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To our friends, clients and colleagues in local and regional government, higher education and the nonprofit sector, welcome to our latest Monday Message from the Public Law Group at McDonald Hopkins. In today’s email, assembled by attorneys Teresa Metcalf Beasley, Margaret O’Bryon, Kelsey Smith and Kevin Butler, you’ll find insights into areas of law we’re watching on your behalf.

In today’s edition:

Spotlight on economic development tools: JobsOhio distressed areas assistance
SERB report: healthcare cost increases have outstripped public-sector wage hikes
New Senate bill, lawsuit attempt to undo income tax measure affecting COVID telecommuters
Update from Washington: Congress recesses without a relief deal

Spotlight on economic development tools: JobsOhio distressed areas assistance

We are fortunate to count among our ranks an entire team of attorneys who have spent their careers helping government, business, education and nonprofit entities employ special mechanisms to provide creative and cost-effective solutions for economic development projects and preserve clients’ bottom lines. In our Monday Message we’ve periodically highlighted some of these special, often unused financing vehicles sitting right in your back yard.

Today we focus on three new programs announced by JobsOhio, the private development arm of the state government, that recognize the need for additional financial assistance in certain distressed communities and will help incentivize development and job creation and retention in these areas.

Many areas in Ohio have yet to fully recover from the last recession, with 20 percent of Ohioans living in distressed areas and the pandemic disproportionately impacting those areas and vulnerable workers. JobsOhio has made available three new tools for underrepresented populations – its Inclusion Grant, Inclusive Project Planning Program and Vibrant Community Program – that provide that additional financial assistance needed to advance much needed development projects. We look at each program here:

Inclusion Grant – The goal of this reimbursable grant program is to drive investment and job creation into distressed areas across Ohio. The targeted recipients are small and medium-sized business located in distressed communities or with minority ownership. A few of the eligible costs include land, leasehold improvements machinery and equipment and information technology including hardware. The priority areas to receive grants, after successful application, are distressed geographic areas and underrepresented populations. Decision factors include the location of the company, the company ownership structure, job creation or retention, and the amount of the investment.
Vibrant Community Program – With an investment commitment of $6 million a year ($20 million over 5 years), this program is designed to assist small and medium sized communities with the implementation of catalytic development projects that fulfill a market need and represent a significant reinvestment in areas that have struggled to attract new investment. Businesses, nonprofits, developers, port authorities and local governments are eligible to apply, funding is capped at 50 percent of the eligible costs and there must be an identified end user that will occupy at least 30 percent of the space. Eligible projects include real estate development projects, operated shared spaces, and some mixed-use projects. Awards are competitive and will be made on an annual basis. Applications for the first round of funding will be made available in September 2020 and awards will be announced in December 2020.
Inclusive Project Planning – In order to generate more actionable projects across the state, JobsOhio designed this program and committed to invest $400,000 a year ($2 million over 5 years) to provide grants that target providing assistance to help fill gaps that communities may have with respect to technical capacity and expertise. Under this program, grants of up to $20,000 and not more than 50 percent of the total planning costs can be awarded. The vendor providing the technical assistance is contracted by JobsOhio and eligible communities may also receive support through partnerships with JobsOhio. Local governments, local economic development organizations, nonprofit or public-private partnerships and port authorities are eligible applicants for this program and there must be a local leader identified. Sources of the grant can be used for market and industry studies, due diligence, capacity planning and stakeholder coordination, capital or budget planning, advising on local economic development tools, timeline planning and marketing and prospectus development.

The Inclusive Project Planning Program and Vibrant Community Program are specifically aimed at 98 cities statewide (38 in Northeast Ohio) with populations between 5,000 and 75,000 and poverty rates at or about the state’s average poverty rate.

Our Public Law team, which includes dedicated public finance and real estate attorneys, can be of help if you’d like to learn more about how these JobsOhio incentives can best be used for projects in your areas. Contact any of us for assistance.

SERB report: healthcare cost increases have outstripped public-sector wage hikes

Ohio’s State Employee Relations Board has released its report on the cost of public sector health insurance. The 2020 edition of SERB’s annual report presents the results of a survey to collect data from up to three medical and prescription plans per employer, as well as the collection of dental, vision, and life insurance single plans. The medical insurance overview provides the following data:

Preferred provider organizations are the most utilized plan type.
High-deductible health plans have increased slightly since the 2019 survey.
Over the past year public-sector medical insurance premiums for family plans have risen by 6.7 percent – nearly three times the 2.3-percent average wage increases statewide.
Ohio’s premium rates increased at a higher percentage rate than the overall national rate.
Premium rates for families have increased 24 percent from 2016 to 2020.

The annual report, which you may download here, is mandated by the Revised Code and is based upon data collected from public employers including the state government, counties, cities, townships, school districts, educational service centers, colleges and universities, fire districts, metropolitan housing authorities, port authorities and regional transit authorities.

New Senate bill, lawsuit attempt to undo income tax measure affecting COVID telecommuters

Municipal mayors, finance directors, treasurers and auditors should be closely watching the progress of two actions taken recently to upend the measure put into place in March that preserved the status quo with regard to municipal income taxes collected from those working from home during the coronavirus pandemic.

In July, employees of the Buckeye Institute, a think tank aligned with conservative causes based in Columbus, filed a lawsuit in Franklin County Common Pleas Court alleging that Section 29 of the state’s omnibus pandemic response bill, H.B. 197, is unconstitutional. The section of H.B. 197 in question preserved employees’ regular work cities as their places of employment for the purposes of income tax withholdings for the duration of Gov. DeWine’s current emergency declaration – notwithstanding that those employees might actually be working from home, in other cities, during the crisis. The suit alleges that because municipal income tax liability must bear some relationship to the city in which a person actually works, that portion of H.B. 197 violates the plaintiffs’ due process rights.

Last week, the General Assembly saw the introduction of a similar measure, S.B. 352, which would repeal the same section of H.B. 197 that the Buckeye Institute seeks to upend with its lawsuit.

Each action, if successful, could throw communities accustomed to reaping municipal income taxes from a sizable portion of commuters who live (and may currently be working) elsewhere into serious uncertainty. In northeast Ohio, Cleveland and cities with substantial office operations along the interstates all come to mind as targets. And all payroll departments and in-house or regionalized tax collection agencies could be dramatically affected by having to sort out the differences between employees’ workplaces and telework places, making both these efforts worth tracking closely.

As a practice group marked by current and former municipal officials as well as elected representatives to the state government, we’ll be watchful and report back here. Meanwhile, call on any of us for guidance on how your municipality may be impacted by the lawsuit or Senate bill.

Update from Washington: Congress recesses without a relief deal

Our Public Law team member Kelsey Smith reports today that ideological differences between the U.S. House and Senate – chief among them cost – will likely prevent Congress from reaching an agreement over the next coronavirus-related stimulus package until at least late September, when the houses reconvene in earnest. Read Kelsey’s post here. That means President Trump’s recently signed executive actions, including the $300-per-week extension of unemployment benefits ($400 in some states), will for the time being stand in for congressional action, and direct aid to local governments and sweeping immunity provisions will remain on hold. We’ll continue to provide updates online and in this Monday Message.

If you have questions or need assistance on any of the matters we’ve covered above or with your legal needs in general, please feel free to contact any member of the McDonald Hopkins Public Law team.

Have a great week!

Teresa Metcalf Beasley
Chair, Public Law