COMMUNITY REINVESTMENT AREA PROGRAM - SUMMARY

Community Reinvestment Areas are areas of land in which property owners can receive tax
incentives for investing in real property improvements. The Community Reinvestment Area (CRA)
Program is a direct incentive tax exemption program benefiting property owners who renovate
existing or construct new buildings. This program permits municipalities or counties to designate
areas where investment has been discouraged as a CRA to encourage revitalization of the existing
housing stock and the development of new structures.
 

The CRA Program was created in 1977 and underwent major revisions in 1994. The local legislative
authority with jurisdiction over the designated area determines the size, the number of areas as well
as the term and extent of the real property exemptions.
 

A municipality or county must undertake a Housing Survey of the structures within the area proposed
as a CRA. The results of the survey must support the finding that the area is one in which housing
facilities are located and that new construction and renovation is discouraged. The local legislation
creating the CRA must contain a statement of finding that the area included in the description is one
in which "housing facilities or structures of historical significance are located and new housing
construction and repair of existing facilities or structures are discouraged."
 

All property owners meeting the requirements set forth in the local legislation and planning to
undertake a real property improvement can apply to the housing officer designated by the local
legislative authority. Residential applications are filed at construction completion, but projects
involving commercial or industrial facilities must apply before the project begins. Residential
projects in a CRA receive the percentage and term of the exemption specified within the authorizing
legislation. In all commercial and industrial projects the exemption percentage and term are to be
negotiated between the property owner and the local legislative authority. An agreement meeting the
standards set forth in Ohio Revised Code Section 3735.671 must be finalized prior to the commercial
or industrial project going forward.
 

Local municipalities or counties can determine the type of development to be supported by the CRA
Program by specifying the eligibility of residential, commercial and/or industrial projects. The CRA
Program is a permanent tax exemption incentive program, which does not have a sunset provision.
Local legislative authorities may wish to include an annual review or renewal clause to ensure the
program is meeting expectations. The local legislative authority must designate a Housing Officer to
review applications and to serve as the program lead. In addition, the local legislative authority must
create Tax Incentive Review Council to review performance on all agreements and projects.
 

CRA PROGRAM BENEFITS
 

EXEMPTION LEVELS:
 

Real Property Up to 100%
 

TERM EXEMPTIONS:
Residential Remodeling (2 units or
less; minimum $2500)
Up to 10 years as specified in the
legislation that creates the CRA
Residential Remodeling (more than
2 units; minimum $5000)
Up to 12 years as specified in the
legislation that creates the CRA
Residential New Construction Up to 15 years as specified in the
legislation that creates the CRA
Commercial and Industrial
Remodeling (minimum $5000)
Up to 12 years as negotiated and
approved in an CRA Agreement
Commercial and Industrial New
Construction
Up to 15 years as negotiated and
approved in an CRA Agreement
 

** The exemption percentage and term for commercial and industrial projects are to be negotiated on
a project specific basis. If the proposed exemption exceeds 50%, local school district consent is
required unless the legislative authority determines, for each year of the proposed exemption, that at
least 50% of the amount of the taxes estimated that would have been charged on the improvements if
the exemption had not taken place will be made up by other taxes or payments available to the school
district. Upon notice of a project that does not meet this standard; the board of education may
approve the project even though the new revenues do not equal at least 50% of the projected taxes
prior to the exemption.
 

While the CRA Program is primarily a housing oriented incentive, it does have considerable value as
an economic development tool. It is extremely important for both property owners and local
governments to realize the significance of the local authorization date. Of importance, a CRA created
after July 1, 1994 must receive confirmation from the Director of the Ohio Department of
Development prior to formally granting a real property tax incentive.
 

In a municipality which has a local income tax, any project which will generate a new annual payroll
of one million dollars or more, the municipality and the board of education must negotiate a revenue
sharing agreement outlining the manner and procedure of the agreed upon compensation. If no
agreement is reached within six months of the finalization of the CRA Agreement, then the income
tax revenues generated by the new employees will be split 50/50 between the municipality and board
of education.
 

The CRA Program includes many notice requirements. In a CRA created after July 1, 1994, notice of
all commercial and industrial projects must be given to the affected board of education a minimum of
14 days prior to the formal review of the agreement by the local legislative authority. Notices for
residential applications are required 14 days prior to the certification of the exemption to the County
Auditor.
 

Note that if a CRA Agreement is proposed which provides an exemption greater than 50%, the local
legislative authority must request the board of education's approval a minimum of 45 business days
prior to the scheduled local legislative review. The board of education, by resolution adopted by a
majority of the board, shall approve or disapprove the agreement and certify a copy of the resolution
to the legislative authority not later than fourteen days before the legislative authority formally
considers the agreement. The board may include in its resolution conditions under which it would
approve the agreement. The local legislative authority may approve the proposed agreement if the
conditions are satisfied. If the board does not approve the proposed agreement or if the conditions are
not satisfied, the local legislative authority may approve an agreement so long as the exemption does
not exceed 50%.
 

When a proposed CRA assisted project involves the relocation of any portion of the operations of a
business that is located elsewhere within the state to a different jurisdiction within the state, the local
government of that jurisdiction must provide to the local legislative authority of the county or
municipality from which the relocation will occur a notice not less than 30 days before the formal
review or approval of the CRA Agreement. The formal notice must include a copy of the agreement
to be considered.