HB 222- DEBT SETTLEMENT LICENSURE

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1 Below is an update on legislative happenings this week in the Ohio General Assembly that are of interest to property and casualty insurance companies. Please let us know if you have questions on any of the issues. The following bills were recently added to the OII Bill Watch list. Please let us know if you have comments or concerns regarding these bills. Click here for a complete list of bills on the OII Watch List. House Bills HB 222- DEBT SETTLEMENT LICENSURE (Mecklenborg) To require the licensure of, and otherwise regulate, providers of debt settlement services. Click here to view HB 222 as introduced Senate Bills SB 154-DRIVER TEXTING (Smith, S) To prohibit driving a vehicle while using an electronic wireless communication device to write, send, or read a text-based communication and to establish the violation as a secondary traffic offense. Click here to view SB 154 as introduced Signed by the Governor HB 123- BWC Budget / HB 124- Industrial Commission Budget On April 25 th, Governor John Kasich signed HB 123 and HB 124. HB 123 is the Bureau of Workers Compensation budget for fiscal years 2012 and 2013, and HB 124 is the Industrial Commission s budget for fiscal years 2012 and Click here to view HB 123 as enacted Click here to view HB 124 as enacted Passed by the House HB 153 Biennial Budget This week the Ohio House passed the state budget bill (House Bill 153) and made numerous changes to the measure, including a couple items of interest to property and casualty insurance companies. One of the changes the House made allows the director of the Department of Public Safety to approve an entirely electronic remedial driving course. The OII has communicated with the DPS and they are opposed to this provision. This language can be found on pages 5-9 of the attached document.

2 The House also added language that allows insurance companies to take part in the Ohio Preservation Tax Credit by allowing it against foreign and domestic insurance taxes. This language can be found on pages of the attached document. As previously reported, HB 153 also contained a provision that allows Ohio domiciled insurance companies to engage in the practice of derivative netting. This language can be found on pages 1-4 of the attached document. The bill now goes to the Senate for consideration. Please click here to view HB 153 as passed by the House in its entirety. Hearings of Interest HB 170 Written Contracts The House Judiciary Committee heard proponent testimony this week on HB 170, which is legislation sponsored by Rep. Bob Mecklenborg (R-Cincinnati) that would shorten the period of limitations for actions upon contacts in writing from 15 to six years. Mark Johnson, a Baker Hostetler attorney whose practice focuses on class action litigation, said there is no sound reason to maintain the 15 years statute of limitations for written contracts and Ohio businesses and courts are negatively impacted by the current limitations period. He said that not only does this limitations period unnecessarily add tremendous risks in the defense of class actions, it is an unnecessary expense of the cost of doing business in Ohio. Johnson, who was testifying in a personal capacity based on his experience in over 50 class actions, noted the current statute of limitations was established in 1803 to cover "all actions of covenant or debt founded upon a specialty under hand and seal..." He said that the significance of contracts under seal dates back to early English common law when contracts with the seal of the king gained special importance. Ohio eliminated any significance of contracts under seal in Therefore, Johnson said the original basis for establishing a 15 years statute of limitations was eliminated over a century ago. Johnson s testimony is attached. HB 170 is supported by the Ohio Alliance for Civil Justice. Click here to view HB 170 as introduced.

