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New laws limit townships' authority for economic development

Townships in Ohio that want to expand their economic development zones or make new ones will be subject to new requirements in 2014 due to House Bill 289. People involved with business planning might interested to learn that townships will no longer be able to create joint economic development zones starting January 1, 2015. Existing JEDZs will not be effected. If any townships or municipal corporations wish to make significant amendments to existing zones, such as increasing tax rates, they must do before the end of 2014. New zones should also be formed by the end of the year.

The main supporter of House Bill 289, Rep. Kirk Schuring, said that JEDZs were originally formed to foster cooperation between local governments and to encourage economic development. However, some local governments have been using the JEDZs an a way to levy taxes without employees or employers being able to oppose them, according to Rep. Schuring. The bill requires amendments and new JEDZs to have plans that detail the way income tax collections are to be used. A minimum of half the taxes must be devoted to things like improvements to facilities and services.

Sen. Bill Seitz opposed the bill, saying that townships don't have the ability to levy income taxes or pay for services by taking advantage of collections. He warns that regulating township government will have bad consequences, such as larger one becoming cities with a resulting budget expansion.

Businesses that think like they have been unfairly treated due to JEDZs might be happy to hear about the new bill, but should also consider that townships might try to push through changes before the end of the year. An attorney could advise any employers or business owners concerned about the potential impact of the new laws.

Source: The Daily Record, "Ohio eliminates formation of joint economic development zones", Mark Kovac, June 11, 2014

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