Economic Incentives & Financing
Real Estate Tax Abatements
The City of Springboro can grant tax abatement or all improvements placed on the land; taxes on the land cannot, under Ohio law, be abated. This means that the City can eliminate the real estate taxes due on the building for a number of years, not to exceed 15 years. This is significant savings for you. Example: Let us assume that you erect a 30,000 square foot factory or office building at a total cost of 1,000,000. For normal tax purposes, this new building would be assessed at 35% of the actual value, resulting in a tax valuation of $350,000 at a hypothetical tax rate of $41.00 per $1,000 equating to an annual tax of $14,350.00. Fifteen years times $14,350.00 equates a savings of $215,250.00!
Springboro Incentive Program (SIP)
The purpose of the Springboro Incentive Program (SIP) is to provide an incentive for the attraction of new businesses into vacant commercial and industrial buildings within the City of Springboro. The program may be used in conjunction with other financing and incentive programs available through the federal government, State of Ohio and Warren County as provided herein.
The City of Springboro, through the Springboro Community Improvement Corporation (CIC), will provide as an incentive, a one-time grant for moving expenses to any manufacturing, industrial or service oriented business (retail is not eligible) that is willing to relocate to any existing vacant building within the City based on the following criteria:
- The business entity must intend to relocate or create any number of full-time equivalent (FTE) jobs with no less than $500,000 net new payroll (as a result of net new jobs).
- The average hourly wage of these jobs, excluding benefits, shall be a minimum of $12 per hour.
- The enterprise must have been in operation for no less than three years.
- The business entity must be willing to enter into a written agreement with the City to commit to operate within the building and/or the City of Springboro for a minimum of (5) five years.
To download the application and full guidelines of the SIP, please click here.
Industrial Revenue Bonds
These are tax exempt bonds which can be issued for you in the name of the City, and because the bonds are so issued, they are tax exempt, meaning that the purchasers of the bonds do not have to pay tax on the interest received, thereby causing the bonds to be more attractive to the purchasers at a lower rate of interest. The maximum which can be issued to any borrower is $10,000,000 within a six year period. The purchasers of the bonds must look to the borrower, for whom the bonds are issued, for payment, because the City does not pledge its good faith or credit, and has absolutely no obligation or liability.
Any project for which bonds are issued must be constructed with the prevailing wage rates as determined by the State of Ohio.
The cost of legal fees connected with the issuance of bonds can be included in the amount of bonds; the legal fee for a $1,000,000 issue is approximately $10,000.
Industrial Revenue Bonds can be used to finance a project in conjunction with other State and Federal programs and funds, such as State loans, Development Action Grants, etc. Bonds cannot be used in conjunction with a '504' loan.
It must be remembered that because the City which issues the bonds has no obligation for payment of the principal and interest, the industry, firm or person for whom the bonds are issued must find a purchaser for the bonds, and negotiate the interest rates and terms. In summary, the City is merely lending its tax exempt status to the borrower. Length of issues can be up to 25 years.
'504' Small Business Administration Loan
The 504 loan program, originally created in 1986, provides long-term, fixed rate financing to small businesses at favorable rates for fixed asset acquisitions as a means to foster economic development and create and preserve jobs in urban and rural areas.
A bank or other financial institution finances 50% of the costs and takes a first mortgage (lien) position on the assets financed.
The 504 loan is typically 40% of the project costs, up to a cap. This 504 loan is brought to the borrower through the efforts of a CDC, a Certified Development Company. CDC’s are regional economic development organizations licensed by the US Small Business Administration (SBA). The CDC makes the loan under the SBA 504 loan program to assist small businesses. The CDC processes, approves, closes and services the loans and in all ways is the local advocate for the business with this loan program.
With the financing provided from the bank and the 504 loan, owners typically are required to inject 10% equity to proceed with their fixed asset investment.
Advantages of SBA 504 over Conventional Financing
Low downpayment. Just 10%. Lets you preserve your cash for your working capital. In Ohio, many banks will lend only 75-80% of the appraised value of the project leaving you to contribute 20-25%.
Fixed rate on the SBA 504 loan. You don’t have to worry about the prime lending rate going up. You can plan for the future because you know the amount of your mortgage payments for the next 20 years.
Long term. CDC 504 loans are for 10 or 20 years. Because the CDC is in second lian position, the bank or other lender doing the 50% first lien loan are willing to lend at a longer term, and longer terms makes you monthly payments lower.
Low Interest rate. Even with the fees and closing costs included in the rate (as many are financed in with the loan), it is still a low rate for a subordinate mortgage loan, particularly for small business. The blended rate between the bank portion and the CDCs 504 loan improve the affordability for you.
