Posts tagged Real Estate Law.

Introduction:
On December 8, 2016, the Ohio legislature passed Senate Bill 235 ("SB 235") which, among other things, adds Section 5709.52 to the Ohio Revised Code (“ORC”). Effective March 28, 2017, this section authorizes local governments to approve property tax exemptions for the increase in property value for property that is either “newly developable property” or “redevelopment property.”  These terms essentially mean that as to a parcel of property, no commercial, industrial or agricultural operations are currently taking place on the property and that construction or reconstruction of a commercial or industrial building(s) is planned, but a certificate of occupancy has not yet been issued.

During this pre-development phase, the property tax exemption provided by SB 235 effectively freezes the taxable value in place during the exemption term until a certificate of occupancy is issued or upon the occurrence of other circumstances, as discussed below.

On December 8, 2016 the Ohio Senate passed House Bill (“HB”) 463. HB 463 in part amends Ohio Revised Code (“ORC”) Chapter 3735, which governs Community Reinvestment Area tax exemptions (a “CRA”).

The scenario of a developer who paid cash for a parcel of land and wants to get started on development and construction prior to the closing of the construction loan is fairly common.  However, under Ohio law a pre-start construction project creates difficulties for the title insurance underwriter to insure the priority of the mortgage over mechanic’s lien risk.  This is likely to result in more time and costs to provide the required title insurance and if not handled properly, it could jeopardize the financing for the project. 

While KMK continues to grow its expertise in leading New Markets Tax Credits financing deals for many types of significant projects and as we expand our work in EB-5 financing deals, P3s and PRIs, we are surprised by the number of communities in some parts of the country still unfamiliar with the tremendous financing horsepower of NMTCs.  Here is a quick highlight of this extremely valuable financing tool.

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