Community Improvement Corporations

Community Improvement Corporations: How They Are Established and How They Can Be Utilized to Benefit a Township

Community Improvement Corporations (CICs) are quasi-governmental non-profit corporations authorized under ORC Chapter 1724 and organized under ORC Chapter 1702. Generally, there are two types of Community Improvement Corporations (CICs), including traditional CICs which are for the purpose of economic development, as well as CICs organized as County Land Reutilization Corporations, commonly known as County Land Banks. This article will address only CICs which are established as

Economic Development Corporations.

Economic Development CICs, Formation and Purpose Economic Development CICs were first established in 1965, and have since been utilized and developed as a leading economic development tool for local governments. There are over 300 CICs in Ohio. CICs can be established by an individual county, township, or municipality, or multiple such entities. A single township can establish its own CIC, even if one has been previously established by a county, or combination of entities, for the benefit of an area which includes the township.

CICs are established for the following purposes: “advancing, encouraging, and promoting the industrial, economic, commercial, and civic development of a community or area” (ORC 1724.01(B)(1)).

CICs are established by filing Articles of Incorporation with the Secretary of State of Ohio. The Articles must designate a Statutory Agent, location and purpose. The Attorney General of Ohio reviews and approves Articles of Incorporation. The CIC must also adopt a Code of Regulations. A CIC is governed by a Board of Directors and Officers. There is no limit to the size or manner of appointment of members to the Board of Directors, except that if the CIC is a “designated agency” for a local government, then at least 40% of the Board must be elected or appointed by officials of the political subdivision(s) which established the CIC. Typically, CICs are established so that they can act as “designated agents” for local governments, and in their behalf, perform and provide economic development programs and assistance, as further discussed below.

Designation of Agency

A township may designate a CIC as its agent. It must do so by resolution. In such event, the CIC becomes the agent of the township for the “industrial, commercial, distribution, and research development of the township, to promote the health, safety, morals, and general welfare of its inhabitants”. (ORC 1724.10) In such event, the township may also enter into an agreement with the CIC for the following purposes:

To prepare an Economic Development Plan for industrial, distribution, and research development in conformance with the Plan
To insure mortgage payments
To incur debt, mortgage property and issue obligations for the purpose of obtaining, constructing and approving buildings, properties and sites. The debt is not the debt of the township
To promote and encourage growth of industrial, commercial, distribution, and research facilities
To buy or sell land at or below fair market value without advertising or bidding
To convey public property to a CIC without advertising or bidding

Funding Sources

There are many potential sources of funding for CICs. Counties can appropriate general funds to CICs and can implement an economic development property tax levy to fund the same. Townships can appropriate general funds by unanimous vote of the Trustees but only for administrative costs of the CIC. Municipalities can appropriate general funds. The CIC can receive donations from companies and can charge membership dues to entities, including governmental entities and private companies which are members of the CIC. Additionally, there are certain grant programs which can benefit CICs. Also, CICs can retain proceeds and fees from the sale of property and for performing services by contract.

CIC Powers

CICs have broad power to assist local governments with economic development programs and services as delineated in ORC 1724.02. Some of the most important include the following powers and authority:

To borrow money for any purpose of the CIC
To provide loans to individuals for businesses
To buy, lease, sell real or personal property
To acquire the good will, business rights, real or personal property, and assets of an individual or business
To charge fees to political subdivisions for services
To enter into contracts with federal, state, and local governments
To apply for and administer grants
To do all acts necessary or convenient to carry out its statutory powers

CIC Programs and Services

CICs are being utilized by local governments, including townships, to provide and perform a broad variety of economic development assistance throughout the state of Ohio. For many local governments, CICs serve as the agency to promote economic development for their jurisdictional area, including facilitating tax abatement and tax redirection programs and incentives, promoting foreign trade zones, and coordinating with other economic development agencies, including port authorities, community development corporations, and chambers of commerce. Some CICs work with state agencies like “Jobs Ohio” and regional economic development entities to facilitate economic development including the retention and expansion of commercial enterprises. Often, CICs are utilized to acquire property for economic development purposes, including land assembly, survey, engineering, and negotiating the purchase, lease, or sale of such property, as well as construction, and management of properties. CICs have also been utilized for the purpose of coordinating Small Business Administration loans, brownfield development, establishing entrepreneur centers, and for developing technology and broad band initiatives. CICs can provide grants and loans to startup businesses, and are frequently utilized for promotion and marketing, economic development branding, website development, and to promote and coordinate economic development meetings and trade shows. An example of the creative use of a CIC grant program is found in a program labeled “Residential Incentive Grant Program” initiated by the Springfield Township CIC, located in Hamilton County, Ohio. That program provides certain grants to individuals who work or have businesses located in the township’s Joint Economic Development Zone (JEDZ) and Joint Economic Development District (JEDD). This grant program provides reimbursement for the income taxes paid by such individuals and businesses when such individuals also reside in the township or such resident business owner owns at least 50% of the business located therein. Individual residents and resident business owners must apply for the grant, and receive an IRS Form 1099 for grant funds received. Such program is intended to encourage a “strong residential base” in the township, incentivizing people to both live and work in Springfield Township.

Other CIC Considerations

CICs cannot exercise eminent domain, cannot levy taxes and can only recommend tax abatement and tax incentive programs to entities with authority to initiate the same. CICs are generally exempt from paying prevailing wages for construction projects depending upon the project. Being a member of a CIC Board of Directors is not the “holding of a public office”, so, generally, there are no ethical conflicts occasioned by serving on such Board and also as an elected or appointed representative of a local government. CICs are subject to audit by the State Auditors Office and are subject to the Sunshine Law and Public Records Laws, with limited exceptions.

John B. Albers is the managing partner with the law firm of Albers and Albers. John has been practicing in the area of Township and Local Government Law for 35 years and frequently advises Townships in the areas of Township Law, Economic Development Tools, JEDDs, TIFs, Public Works Projects, Potable Water and Sewer Services, Township Home Rule, Intergovernmental Contracts, Land Use and Development, and Local Government Law. Materials for the above are also provided by Larry L. Long, CEO of the Ohio Projects Group, LLC.