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REAL ESTATE LAW FEATURE

the developer receives all ownership benefits
for federal tax purposes, and under the capital
lease, the developer has the right to purchase the
property at the end of the term. Alternatively,
the developer can retain fee ownership of the
project site, lease the underlying ground to the CHEERS TO 25 YEARS!
port authority via a ground lease, and the port
leases back the project site to the developer
via a capital lease. In either of those structures,
the port authority, by retaining a requisite
ownership interest in the underlying land (either
in fee simple or through a ground lease), is
able to provide tax exempt status regarding the
construction materials of large scale development
projects. The port authority, as an administrative
fee, will receive a certain percentage of the sales
tax savings provided to the developer. In utilizing
port authority financing, developers realize
significant savings. Celebrating 25 Years in 2019
Another tool heavily used for real estate
development in downtown Cleveland is state
and federal tax credit incentives. Tax credits may
be taken by real estate developers themselves
or other third party investors and institutional Attorneys | Environmental | Toxic Tort | Litigation
lenders in such projects. As an example, the www.mdllp.net
federal Historic Tax Credit and Ohio Historic
Preservation Tax Credit programs have attracted
significant investment in development projects
in the downtown area. With both programs, in
order to be eligible for tax credits, the historic
buildings for renovations must be listed in the
National Register of Historic Places or otherwise
be located within a historic district and designated
by the National Park Service as a structure
that retains historic integrity and contributes
to the historic character of the district. Given
that downtown Cleveland has many historical
buildings with ornate facades and structures, it is
no wonder that these tax credits have been put
to good use.
Future development may also be on the
horizon with the proposed “transformational
mixed use development credit,” which recently
passed the Ohio Senate by a 32-1 vote, and is
now with the Ohio House of Representatives to
consider. In order to qualify for tax credits, the
project must constitute a “transformational mixed
use development,” which means it must:
• Have a transformational economic impact
within the project area approved by the Ohio
director of development services
• Integrate some combination of retail, office,
residential, recreation, structured parking, and
other similar uses
• Include at least one building that is 15 or more
stories in height or has a floor area of at least
350,000 square feet.
OCTOBER 2019 CLEVELAND METROPOLITAN BAR JOURNAL | 31