Joint Economic Development Districts (JEDDs)

Real Estate Law 101

Special thanks to Matthew Galen, a summer associate with Kohrman Jackson and Krantz for his preparation of this overview on JEDDs.

I. What is a JEDD?

A “JEDD” is short for Joint Economic Development Districts. Sections 715-69-715.90 of the Ohio Revised Code govern JEDDs. In short, a JEDD is a type of contract between the legislative authorities of communities that border or touch each other to develop a specific parcel or parcels of land for a more productive use. Communities that individually lack land development capabilities create and enter into JEDDs with a goal of economic development, job preservation, and/or employment opportunities for their citizens. The combined efforts and shared resources between the communities for the parcel(s) in question aids efficient development. The foundation for a JEDD is cooperation between local communities so that each may economically benefit.

Private developers submit proposals to a JEDD board, comprised of representatives of all participating parties in accordance with O.R.C. § 715.78(A). The best proposal is selected and a contract is formed. Typically, once the land at issue has been developed, the partnering communities share roughly 80 percent of the income tax revenue earned by businesses operating on the JEDD land. The remaining 20 percent of the income tax revenue goes to the independent JEDD board. The JEDD board is responsible for maintaining the JEDD fund that maintains the land. This means there are no additional taxes for the partnering communities.

II. When is a JEDD used?

A JEDD is used when communities desire to work together for shared tax revenue. Communities who desire increased income tax revenue from an industrial opportunity, yet are unable to support the business or industry behind the increase in tax revenue alone, can contract with a neighboring community to share resources. This is done when a town cannot, or will not annex the necessary land. Because both communities are involved and share their resources, economic issues afflicting both communities are alleviated. JEDDs CANNOT be used for residentially zoned areas.

III. Why would a community want a JEDD?

Communities like to use JEDDs because they collect increased tax revenue without having to raise their own taxes or outlaying initial funding for property improvements. Participating communities enjoy increased tax revenue that facilitates a direct benefit for community infrastructure investments. Additionally, JEDD creation can alleviate any annexation pressures between neighboring communities since both equally benefit.

Since an independent and impartial board manages the JEDD, communities need not have to worry about future jurisdictional boundary issues or responsibilities of the other party. The JEDD contract, enforced by the JEDD board, governs all terms and conditions between the communities. The board does not have more power than the creating communities for which it serves, nor can it cause the creating communities to lose any powers.

IV. What are the advantages of creating a JEDD?

For Townships:

· Townships cannot collect income tax, yet the JEDD provides the township an ability to increase revenues through income and property taxes on previously vacant land.
· JEDDs prevent city or village annexation for a minimum of 3 years, creating a period of cooperation between the township and city or village.
· JEDDs provide a new source of funding for resident services at no additional cost to them.

For Cities or Villages:

· Income tax revenues increase.
· Infrastructure utilities typically increase, thereby increasing tax revenue.
· Economic issues between townships and cities or villages are solved in a cooperative manner.

V. What are the disadvantages of creating a JEDD?

· Negotiating and drafting the JEDD contract is a legally complex and potentially time-consuming process.
· Gaining a majority petition for a JEDD from the property and business owners within the JEDD can be difficult.
· A JEDD contract requires approval from the municipality and unanimous adoption from the township – if not unanimous, then the township voters must approve the contract through election in the township.

VI. Example of a JEDD

Consider for example that a company has contacted your community to relocate its business because of your community’s advanced infrastructure development. Your community is interested, but does not have any available industrially zoned land to make the deal happen. A community that borders yours has some available industrial land that could support the industrial prospect’s needs, but unlike yours, lacks the requisite infrastructure. What can your community do? Your commuity can create a JEDD with your neighbor. This allows the company to relocate its business onto your neighbor’s land while your community extends its infrastructure in support. Both your community and your neighbor now can collect and share equally in the increased income tax revenue brought in by the economic activity the new industry has brought in, such as increases in jobs, consumer spending, or community investment.

VII. What can a community do to make a JEDD a reality?

Townships, cities, and villages who desire economic development and increased local cooperation between sister communities can solicit assistance from legal professionals who are experienced in the intricacies and complexities of JEDD creation. Sections 715.69-715.90 of the Ohio Revised Code outlines the statutory language that governs JEDDs and their creation. These statutes are fairly complex, but with step by step assistance from the right legal professionals, communities can reap the substantial economic benefits JEDDs offer.

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