A piece of Ohio legislation that would temporarily expand the Buckeye State’s Opportunity Zone (OZ) tax credits is headed to the governor’s desk for final approval.

Senate Bill 225, sponsored by Sen. Kirk Schuring (R-Canton), would boost the OZ credits from $50 million to $75 million through June 30, 2023, before dropping back to $50 million in fiscal year 2024 and $25 million annually thereafter. The bill would also significantly boost Ohio’s Historic Preservation Tax Credit cap from $60 million to $120 million for fiscal year 2023-24.

SB 225 was approved by Ohio’s House of Representatives on June 1, having already passed through the state Senate in February. If Gov. Mike DeWine signs it, the law would take effect 90 days after. It was first introduced in September 2021.

Ohio’s Opportunity Zone bill spurs economic development

Ohio-based OZ industry insiders told Opportunity Zone Magazine that this latest development further expands their state’s economic opportunity, and benefits investors from outside Ohio as well.

Chris Knoppe, president of Columbus-based Cbus OZ Funds, said SB 225 would “further incentivize investment into Ohio Opportunity Zones and fuel development, and re-development, in the areas of the state that have been most starved for investment capital.”

Knoppe also noted that SB 225 adds flexibility to the tax credits through allowing the transfer of partial tax credit certificates. It also allows for the certificates to be sold more than once.

“This will increase the liquidity of the tax credits and ultimately increase their value,” Knoppe said.

Andrew Doup, a business attorney with Kegler Brown Hill + Ritter’s Columbus office, pointed out how out-of-state investors “prize the transferability rule because it enables them to sell their tax credit to in-state residents for cash, and so a submarket of Ohio OZ tax credits has emerged with trading that ranges from 60 to 92 cents on the dollar. The amendment relaxes formerly stringent rules on transferability, so my expectation is for that Ohio OZ tax credit submarket to heat up.”

The impact of the SB 225 bill in Ohio

Doup added that SB 225 has other benefits, notably that the 10% Ohio OZ tax credit complements the federal OZ tax incentives by offering dollar-for-dollar credit against Ohio’s state income tax liability.

“Under the amended statute, applications would be made in January and July of each year for the previous half-year period, and certificates would get awarded as soon as April 1 or Oct. 1, as applicable,” he said. “This constitutes an immediate ROI for investors.”

Doup also added that unlike federal OZ law, Ohio’s law awards “the tax incentive regardless of whether the cash contribution is comprised of pre-tax or post-tax dollars. What this means is that the benefit of the Ohio OZ income tax credit alone will often greatly outweigh the cost of organizing an Ohio OZ investment for compliance” with Ohio law.


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