NORTH ROYALTON – The city administration will begin utilizing the Community Reinvestment Area Program as another tool in its economic-development toolbox to better retain and attract new business.
The purpose of a CRA is to encourage and spur reinvestment in the form of new construction and renovation by offering tax incentives, which vary based on the size of the business and its investment. Many surrounding municipalities are already doing so, therefore, North Royalton opted to do likewise in order to stay viable, economic development wise.
“Most of our neighboring communities utilize it to offer real estate tax abatement, Strongsville, Middleburg Heights,” Tom Jordan, the city’s community development director, said. “I recommend passage of this program to keep the city competitive.”
City council OK’d the creation of the CRA unanimously at its March 3 meeting.
Since 1994, the city has offered real estate tax abatement in the form of what’s known as the Enterprise Zone Program; however, that program is more limited than the CRA and is being phased out statewide.
“The state of Ohio has talked about doing away with the Enterprise Zone. When it was set up, one of the major features was that it offered personal property tax abatement, but personal property taxes have been done away with,” Jordan explained.
That program is also restricted solely to industrial or office properties.
“If I own a building as a manufacturer, for example,” Jordan said, “and I had a lot of equipment in it, I used to pay personal property taxes for the equipment. I used the Enterprise Program for that. But now, it’s only good for real estate.”
The CRA, on the other hand, is available not merely to industrial and office, but to retail projects as well and offers the tenant or owner real estate tax abatement for longer terms than the Enterprise Zone.
“The CRA is more flexible with the different types of commercial properties that can utilize it and the terms are for a longer period of time,” Jordan said, as an added perk.
The CRA Program is a direct incentive tax exemption program benefiting property owners who renovate existing or construct new buildings. This program permits the municipality to designate areas as CRAs to encourage revitalization of the existing housing stock and the development of new structures.
In North Royalton, the entire community will be designated a CRA, when before only certain areas were eligible for Enterprise Zone abatement.
The CRA Program was created in 1977 and underwent major revisions in 1994. Within the framework of the law, North Royalton will determine the term and extent of the real property exemptions, which will vary from business to business depending on the number of employees each company employs and the amount of its investment. In all commercial and industrial projects in a CRA, the exemption percentage and term are to be negotiated between the property owner and the city.
All property owners meeting the requirements set forth by the city and planning to undertake a property improvement can apply, in this case, to the building commissioner. Commercial and industrial facilities must apply before the project begins, and an agreement meeting the standards set forth in Ohio Revised Code must be finalized prior to the commercial or industrial project moving forward.
Municipalities have the authority to determine the type of development to be supported by the CRA Program by specifying the eligibility of residential, commercial and/or industrial projects. Residential properties will not be eligible in North Royalton, Jordan said.
Mayor Bob Stefanik said the purpose of the CRA is to provide another avenue to encourage reinvestment within the city, which has always been a top priority.
“We have always gone after business retention and new business very aggressively. The strength of our industrial park is mid-range businesses. We try to attract those that employ 40-100 people, that’s our bread and butter in North Royalton. Of course, if a larger employer comes in, we are very accommodating to that business also,” he said. “But it’s just as important to retain your businesses, and we do that through Tom Jordan’s office. We’re trying to incur as much flexibility in our incentives in hopes of attracting even more businesses.”
Ward 6 Councilman Dan Kasaris agrees with that approach because the more businesses that are brought in to the city, the less reliant the city becomes on residential taxpayers.
“CRAs provide a way to bring industry or businesses to our city and increase our income tax base,” he said. “The more businesses we have in North Royalton, the less reliant the city is on our residents to fund operating the government.”
Ward 3 Councilman Dan Langshaw said the recent city master plan recommended that a CRA be established and that doing so would have a role in helping encourage the continued progress North Royalton is making.
“This program is much more flexible than the existing Enterprise Zone Program and at the same time, allows for council to still have legislative oversight when approving any CRA request,” he said.
His ward is home to a large portion of the city’s businesses especially with the Industrial Parkway off York Road.
“I support the CRA program because it allows for these businesses here in my ward and throughout the city,” Langshaw said, “to do positive reinvestment back into North Royalton, whether it be renovating or constructing new buildings.”
Ward 4 Councilman Paul Marnecheck echoed his peers on council.
“The CRA helps North Royalton remain competitive in attracting and retaining a vibrant business-tax base,” Marnecheck said. “Council is still in control because any abatement would still need to be reviewed and authorized by council.”