3 SB 143-Fraud Damages The Senate Judiciary-Civil Justice Committee heard sponsor testimony from Sen. Jim Hughes (R-Columbus) on SB 143, which would provide for the recovery of damages and civil penalties for defrauding the state of money or property and authorize private persons to bring qui tam civil actions in the name of the state to remedy the frauds. The legislation would permit the Attorney General to intervene on behalf of the state in the action or to pursue an alternative remedy. Sen. Hughes said enactment of the false claims act would entitle Ohio to an extra 10% of the money recovered through such a case under the federal Deficit Reduction Act of He added that states without such a law currently receive 40% of the total amount. Hughes said 27 states and the District of Columbia have some form of false claim laws in place. Sen. Hughes also said the bill would provide protection for individual whistleblowers in such cases and provide for monetary awards for the whistleblower if the plaintiff prevails in the suit. Sen. Eric Kearney (D-Cincinnati) asked about Attorney General Mike DeWine's position on the bill. Sen. Hughes said he believed DeWine would be speaking to the committee in support of it. Sen. Bill Seitz (R-Cincinnati) said that the American Legislative Exchange Council generally opposes qui tam cases. We will continue to follow this legislation. Click here to view SB 143 as introduced SB 129-Medical Immunity The Senate Judiciary-Civil Justice Committee heard testimony on SB 129. This bill is sponsored by Sen. Kevin Bacon (R-Minerva Park) and would grant qualified civil immunity to a physician, physician assistant, dentist, or optometrist who provides emergency medical, dental, or optometric services, first-aid treatment, or other emergency professional care in compliance with the federal Emergency Medical Treatment and Active Labor Act or as a result of a disaster and to a certified nursemidwife, certified nurse practitioner, clinical nurse specialist, or registered nurse who provides emergency services, first-aid treatment, or other emergency professional care as a result of a disaster and provide that these provisions do not apply to wrongful death actions. The Ohio Association for Justice, the group formerly known as the Ohio Academy of Trial Lawyers, submitted written testimony in opposition to the bill on behalf of the group s president, Dennis Mulvihill. The testimony said both the Ohio General Assembly and the Supreme Court of Ohio have established protections over the last eight years that have given doctors considerable advantages in the event of a lawsuit.

4 "What is the effect of all this legal protection? Medical malpractice claims are way down, and are at historic lows," the testimony said. "While recent reports indicate that the incidence of malpractice in hospitals seems to be higher than expected, the rate of lawsuits has slowed to a trickle. Thus, there is empirical evidence there is no need for this legislation." Cleveland Attorney Michael Shroge challenged a claim from supporters of the bill that the measure would improve access to emergency care. "The empirical evidence and data are overwhelming and indisputable that this bill does not improve access to care and will lead to a decrease in the quality of care delivered by our emergency room physicians should it be enacted," he said. Columbus Attorney Gerald Leeseberg said a close examination of SB 129 shows it would not be limited to emergency room physicians, but would extend to radiologists, hospitalists, cardiologists and others because of its definitional ambiguity. "This blanket immunity from accountability and responsibility for negligent medical care applies to any medical provider from any medical specialty, rendering any kind of medical care or service, to any patient, under any circumstance, to any patient in an emergency room," he said. We will continue to follow this legislation. Click here to view SB 129 as introduced Incoming MADD National President Supports Drunk Driving Punitive Damages Legislation Mothers Against Drunk Driving (MADD) has elected Jan Withers, a Maryland woman who lost her daughter in a crash caused by an underage drunk driver, as its national president. Withers, who has served on the MADD National Board of Directors since 2005, will take office July 1st and serve a three-year term. Withers has testified the past two years before the Maryland General Assembly in support of legislation (HB 574/SB 483) which would allow punitive damages to be awarded against certain defendants who were driving while intoxicated and would make it easier for plaintiffs attorneys to put evidence before a jury that would encourage larger awards. The legislation would allow a jury to award punitive damages if the driver has a BAC of 0.15 or higher or a BAC of.08 or higher and is driving with a suspended or revoked license. Earlier this year in Maryland, the Senate bill failed to pass when a vote was taken in its respective committee, and the House bill was withdrawn by the sponsor before a committee vote was taken. However, similar legislation could resurface in Maryland or appear in other states.

5 Supreme Court of Ohio-Traffic Rules Amendments The Supreme Court of Ohio has adopted amendments to Ohio Traffic Rules 11, 13, and 14, which become effective on July 1st. The Court's Commission on the Rules of Practice and Procedure recommended these amendments and the OII sent out information on them in January. The amendments, which are attached, limit the authority of traffic violations bureaus to handle certain violations and require magistrates to have at least four years of experience and be in good standing with the Supreme Court of Ohio at the time of appointment.

