Enterprise Zone Tax Abatement

The City of Cleveland was made a “Full Authority Ohio Enterprise Zone,” #024, on September 10, 1985. The Ohio Enterprise Zone Program is an economic development tool administered by municipal and county governments that provides real property tax exemptions to businesses making investments in Ohio. Enterprise zones are designated areas of land in which businesses can receive tax incentives in the form of tax exemptions on eligible new investment. The entire City of Cleveland has been declared an Enterprise Zone.

The City of Cleveland’s current policy allows for Tax Abatements in all neighborhoods, except Downtown Cleveland. Tax Abatement is only granted where there is a clear gap in funding where it can be shown that the abatement will reduce costs allowing for payment of debt service in an amount that will move the project forward. The City also does a calculation to determine that the return on the investment to the City of Cleveland, based on a ratio of taxes generated versus taxes abated, must be 1.25 or greater.

The City of Cleveland may offer tax incentives for non-retail projects that are establishing or expanding operations in the State of Ohio. Tax incentives are negotiated at the local level, and an enterprise zone agreement must be in place before the project begins. Qualifying businesses can receive tax abatement for substantial investment in real property. The business must demonstrate job creation and retention within the zone to qualify for the local tax incentive. Businesses are required to report job numbers annually to comply with Enterprise Zone regulations.

Qualifying Investment Levels:
A business must be creating or retaining jobs as a result of its investment. To qualify, the investment by the enterprise must meet one of the following conditions:
An investment in an expansion must equal at least 10% of the market value of the facility prior to the expenditure.

The renovation of an existing facility requires expenditures totaling at least 50% of the market value of the subject facility.

When occupying a vacant facility or site an enterprise must incur expenditures to renovate or expand the facility equal to at least 20% of the market value of the subject facility; or establish a new facility in an Enterprise Zone.

If a company desires to move into the City of Cleveland from another location in the State of Ohio, and needs tax abatement to complete their project, the State of Ohio’s Relocation Waiver Procedures must be followed.