Cincinnati's drive to take quick advantage of a new Ohio financing mechanism for development projects has hit a major speed bump at the Ohio Department of Taxation.

City Manager Valerie Lemmie says the state has refused to certify Cincinnati's new tax increment financing (TIF) districts approved by council in December 2002, and so far attempts to resolve the impasse with Ohio tax officials have failed.

A lengthy impasse could be disastrous. It is holding up a queue of major Cincinnati development deals, and the city's pledge to invest $100 million in downtown initiatives hinges on revenue generated by the new TIF districts.

Area lawmakers need to act fast to pass an amendment that frees up this powerful new tool for development. Chicago and other cities have used similar TIF devices to spur new housing, jobs and other development.

Smaller TIF projects have been done for years, but Ohio House Bill 405 authorized cities to create "area-wide TIFS" to redevelop districts of up to 300 acres. The law, before and after HB 405, requires that affected property owners sign off on any TIF deal. Any increase in owners' property values is exempted from real estate taxes for 30 years, but an equal amount must be paid into a TIF fund "in lieu of taxes." Cities then can use that new revenue stream to sell bonds to pay for upfront costs such as renovating houses or improving streets and sidewalks. It was Ohio Department of Taxation policy not to require signatures from every single property owner, but after HB 405 passed, a school board near Columbus objected to a proposed TIF. Cincinnati has an agreement to compensate its school district for any taxes lost to a TIF, but Ohio tax officials felt they could no longer waive the requirement of signatures from property owners without authorization in Ohio law. Cincinnati City Council Finance Committee Chairman John Cranley says it would be an "administrative nightmare" to try to get signatures from every property owner in every TIF district, and he is right.

Ohio lawmakers who expanded TIFs to whole districts may not have anticipated the problem of getting hundreds or even thousands of signatures for a development deal, or that some property owners might object to redirecting their countywide real estate taxes to the benefit of their own district. But some object that a TIF could block them from selling their property to a church, hospital, government or other tax-exempt buyer. A TIF property is already tax-exempted, and can't be double-exempted. Cincinnati officials say they would be glad to carve out such exceptions within TIFs, but there is no legal basis to do that.

"It would not be a very difficult amendment to draw up," Cincinnati development director Chad Munitz said. Gov. Bob Taft is pushing several new jobs bills. Cincinnati officials hope the TIF amendment could be added to one and passed before the session ends in June.

It's a small amendment, but it could save Cincinnati untold grief on deals worth millions. It needs to happen fast.