GBQ

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A Diamond In The Rough

Major retrofits and adaptive reuse of older buildings has become a prominent trend in the US as the concept of urbanism and millennials drive change in America’s core cities. The shift of twenty-somethings and empty nesters from the suburbs to urban markets has led to ambitious companies seeking unique office space in central business districts to be near the heart of the action – surrounded by a wealth of talent and cultural touchstones.

With the resurgence of the downtown, the demand divide between older and new buildings is growing as commercial office tenants seek space that can accommodate new workplace models. Antiquated facilities and floor plates aside, there are a pair of four letter words on the tongues of prospective buyers and lessees alike when considering older buildings – risk and cost. “Is there asbestos behind that wall? What about lead paint? Are there indoor air quality concerns?” Considering whether or not to transform a long under-utilized industrial site into a flexible commercial property designed to meet next-generation demands can raise a lot of questions. Thankfully, there is a resource available in Ohio to aid end user tenants, property owners, and developers confront and answer these questions raised by the relics of our state’s industrial past.

The JobsOhio Revitalization Program, administered by JobsOhio, a private, non-profit organization that promotes job creation and economic development for Ohio, is focused on helping rejuvenate sites in preparation for end users that support future job creation opportunities. Approximately $43 million of the $100+ million JobsOhio can spend annually for economic development programs will be invested in revitalization projects in the form of grants and loans. These incentives are intended to advance brownfield revitalization by providing Phase II environmental assessment grants, asbestos and lead-based paint abatement grants, and site improvement loans and gap grants while also creating quality jobs.

In order to qualify for any of the incentives, the site in question must be an abandoned or under-utilized contiguous property where redevelopment for the primary purpose of job creation or retention is complicated by significant redevelopment challenges. Applicants can be businesses, non-profits, or local governments where a potential end user has expressed clear interest (letter of intent, option or lease) in reuse of the site and a plan for job retention or creation.

With per project funding availability ranging from up to $200,000 for Phase II assessments to a maximum loan amount of $5 million for site improvements, interested parties would do well to investigate this resource if there is interest in remediating a former factory or vacant land once used for an industrial purpose.

These loans and grants allow urban areas the ability to offer growing businesses land or existing buildings at a price that can reasonably compete with so-called greenfield properties in undeveloped areas. Though not ideal for every situation, utilizing these resources can be instrumental to understanding a project’s risk and help offset costs of having to address site conditions created by former site users.

GBQ’s State and Local Tax (SALT) practice has the experience to help frame the project scope, coordinate with the necessary parties to review project eligibility, and negotiate incentive assistance to support these projects in every corner of Ohio. Contact us at 614.221.1120 for additional details on how we can help your company qualify for any available incentives.

Written by:
Michael Loges
Senior, State and Local Tax Services