The Ohio Senate has approved a bill that would suspend property tax increases for commercial and industrial developments until a certificate of occupancy is granted. Any increase in the taxable value of properties that are being newly developed or redeveloped would not be subject to property taxes until the development is completed. Senate Bill (SB) 235 passed 22-11 on May 4.

Advocates of SB 235 say that it will encourage improvement of undeveloped property as developers would not face tax increases until a project is near completion. This measure would increase land development and job growth, and eventually increase property taxes when the development is completed.

However, the bill has faced debate and opposition, with many local governments expressing their concern while the bill was in the Senate Ways and Means Committee. The concern is that the bill would cause an unknown fiscal loss to local governments, although it would have no impact at the state level.

The Ways and Means Committee notes that it responded to the concerns by adding several amendments to the bill. One of those amendments is a ten-year reset, so that the taxable value of the property resets to the actual value at the eleventh year (and every ten years after that) for the tax suspension while the property is still in development.

As school districts are funded in large part by property taxes, SB 235 has implications to school districts. Many developments are years in the making, as noted by the ten-year reset amendment. This means that school districts would potentially lose out on many years of funding during the development of these commercial and industrial properties.

SB 235 has now been introduced in the Ohio House of Representatives for consideration. You are urged to contact your Ohio representative to provide input for the House committee that will be assigned to SB 235. Ennis Britton attorneys are available for counsel regarding how this bill may affect your school district.