The day after Ohio Governor Mike DeWine (R) ordered hundreds of millions in spending cuts to state government, he and Lt. Governor Jon Husted announced six projects set to receive tax assistance approved by the Ohio Tax Credit Authority (OTCA).
The six businesses approved to receive the Job Creation Tax Credit (JCTC) for their projects are Jo-Ann Stores, Kalera Inc., Cross Country Mortgage, The Cleveland Clinic Foundation, CBTS Technology Solutions and High Road Holdings LLC (Everything But the House).
According to a press release sent from DeWine’s communication team, the six projects are expected to create 2,423 new jobs and retain 18,458 jobs statewide. “Collectively, the projects are expected to result in more than $173 million in new payroll and spur more than $347 million in investments across Ohio.”
The company that received the largest tax credit and for the longest time is the Cleveland Clinic Foundation (CCF). The CCF operates the Cleveland Clinic and is a corporation for non-profit.
The Cleveland Clinic is also a member of the Ohio Hospital Association (OHA) – the group that lobbies for the hospitals in its membership. The Ohio Star reported that the OHA was one of the organizations that signed-on to a letter sent to the Ohio House of Representatives State and Local Government Committee last year urging the lawmakers to not approve Senate Bill 311 (SB311) – the legislation that would have given lawmakers the ability to rescind Ohio Department of Health orders, aimed at a broader and faster opening of Ohio.
SB311 eventually passed the Ohio General Assembly but was vetoed by Governor DeWine and never taken back up by the Senate to override the veto despite then-President of the Senate Larry Obhof boisterously promising to do so.
If shorter operating hours and restrictions that keep enterprises from operating at full capacity lower tax revenue for the State, then the Cleveland Clinic is now piling on the tax receipt losses with their welfare allotment of a 2.58 percent tax giveback for each of the next 15 years.
According to a report released last month, the Cleveland Clinic missed revenue projections from patient care by almost $900 million through the first nine months of 2020 and spent $190 million to build up COVID capacity. In 2019, health system saw patient revue spike almost 50% to $10.6 billion.
Tax dollars the Cleveland Clinic received in 2020:
- $423 million in CARES Act grants;
- $849 million in loans from Medicare (which it has paid back);
- $46 million FEMA for COVID care.
The Cleveland Clinic has a cash and investment reserve worth $11.8 billion. The health system was contacted but did not provide a comment.
JCTC is not available to retail locations and many other companies in the service business according to an Economic Development Manual produced by then-Attorney General DeWine’s office.
The JCTC approval from OTCA is based on several factors such as number of jobs created or retained, investment in the project, the extent out-of-state competition.
The OTCA is a five-member board charged with reviewing and approving tax credit applications and, along with the Ohio Development Services Agency, annually monitoring and reporting on the tax welfare projects awarded.
A business tax credit is a tax incentive given to companies making it lawful for them to subtract the amount of the credit awarded from their annual tax obligation.
In the case of the Job Creation Tax Credit an agreement is created between the project tax payer and the OTCA outlining commitments and compliance. Pay rate increase factors, annual reporting, a commitment from that the taxpayer to maintain operations three years beyond the project are a few of the contract terms.
The credit is refundable – if the annual tax obligation is lower than the tax credit, a refund is issued.
“An important reminder is the Job Creation Tax Credit (JCTC) is a performance-based incentive. Tax Credits are earned over time based on actual performance of creating new jobs and new corresponding payroll,” said Todd Walker, spokesperson for Ohio Development Services.
Walker continued “as with all incentives, companies are required to file annual reports to confirm compliance with the terms of the agreements and determine the applicable tax credit amount.”
The six projects as listed, verbatim, in the Governor’s email received by The Star:
Jo-Ann Stores LLC, Village of West Jefferson (Madison Co.), expects to create 175 full-time positions, generating $5.7 million in new annual payroll as a result of the company’s new project in West Jefferson. Jo-Ann Stores is a specialty retailer of fabrics and crafts. The TCA approved a 1.192 percent, eight-year Job Creation Tax Credit for this project.
Kalera Inc., City of Columbus (Franklin Co.), expects to create 65 full-time positions, generating $2.8 million in new annual payroll as a result of the company’s new project in Columbus. Kalera produces nutrient-rich, pesticide-free, and GMO-free produce through urban, vertical hydroponic farming technology. The TCA approved a 1.219 percent, seven-year Job Creation Tax Credit for this project.
CrossCountry Mortgage LLC, City of Cleveland (Cuyahoga Co.), expects to create 180 full-time positions, generating $9 million in new annual payroll and retaining $37.3 million in existing payroll as a result of the company’s new project in Cleveland. CrossCountry Mortgage is a mortgage-based solutions provider offering home purchase, refinance, and home equity products. The TCA approved a 1.655 percent, eight-year Job Creation Tax Credit for this project.
The Cleveland Clinic Foundation (CCF), City of Cleveland (Cuyahoga Co.), expects to create 1,000 full-time positions, generating $100 million in new annual payroll and retaining $956.3 million in existing payroll as a result of the company’s expansion project in Cleveland. CCF operates the Cleveland Clinic, an academic medical center. The project involves expanding R&D operations by establishing a new Global Center for Pathogen Research & Human Health. The TCA approved a 2.580 percent, 15-year Job Creation Tax Credit for this project.
CBTS Technology Solutions LLC, Cities of Cincinnati and Springdale (Hamilton Co.), expects to create 137 full-time positions, generating $15.8 million in new annual payroll and retaining $77.2 million in existing payroll as a result of the company’s expansion project in Cincinnati and Springdale. CBTS Technology Solutions provides technology consulting services including cloud assessment and strategy, infrastructure needs, and communication channels. The TCA approved a 2.392 percent, nine-year Job Creation Tax Credit for this project.
High Road Holdings LLC (EBTH), City of Blue Ash (Hamilton Co.), expects to create 866 full-time positions, generating $40.4 million in new annual payroll and retaining $8 million in existing payroll as a result of the company’s expansion project in Blue Ash. EBTH is a curated auction-based marketplace for secondhand goods from retailers and individuals. The TCA approved a 1.980 percent, nine-year Job Creation Tax Credit for this project.
– – –