities without requiring township participation, potentially streamlining the JEDD formation process in some instances.
- Targeted Economic Development: Allowing all-municipal JEDDs might enable municipalities with shared economic interests or contiguous areas to more easily create focused development districts.
- Potential for Complexity: The introduction of different formation rules based on the type of contracting parties (all-municipal vs. municipal-township) could add complexity to the law.
- Importance of Public Input and Consent: The bill retains robust requirements for public hearings, notification, and consent from property and business owners, emphasizing transparency and local buy-in.
- Continued Emphasis on Economic Development Planning: The requirement for a detailed economic development plan within the JEDD contract remains a key element.
This briefing document provides a preliminary overview of S.B. No. 29. Further analysis of its potential economic and legal ramifications may be warranted.