Watkins, 041221 OHAGO, AGO 2021-06

• Case Date: April 12, 2021
• Court: Ohio

The Honorable Dennis Watkins AGO 2021-06 Opinion No. 2021-006 Ohio Attorney General Opinion Ohio Attorney General April 12, 2021          The Honorable Dennis Watkins          Trumbull County Prosecuting Attorney          4th Floor Administration Building          160 High Street N.W.          Warren, Ohio 44481-1092          SYLLABUS:          1. Prevailing-wage law does not attach to enterprise-zone agreements under R.C. 5709.631, or community-reinvestment-area agreements under R.C. 3735.671, because neither constitutes a public authority undertaking or contracting for a public improvement pursuant to R.C. 4115.03, et seq.          2. It is permissible to mandate the hiring of a certain number or percentage of local workers under an enterprise-zone agreement under R.C. 5709.631 or a community-reinvestment-area agreement under R.C. 3735.671.          Dear Prosecutor Watkins:          You requested an opinion regarding the authority of a board of county commissioners (“Commissioners”) to place additional conditions on the granting of tax exemptions. More specifically, you ask about the Commissioners’ power to impose conditions on the granting of tax exemptions in enterprise-zone and community-reinvestment-area agreements. I have framed your questions in the following manner:

1. May Commissioners require that applicants for an enterprise-zone tax-incentive agreement under R.C. 5709.631, or a community-reinvestment-area tax-incentive agreement under R.C. 3735.671, commit to compensating labor used in the site preparation and construction of the project at a prevailing wage?

2. Do Commissioners have the authority to add, as an additional term to an enterprise-zone or community-reinvestment-area tax-incentive agreement, that an applicant use a specified number or percentage of local workers in the site preparation and construction of the project?

3. Is there an alternative statutory economic incentive that allows the Commissioners to mandate the payment of the prevailing wage and mandate the use of a specified percentage or number of local workers?

         I          Your request concerns two types of incentive programs: enterprise-zone programs and community-reinvestment-area programs.          An enterprise-zone program is designed ‘“to encourage businesses to establish, expand, renovate, and occupy facilities and to create jobs within economically distressed zones.’” 2012 Op. Att’y Gen. No. 2012-030, at 2-267, quoting 1989 Op. Att’y Gen. No. 89-013, at 2-55. Once an enterprise zone is designated, a board of county commissioners, with the additional consent of the legislative authority of each affected municipal corporation or board of township trustees, may enter into an agreement with an enterprise whereby the enterprise receives certain tax exemptions in exchange for creating or expanding a business within the designated zone. See 2012 Op. Att’y Gen. No. 2012-030, at 2-267. The form of the agreement is set forth in R.C. 5709.631. R.C. 5709.63(E).          A community-reinvestment area is a “property tax incentive program that promotes the construction and remodeling of commercial, industrial, and residential structures” within a designated area. State ex rel. City of Lorain v. Stewart, 119 Ohio St.3d 222, 2008-Ohio-4062, 893 N.E.2d 184, ¶ 26; 1996 Op. Att’y Gen. No. 96-030, at 2-112. To obtain the incentive, the property owner must file an application with the housing officer designated by the legislative authority. State ex rel. City of Lorain at ¶ 26-27; R.C. 3735.67(A) and 3735.65(A). As your request indicates is the case here, if any part of the new or remodeled structure is to be used for commercial or industrial purposes, the property owner shall enter into a written agreement with the legislative authority pursuant to R.C. 3735.671. R.C. 3735.67(A).          In sum, both enterprise-zones and community-reinvestment areas are tax programs designed to create incentives for undertaking financial endeavors within a designated location. The authority bestowed upon the Commissioners by the General Assembly relates to the establishment of the designated locations, the granting or denying of an applicant, and to the addition of noncontradictory additional terms to the respective agreements set forth in R.C.5709.631 and 3735.671.          II          You first ask whether the Commissioners have the authority pursuant to R.C. 5709.631 and 3735.671 to mandate that applicants for an enterprise-zone or community-reinvestment-area agreement compensate at a prevailing wage labor used to prepare the site and construct the project. I conclude that the answer is “no.” ...