Taxpayers can now access a new, non-refundable tax credit for insurance premiums for capital contributions on certain Transformational Mixed Use Developments (TMUDs). The Amended Senate Senate Bill 39, finalized during the last session on Lame Ducks and signed by Ohio Governor DeWine on December 29, 2020, allows real estate owners or insurance companies to apply for certification and preliminary approval with the Ohio Tax Credit Authority provide tax credits against taxes imposed on insurance companies under RC Section 5725.18 or RC Section 5729.03. The Tax Credit Authority is limited to awarding $ 100 million per year (with individual projects capped at $ 40 million each). Rural areas received a set of $ 20 million per year in available tax credits under the law. Once granted, the tax credits can be sold or transferred to raise capital for certified projects.
To be eligible, projects must meet four requirements. First, a project must have “transformative economic impacts” on the development site and the surrounding area. Second, the project must have more than one intended use, with a combination of retail, office, residential, leisure, structured parking and / or other similar uses in one development. Third, the increase in tax revenue after completion must exceed ten percent of the development costs. Fourth, a project is only eligible if it was not completed but received the tax credit.
In particular, the eligibility criteria change depending on whether the project is located in a rural area (defined by law as more than ten miles from a major city, which the program defines as a city with more than 100,000 residents). That is, if the project is within ten miles of a major city, the estimated development cost must exceed $ 50 million and include at least one new or previously vacant 15-story or taller building (or the project must otherwise include floor space of at least 350,000 square feet) with an annual payroll of $ 4 million or more. Rural projects, on the other hand, must include at least one new or previously vacant two-story or taller building (or otherwise have a floor space of at least 75,000 square feet). There are no minimum investment requirements for rural projects.
For more information on Senate Bill 39, please see our blog post January 7, 2021.
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