This loan program is very popular with small businesses and local financial institutions, and is also convenient because it is administered locally.
Warren County has established the Certified Development Corporation of Warren County and this is one of the many CDC’s operating in the State of Ohio and here in the southwestern part of the state which is authorized to make such loans. To see a full listing of all of the CDC’s in your area, go to Ohio CDC Association.
The maximum 504 loan amount allowable from the SBA is $1,500,000, however the loan cap can be exceeded and up to $4,000,000 is available under certain conditions. Ask a CDC for more information.
The 504 loan is made available to small businesses and requires a commitment to create or retain 1 job for every $50,000 (1 for $100,000 if a small manufacturer) within 2 years of the funding of the loan. Also, it is important to note that a 504 loan will require the personal guaranty of owners or shareholders of 20% or more of the company. Finally, in some cases the SBA 504 loan can be made in conjunction with financing made available from the State of Ohio. For a full description of the program and other terms and conditions not detailed here, please contact a CDC or you may wish to visit the SBA website for more information.
Low Interest State Loans
Can all be combined with '504' loans, Conventional Financing, Industrial Revenue Bonds, and some State loans.
A. A low interest loan not to exceed 30% of the total cost of the project; amount loaned is generally $10,000 per new job created. Interest rate generally is 2.3% of prime rate.
Fifteen years or less is preferred. Prevailing wages apply.
B. Guaranteed Loan Program: The State will guarantee up to 90% of the
total amount borrowed for land and buildings. Limit: 25 years. Prevailing
The State endeavors to limit the amount of loans to $10,000 per new job projected to be created within 5 years. This is not a mandatory rule, but rather a goal; the rule has been exceeded
Industrial Job Training
The State can make funds available for training your employees. The Warren County Private Industry Council can also provide training and can pay 50% of the new employees' wages for six (6) months, and in some cases for a longer period
The State of Ohio's 'Linked Deposit Loan Program'
This program enables a business to borrow funds from their bank at an interest rate of 2 or 3 percent below the rate which the bank would normally charge. The bank is able to grant this reduced rate because the State of Ohio agrees to deposit a like amount with the bank, and the State agrees to accept 2 or 3 percent less interest than the bank would normally pay on such a certificate of deposit. These loans can be for two- (2) years and can be renewed for an additional two (2) years. In summary, the bank lends, say, $200,000 to the business, at an interest rate of 2 or 3 percent less than usual because the State of Ohio will deposit $200,000 in the bank at an interest rate of 2 or 3 percent less than usual.
Ohio Job Creation Tax Credit Program
The program provides a refundable tax credit against a company's corporate franchise tax based on the state income tax from the new, full-time employees. While the amount of the tax credit can be up to 100% for up to 10 years, the Tax Credit Authority has issued credits generally ranging from 50% to 75% for 5 to 10 years. Under Section 122:7-1-06(A) of the Ohio Administrative Code, the Tax Credit Authority cannot grant a tax credit the exceeds 75% unless the Director of ODOD recommends that there is an extraordinary circumstance which merits an exception.
All projects must meet these 11 criteria in order to be eligible:
1. At least 25 new, full-time jobs must be created by the company (taxpayer)
within three years in a community in Ohio.
2. The average hourly wage rate (excluding benefits) of the project's new, full-time jobs for three years must be at least 150% of Ohio's minimum wage, which equates to $6.37 as of calendar year 1993. In addition, the Tax Credit Authority will consider the amount and type of employee benefits being provided.
3. If the project involves an expansion or consolidation of an existing Ohio facility, then the company must commit to retaining the current employees. The state tax credit will apply only to the net, new full-time positions.
4. The project must involve a substantial capital investment in land, building, machinery, and/or infrastructure.
5. The company must demonstrate to the state, through its financial statements and sources and uses of funds, that it is economically sound and the project is financially viable.
6. The project must not have already started at the Ohio site or have been publicly announced to be undertaken at the site prior to approval by the Tax Credit Authority.
7. The company must demonstrate that a significant portion of the sales or revenues attributable to the project are generated from outside the State of Ohio. However, a company that does not meet this criteria may be eligible if its products sold are used by its Ohio customer(s) as a component or part of a produced that can demonstrate a significant portion of the sales or services are generated outside the State of Ohio.
8. In general, the project site cannot be a relocation from one community in Ohio to another.
9. The local community must financially support the project in an adequate manner.
10. The company must demonstrate that the tax credit is a 'major factor" in its decision to expand or locate at the Ohio site, as required by Section 122.17(C)(3) of the Ohio Revised Code.
11. The company must agree to maintain operations at the project site for at least twice the term of the tax credit (up to 20 years), as required by Section 122.17(D)(3) of the Ohio Revised Code.