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Thursday, December 20, 2018

Bill That Would Give nuCLEus Project Huge Tax Credit Stalled for Now

Posted By on Thu, Dec 20, 2018 at 10:25 AM

click to enlarge Architect's rendering of the nuCLEus project. - NBBJ
  • NBBJ
  • Architect's rendering of the nuCLEus project.
A bill that would provide an upfront 10-percent rebate to "transformational mixed-use development" projects (TMUDs), originally tailored to the proposed nuCLEus skyscraper in downtown Cleveland, will not pass in the Ohio General Assembly this year.

The Plain Dealer's Michelle Jarboe reported this week that the bill simply ran out of time as it made its way through committee, but that the bill's sponsor, Rep. Kirk Schuring (R-Canton), was confident it would pass in 2019.

The legislation has been revised from original language composed chiefly by nuCLEus developer Bob Stark's financial guy, Rob Sommers. The bill was designed to make financing possible for the ostensibly catalytic project after CMSD rejected a unique tax arrangement.

The new version of the bill would open up many more projects to the incentive: any project with multiple uses (office and residential, for example) of more than 15 stories and 350,000 square feet that costs more than $50 million would be eligible. It is meant to give developers upfront money for construction by letting them sell their rebate at a discount to insurers.

In the four Senate committee hearings, 13 parties testified in favor of the legislation. They included nuCLEus developer Bob Stark, multiple Ohio chambers of commerce, (the Greater Cleveland Partnership and the Greater Akron Chamber among them), and representatives from financial institutions. They argued that the legislation would add another critical tool in cities' economic development toolbox.

"H.B. 469 puts organizations like ours in a better position to attract investors to meaningful projects that stand to revitalize our local communities," said John Rizzo, director of Government Affairs at the Greater Akron Chamber.

Two divergent parties spoke in opposition as well. Representing the Ohio chapter of the Koch Brothers' Americans for Prosperity advocacy group, Micah Derry said that his organization's mission was to identify and oppose policies in which the government picks winners and losers at taxpayers' expense.

"Unfortunately, HB 469 represents the worst of this kind of corporate welfare," he said. Later, he proposed a different form of corporate welfare: further cutting corporate taxes, (the last thing Ohio needs).

"The costs of corporate welfare are directly carried by the taxpayers who finance these various incentive schemes," he said. "Ohio could actually reduce its state corporate income tax rate by nearly 11 percent if it eliminated all corporate incentives. Consider how that might attract the businesses you’re trying to bring here."

Zach Shiller, research director for Policy Matters Ohio, presented clear and specific objections, including the fact that the total costs to be borne by taxpayers are uncertain because the number of eligible projects is unknown. Furthermore:

"[The bill] lacks needed guardrails and transparency," Schiller said. "Provisions directed at making sure it is not a revenue loser are short on specifics and have no clawback mechanism, making them weak tea... If the projects it would support are so crucial, the General Assembly should fund them through the capital budget."

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