6 HB 153 State Budget Allows Ohio domiciled insurance companies to engage in the practice of derivative netting. Sec (A) Notwithstanding any other provision under sections to of the Revised Code, no person shall be stayed or prohibited from exercising any of the following rights: (1) A contractual right to cause the termination, liquidation, acceleration, or close out of obligations under, or in connection with, a netting agreement or qualified financial contract with an insurer because of either of the following: (a) The insolvency, financial condition, or default of the insurer at any time; (b) The commencement of a formal delinquency proceeding under sections to of the Revised Code. (2) Any right under a pledge, security, collateral, reimbursement, or guarantee agreement or arrangement or any similar security arrangement or credit enhancement relating to a netting agreement or qualified financial contract; (3) Subject to section of the Revised Code, any right to set off or net out any termination value, payment amount, or other transfer obligation arising under or in connection with a qualified financial contract in which the counterparty or its guarantor is organized under the laws of the United States, a state, or a foreign jurisdiction that the securities valuation office of the national association of insurance commissioners approves as eligible for netting. (B) If a counterparty to a netting agreement or qualified financial contract with an insurer that is subject to a proceeding under sections to of the Revised Code terminates, liquidates, accelerates, or closes out the agreement or contract, damages shall be measured as of the date or dates of the termination, liquidation, acceleration, or close out. The amount of a claim for damages shall be actual direct compensatory damages. (C) Upon termination of a netting agreement or qualified financial contract, any net or settlement amount that a nondefaulting party owes to an insurer against which an application or petition has been filed under sections to of the Revised Code shall be transferred to, or on the order of, the receiver for the insurer. This division applies regardless of whether the insurer is the defaulting party and applies notwithstanding any walkaway clause in the netting agreement or qualified financial contract. For purposes of this division, a limited two-way payment or first method provision in a netting agreement or qualified financial contract with a defaulting insurer shall be deemed to be a full two-way payment or second method provision as against the defaulting insurer.

7 Any property or amount transferred under this division shall be a general asset of the insurer except to the extent it is subject to a secondary lien or encumbrance, or to rights of netting or setoff. (D) In transferring a netting agreement or qualified financial contract of an insurer that is subject to a proceeding under sections to of the Revised Code, the receiver shall do either of the following: (1) Transfer to one party, other than an insurer subject to a proceeding under sections to of the Revised Code, all netting agreements and qualified financial contracts between a counterparty, or any affiliate of the counterparty, and the insurer that is the subject of the proceeding. The transfer shall include all rights and obligations of each party under each netting agreement and qualified financial contract, and all property, including any guarantees or other credit enhancement, securing any claims of the parties under each agreement or contract. (2) Transfer none of the netting agreements or qualified financial contracts, including the rights, obligations, and property associated with those agreements and contracts as described in division (D)(1) of this section, with respect to the counterparty and any affiliate of the counterparty. (E) If a receiver transfers a netting agreement or qualified financial contract, the receiver shall use its best efforts to notify any person who is a party to the transferred agreement or contract of the transfer by noon, of the receiver's local time, on the business day following the transfer. (F)(1) Notwithstanding any other provision of sections to of the Revised Code and except as otherwise provided in division (F)(2) of this section, a receiver shall not avoid a transfer of money or other property that is made before the commencement of a formal delinquency proceeding under sections to of the Revised Code and that arises under or in connection with either of the following: (a) A netting agreement or qualified financial contract; (b) Any pledge, security, collateral, or guarantee agreement or other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract. (2) A receiver may avoid a transfer under sections to of the Revised Code if the transfer was made with actual intent to hinder, delay, or defraud the insurer, a receiver appointed for the insurer, or existing or future creditors. (G)(1) In exercising any right of disaffirmance or repudiation with respect to a netting agreement or qualified financial contract to which an insurer is a party, the receiver for the insurer shall do either of the following: (a) Disaffirm or repudiate all netting agreements and qualified financial contracts between the insurer and a counterparty or any affiliate of the counterparty;

