FREQUENTLY ASKED QUESTIONS: New Bremen Community Reinvestment Area No. 2
Q: What is a Community Reinvestment Area (CRA)?
A: The Ohio Community Reinvestment Area program is an economic development tool administered by municipal and county government that provides real property tax exemptions for property owners who renovate existing or construct new buildings. Community Reinvestment Areas are areas of land in which property owners can receive tax incentives for investing in real property improvements. (as per Ohio Development Services Agency)
Q: Who is eligible? When will it be available?
A: CRA No. 2, eligibility is available to any vacant property within the Village of New Bremen corporation limits. CRA No. 2 is only applicable to new residential home construction. CRA No. 2 will be in effect once area certification from the Ohio Development Services Agency is received. The housing project (new home construction) cannot begin until after the area has been certified by the DSA.
Q: How long is the term of a CRA?
A: CRA No. 2 is a term of 8 years of tax abatement. However, those abated taxes do not include future levies that may be approved after July 27, 2015.
Q: How long will the CRA be available?
A: CRA No. 2 is to be available until December 31, 2016. Village Council will then review and determine if it is to be continued, or ends.
Q: Do other nearby communities offer a CRA?
A: Yes, the city of St. Marys offers a new home construction CRA, as well as the Village of Anna.
Q: If a CRA will freeze taxes, won’t this take money away from the local schools?
A: Presently, the New Bremen Local Schools receives real estate taxes on the property. For any new improvements on the property (building a home), the schools will not receive the real estate taxes for the improved value of the lot for 8 years of tax abatement. The schools will receive the full revenue stream in the 9th year. With no new construction on the vacant lots, the school district is not out anything in real estate taxes.
By offering the tax abatement, more families may consider re-locating to New Bremen, creating a revenue growth for New Bremen Schools. By bringing more families to New Bremen, the school district would receive income tax based on the family’s earnings. Using the median income of $66,280, the increase in income tax would be approximately $620/year per family.1
1As explained in the August 2015 edition of the Cardinal Newsletter
Q: By encouraging new construction, won’t the current housing market suffer within our community?
A: During the implementation planning stages of CRA No. 2, discussion took place regarding the impact that could be made on our community.
It was recognized that many different factors encourage one over the other (building or buying). A family situation and/or needs are the largest factor. If new construction is being considered, we would like to encourage for New Bremen to be considered first.
Q: Why was this decided to be implemented?
A: There were several reasons the decision was made to encourage new construction. While in no particular order, a few of those reasons include the following:
- The average age of our community is increasing, which is indicative that millennials are not moving to the area at moderate rate. Through our planning stage efforts, we were able to confirm that millennials want to return to New Bremen, but there are limited opportunities available within the median housing market price.
- According to the United States Census Bureau, from 1940-2009, the Village of New Bremen has averaged a new home construction growth rate of 11.08% per decade, since 1940. Since 2010 to present, the growth rate has been less than 1%.
From 2000-2008, the village of New Bremen issued 12-24 new home construction building permits each year. Since 2009, there have only been 2-4 new home construction building permits issued each year.
As of July 2015, there have been 6 new home construction building permits issued. However, 33% of those lots had their own economic stimulus available in order to move the lots.
- Enrollment in the New Bremen Local Schools has declined by 12.78% since 2007. Student decline is occurring in nearly all rural schools, but in the Mercer & Auglaize area, New Bremen is suffering the largest percentage of decline. If the millennials, referenced above, are not able to move into our community due to lack of housing options, this number will continue to decline.
- The community’s overall population growth rate has only increased by 2.5% since 2000. While we are on the positive side, versus many rural areas declining, we still believe the growing rate should be higher. There are other rural communities nearby (in Shelby & Mercer County) who have benefitted from near double digit growth. We believe, with the economic base of New Bremen, the population growth rate should be substantially higher than 2.5%. (From 1990-2000, the population of New Bremen had grown by 13.72%)
Q: Who is all involved in the approval process?
A: The New Bremen Village Council approves the ordinance with 3 readings. Within 30 days of ordinance approval, a petition of Area Certification is submitted to the Ohio Development Services Agency.
Due to the local schools being affected by this ordinance, it was important to keep the New Bremen School Board apprised of the proposed ordinance. It was through this dialogue that a modification was made to the ordinance for the abated taxes to only include current taxes, making future levies not a part of the abated taxes.
Q: Why is it called No. 2? Is there another CRA already in place?
A: Yes, in 2008 CRA No. 1 was created. CRA No. 1 is specific to the remodeling of a 60-year old home in identified areas within the Village of New Bremen Corporation limits. In addition, CRA No. 1 encompasses new commercial and industrial construction. CRAs of this type are a common economic development tool that several communities offer.
For industrial/commercial projects that are seeking tax abatement of 50% or higher, the school district is required to approve the CRA. From the beginning, the Village of New Bremen had entered into an Income Tax agreement with the New Bremen Local Schools that any commercial or industrial project must make a donation to the schools for any lost taxes. Currently the Village of New Bremen has 3 companies who have an active CRA, each of those companies comply by making the donation to the local schools.