Plain City Council is currently reviewing a proposed Economic Development Incentive Policy that would guide when and how the village offers certain tax abatements and agreements to businesses. Development Manager Jason Stanford used the graphic above to illustrate the relationship between the community, businesses and developers and the importance of building resources for businesses.
(Graphic submitted)
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Plain City officials are close to approving a policy that will guide when and how tax incentives are offered to businesses.
“The purpose is to make sure we are attracting the type of growth Plain City wants,” said Development Manager Jason Stanford.
At council’s most recent work session, Stanford updated council on the village’s Economic Development Incentive Policy (EDIP), which he hopes to bring before council for a vote within the next month or so.
He emphasized that the proposed policy is a framework for how the village will work with certain businesses to offer tax incentives, but is “not set in stone.”
“This doesn’t prohibit anything,” Stanford said. “It still keeps our flexibility.”
Stanford said the EDIP will build transparency and “safeguard the interests of taxpayers” by ensuring “we’re not just passing out” incentives.
The policy covers several types of incentives, including: Community Reinvestment Areas, Tax Increment Financing, Enterprise Zone, New Community Authority and others like impact fee reductions, annexation assistance and commercial corridor improvement assistance.
Stanford previously explained that the only existing tax exemptions in Plain City are Community Reinvestment Area (CRA) abatements, which give property tax exemptions to owners that renovate existing or construct new buildings in designated areas.
Specifically in the Uptown, CRAs were most frequently awarded to property owners investing in buildings that were in need of repair, Stanford said.
Now that the village is seeing more interest in the Uptown, Stanford said the new policy shifts CRAs away from simply awarding investment and now focuses on job creation and payroll.
CRAs are divided into those offered in the Uptown area and those offered along U.S. 42.
To be eligible for a CRA agreement, businesses doing a commercial renovation in the Uptown must make a minimum investment of $350,000 excluding the purchase of property and create at least five full-time jobs at a minimum payroll of $150,000.
Commercial new builds in the Uptown must invest at least $750,000, also not including the purchase of property, and create at least 5 full-time jobs with a payroll of $150,000.
Along U.S. 42, commercial and industrial new builds or renovations must make a minimum investment of $1.5 million aside from the property purchase, create 10 full-time jobs at a payroll of $500,000 or more.
For all CRAs, the percentage of tax abatement increases with the amount invested. The length of the agreement increases as payroll does, as well.
The policy also includes guidance as to when Tax Increment Financing (TIF) agreements can be made, although it does not detail specific thresholds a business must meet to be eligible.
Through a TIF, the property taxes assessed from the increased property value are diverted from the entities that would generally collect that money to a specific fund that is used for improvements in that area.
Plain City’s policy notes that the village will generally support TIFs that promote economic development, facilitate residential development, contribute to area-wide growth and improvements and enhance proposed projects.
Stanford noted that TIFs would only be considered for residential developments under “very special” circumstances, such as multi-use developments or the creation of housing that is “truly affordable.”
“This is something we don’t want to be going down a lot,” he said.
He also noted that any residential TIF must be a non-school TIF, meaning that schools are kept whole and do not lose out on increased tax revenue.
Council President Michael Terry said he also wants to avoid situations in which apartment complexes qualify for TIFs after being classified as commercial because they technically generate money through rent.
If residential developments are not offered TIFs because new students affect schools, Terry said the same logic should be applied to apartments.
Stanford said he has worked closely with the area school districts throughout the development of the EDIP and intends to continue a partnership with them as incentives are considered and issued.
“They will have a seat at the table whenever we negotiate with businesses,” he said.
Any business that is awarded a CRA or EZ will be required to enter a Payment in Lieu of Taxes (PILOT) arrangement with the district, Stanford said.
Those who receive one of these tax exemption of greater than 75% for 10 years must pay the Jonathan Alder district an annual payment equal to 30% of the property taxes the district would have received if not for the abatement.
Those with exemptions greater than 75% for seven to 10 years will pay the district 20%.
Likewise, the village will have a revenue sharing agreement with the school district.
Through it, Plain City will pay Jonathan Alder an annual amount equal to 50% of the total tax revenue received by the village once the payroll of the company receiving the abatement exceeds $2 million or $1.5 million, depending on the length of the agreement.
Stanford reiterated that the village would also like to work with other taxing authorities, such as the Pleasant Valley Fire District and Plain City Public Library, to ensure that they are not negatively impacted by development incentives.
He noted that the village will consider the needs of the community in their approach to economic development incentives, with the hope that there will be a partnership between taxpayers and businesses.
Specifically, Stanford said village officials will consider whether businesses are anti-discrimination; environmentally sustainable; have hiring practices that prioritize local employees when possible; make in-kind contributions to partners like the school district; have fair third-party agreements so the village is “not pitted against other municipalities;” the cost of necessary infrastructure and whether the company has excess revenue.
To actually receive an incentive, businesses must go through a five-step process that will begin with a consultation with village staff and submission of an application.
From there, staff will make an assessment and recommendation, then village administration will review it and it will be sent to either the Tax Incentive Review Council or Housing Council for review.
Finally, council will review it and vote on the matter.
Council member Aaron Lewis said he appreciates the proposed policy and feels it empowers staff to communicate with businesses in a manner that reflects the goals of council.
“We’re all marching at the same beat,” he said.