Ohio New Markets Tax Credit Program

Ohio Development Services Agency

Program Type:

Tax Incentive

Eligible Geography:

Ohio

Summary:

The Ohio New Markets Tax Credit program provides an incentive for investors to fund businesses in low-income communities. These "new markets" are traditionally underserved by private sector capital. Its objective is to finance business investments in low-income communities. The Program awards tax credit allocation authority to Community Development Entities (CDE) serving Ohio that serve as an intermediary between investors and projects. The investor provides cash to a CDE in exchange for the tax credit (39 percent of their investment claimed over seven years). The CDE uses the cash for projects in low-income communities. $10 million in tax credit allocation authority is available to CDEs each year.

Benefits occur at multiple levels. Businesses in the low-income community receive below-market, non-traditional or flexible loans or equity for their project. The low-income community where the business is located receives increased investment in the area, new job opportunities and potentially services or products that are made available through the new business. Community Development Entities use the tax credit as a means to achieve their mission of investing in and serving low-income communities. Investors reduce their tax liability and receive a positive return on their investment. Applications are received annually for the Ohio New Markets Tax Credit. Qualified CDEs with available (or anticipated) federal NMTC allocation can file a competitive application with the Ohio Development Services Agency. ONMTC awards are announced after the annual federal NMTC award announcements to coincide the allocations.

Eligible Recipients:

Non-Profit Organization

Eligible Recipients Detail:

Tax credit allocation authority is awarded to Community Development Entities, who sell the credit to investors and use that money for high-impact projects. The tax credit can be applied to applicable financial institutions, and foreign and domestic insurance premiums.

Eligible Purpose:

Building Connectivity; Last Mile Connectivity; Broadband Enabled Device (General); Anchor Institution Connectivity

Eligible Purpose Detail:

Investments can be used to finance equipment, operations or real estate costs for qualifying businesses. Real estate financing can purchase or rehabilitate retail, manufacturing, agriculture, community facilities (e.g., health services, museums, or charter schools), rental or for-sale housing, or combinations of these. Investments and loans are qualified by business type and location, and not necessarily activity.

Other Eligibility Criteria:

Any investment in a for-profit or non-profit corporation is eligible if: At least 50 percent of the total gross income of that business is derived from the active conduct of its business within any Qualified Low Income Community. A substantial portion (defined as at least 40 percent) of the use of the tangible property of that business (whether owned or leased) is within any Qualified Low-Income Community Investment (QLIC). Substantial portion (defined as at least 40 percent) of the services performed by that business' employees are performed in any QLIC; the business is not primarily holding collectible If 2) or 3) are 50 percent or more, than 1) has been met.

Low-Income Communities, which are Census Tracts, where:

-The poverty rate is at least 20%
-The median family income does not exceed 80% of the area median family income, or 85% in high migration rural counties
-The Census tract has a population less than 2,000 and is within a Federally Designated Empowerment Zone and is contiguoius to at least one other LIC.

Loans can also be provided for Targeted Low-Income Populations outside of LICs.