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Enacted Sub. H.B. 289 Prohibits the Creation, Amendment, or Renewal of Alternative Joint Economic Development Zones (JEDZs) and Creates Municipal Utility Districts from Municipal-Only JEDZs




by:
Heather R. Baldwin Vlasuk
Walter, Haverfield LLP - Cleveland Office

 
July 15, 2014

Previously published on July 2014

Sub. House Bill (H.B.) 289 was enacted into law on June 5, 2014, and became immediately effective. The new law, which had been amended several times in Bill form, prohibits the formation of new alternative Joint Economic Development Zones (JEDZs) after January 1, 2015, and creates Municipal Utility Districts (MUDs) in place of "municipal-only" JEDZs. Existing "municipal-only" JEDZs are now known as MUDs. Note, however, that the new law does not impact Joint Economic Development Districts (JEDDs).

Under prior law, a JEDZ could be created through two statutory methods. The first method was the "municipal-only" method under Ohio Revised Code Section 715.69. The second method, under R.C. 715.691, deemed the "alternative method", allowed both municipalities and townships to create a JEDZ and levy an income tax in the Zone.

The new law repeals R.C. 715.69, and the provisions for "municipal-only" JEDZs are essentially moved to a new R.C. 715.84, where these zones are labeled as Municipal Utility Districts. The law expressly provides that JEDZs created under R.C. 715.69 are to be now known as MUDs without any further action of the contracting parties.

Also, under the new law, the provisions for "alternative method" JEDZs are significantly amended. After January 1, 2015, municipalities and townships will not be able to create a new JEDZ, renew an existing JEDZ, or substantially amend an existing JEDZ. "Substantial amendment" is defined as any change to the JEDZ contract that increases the rate of income tax that may be imposed within the Zone, changes the purpose for which the income tax may be used, adds one or more contracting parties, or changes the area included within the Zone.

Between June 5, 2014 and December 31, 2014, any JEDZ created or amended must include an economic development plan for the Zone within the terms of the JEDZ contract, along with a schedule for the implementation of new or expanded services, facilities or improvements in the JEDZ or surrounding area. A seven-member joint economic development review council must be formed and give its approval before the JEDZ contract, or substantial amendment thereto, is approved by the contracting parties. The review council includes the county auditor, as chairman, as well as four business owner members from within the Zone. The law requires that 50% of the revenue from income taxes imposed by an alternative JEDZ be dedicated to the provision of new, expanded or additional services as specified in the economic development plan.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Author
 
Heather R. Baldwin Vlasuk
Practice Area
 
Government
 
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