2025-06-26

Briana Cooper

Economic Development Programs

The Ohio General Assembly passed its next Operating Budget, which covers the period of July 1, 2025 through June 30, 2027. That Budget includes major enhancements to several economic development programs that directly affect commercial real estate businesses. These changes establish new standards, impose new deadlines, and present new opportunities for commercial real estate. Our firm has been deep in the trenches advocating for more funding and more favorable policies that will improve the CRE industry and advance economic development throughout Ohio. Nearly everything that we advocated for made it into the Budget, with relatively few exceptions. Check out the summary below for highlights.

Ohio State House

Opportunity Zone Tax Credits

  1. Increases the amount of Ohio OZ credits that the Department of Development may award in each year, from $25 million to $50 million.
  2. Any excess funds from the first year of the fiscal Biennium will be carried forward to the second year.
  3. Includes as part of the eligible investment period for the January 2026 application round investments made during July 1, 2024, through December 31, 2024.
  4. Limits the total awards to $5 million for any single project.

Implications of these changes:

  • More credits means more development in Ohio Opportunity Zones.
  • Awards will be made faster and monetized tax credit proceeds will be more quickly put to use.
  • No single mega-project can consume a large percentage of available funding.
  • This is the fourth amendment of Ohio’s Opportunity Zone law that we have drafted, and our firm is in a stronger position than ever at advising our Clients for success with OZ developments.

Transformational Mixed Use Development (TMUD)

  1. Increases tax credit cap to $125 million per fiscal year.
  2. Increases the reserved amount of credits for TMUD projects, depending upon geographic location, as follows:
    a. $40 million for projects located more than 10 miles from a Major City, plus one-third of any tax credits previously awarded but rescinded in the prior fiscal year.
    b. $85 million for projects located within 10 miles of a Major City, plus two thirds of any tax credits previously awarded but rescinded in the prior fiscal year and any amount reserved but not awarded for projects located more than ten miles from a Major City.
  3. NAIOP initially advocated for improved policy so that projects that really do not need TMUD funding do not receive awards, so that awards go to projects that have a legitimate gap in funding; additionally, so that TMUD tax credits could be sold to a broader array of buyers – both of which were accomplished.
  4. As we delved deeper into the advocacy process, legislators heard from constituents that the standards needed to be more clearly defined in the Statute, and the Department of Development wanted to curb abuses in the economic impact aspect of the application process – both of which were accomplished through intensive communications that we had with legislators and the Department of Development.

Implications of these changes:

  • Increased funding will allow more projects to receive TMUD awards, which will transform more communities throughout Ohio. However, the Program will remain extremely competitive.
  • Having standards clearly spelled-out in the Statute will bring more uniformity and consistency to the Program, and avoid surprises that had previously been encountered with unexpectedly altered standards with little advance notice.
  • Direct and focused economic impact analysis will curb circumvention of the intended process and will enhance fairness in Program administration.
  • The Program will again face renewal in two years, which will require ongoing and future advocacy efforts to demonstrate its value and likely lead to updated and further refined standards.

Brownfield Remediation

  1. Funded at $200 million for the next two years, $100 million per year.
  2. Changes to policy language:
    a. Focuses awards on projects with economic merit.
    b. Projects awarded must not be specific to one region of the State.
    c. Eligible costs may include remediation, demolition, and certain infrastructure costs.

Implications of these changes:

  • With less funding available in a tightened fiscal cycle, the focus on economic development should allow more awards to be made to support a wide range of true economic development projects.
  • Shift from per county set-aside to a statewide merit-based system will likely favor more prepared projects.
  • Encourages coordination and communication between developers and local leadership.

Historic Tax Credits

  1.  Allocates $75 million in funding per year.
  2. Policy enhancements:
    a. Building vacancy or under-utilization are no longer permissible (let alone effectively mandatory) criteria for awarding Ohio Historic Rehabilitation Tax Credits.
    b. Increases the percentage of rehabilitation costs that a certificate owner may claim as a credit from 25% to 35% for a project that is not located in a municipality with a population of at least 300,000.

Implications of these changes:

  • Removing vacancy as a factor makes more buildings eligible and avoids having to prematurely oust tenants just to attempt to obtain an award.
  • Need for renewal of this Program in two years imposes ongoing pressure to prove the value of the Program and justify more funding.

Bottom line: Ohio’s latest Budget sends a bold message in support of the real estate sector of our economy. At a time when many other areas were slashed, our advocacy efforts for the commercial real estate industry fared extremely well. Improved standards, new timelines, and multiple program enhancements make it more important than ever to work with knowledgeable professionals that can guide you and your team through the process and maximize your chances of both receiving an award and that the award is in the maximum possible amount that is justifiable to support your project.

Our firm is in a unique position to help Clients assess which programs align with their pipeline, prove eligibility, optimize scoring, and navigate evolving administrative processes. We serve as the ultimate bridge between the commercial real estate industry, policymakers, and the executive branch that administers these programs. If you’re considering a project that could qualify for these or other economic development programs, now is the time to determine your strategy, assemble your team, and be ready to execute before the upcoming application windows open.