8 (b) Disaffirm or repudiate none of those netting agreements or qualified financial contracts with respect to the counterparty or any affiliate of the counterparty. (2) Notwithstanding any other provision of sections to of the Revised Code, if a counterparty's claim against the estate of the insurer arising from the receiver's disaffirmance or repudiation of a netting agreement or qualified financial contract has not been previously affirmed in the liquidation or immediately preceding conservation or rehabilitation case, that claim shall be considered as if it had arisen before the filing date of the petition for liquidation. If a conservation or rehabilitation proceeding is converted to a liquidation proceeding, that claim shall be considered as if it had arisen before the filing date of the petition for conservation or rehabilitation. The amount of the claim shall be the actual direct compensatory damages determined as of the date of the disaffirmance or repudiation. (H) All rights of a counterparty under sections to of the Revised Code shall apply to netting agreements and qualified financial contracts entered into on behalf of the general account or separate accounts if the assets of each separate account are available only to counterparties to netting agreements and qualified financial contracts entered into on behalf of that separate account. (I) This section shall not apply to the affiliates of an insurer that is the subject of a formal delinquency proceeding under sections to of the Revised Code. (J) As used in this section: (1) "Actual direct compensatory damages" includes normal and reasonable costs of cover or other reasonable measures of damages utilized in the derivatives, securities, or other market for the contract and agreement claims. "Actual direct compensatory damages" does not include punitive or exemplary damages, damages for lost profit or lost opportunity, or damages for pain and suffering. (2) "Business day" means any day, excluding Saturday, Sunday, and any day on which the New York stock exchange or the federal reserve bank of New York is closed. (3) "Contractual right" includes any of the following: (a) Any right set forth in a rule or bylaw of a derivatives clearing organization, as defined in the "Commodity Exchange Act," 7 U.S.C. 1a(9)(A), as amended; a multilateral clearing organization; a national securities exchange; a national securities association; a securities clearing agency; a contract market designated under the "Commodity Exchange Act," 7 U.S.C. 1 et seq., as amended; a derivatives transaction execution facility, including a swap execution facility, registered under the "Commodity Exchange Act," 7 U.S.C. 1 et seq., as amended; a security-based swap execution facility registered under the "Securities Exchange Act of 1934," 15 U.S.C. 78a et seq., as amended; or a board of trade, as defined in the "Commodity Exchange Act," 7 U.S.C. 1a(2);

9 (b) Any right set forth in a resolution of the governing board of any entity listed in division (J)(3)(a) of this section; (c) Any right, regardless of whether evidenced in writing, arising under statutory law, common law, or law merchant, or by reason of normal business practice. (4) "Receiver" means a receiver, conservator, rehabilitator, or liquidator, as applicable. (5) "Walkaway clause" means a provision under which a party to a netting agreement or qualified financial contract that, after calculation of a value of a party's position or an amount due to or from one of the parties in accordance with its terms upon termination, liquidation, or acceleration of the netting agreement or qualified financial contract is not obligated to pay or does not have a payment obligation extinguished under the agreement or contract, in whole or in part, solely because the party is a nondefaulting party. Section Section of the Revised Code shall apply only to formal delinquency proceedings that commence under sections to of the Revised Code on or after the effective date of this act.

10 Allow the director of Public Safety to approve an entirely electronic remedial driving course. Sec (A) When the registrar of motor vehicles determines that the total points charged against any person under section of the Revised Code exceed five, the registrar shall send a warning letter to the person at the person's last known address by regular mail. The warning letter shall list the reported violations that are the basis of the points charged, list the number of points charged for each violation, and outline the suspension provisions of this section. (B) When the registrar determines that the total points charged against any person under section of the Revised Code within any two-year period beginning on the date of the first conviction within the two-year period is equal to twelve or more, the registrar shall send a written notice to the person at the person's last known address by regular mail. The notice shall list the reported violations that are the basis of the points charged, list the number of points charged for each violation, and state that, because the total number of points charged against the person within the applicable two-year period is equal to twelve or more, the registrar is imposing a class D suspension of the person's driver's or commercial driver's license or permit or nonresident operating privileges for the period of time specified in division (B)(4) of section of the Revised Code. The notice also shall state that the suspension is effective on the twentieth day after the mailing of the notice, unless the person files a petition appealing the determination and suspension in the municipal court, county court, or, if the person is under the age of eighteen, the juvenile division of the court of common pleas in whose jurisdiction the person resides or, if the person is not a resident of this state, in the Franklin county municipal court or juvenile division of the Franklin county court of common pleas. By filing the appeal of the determination and suspension, the person agrees to pay the cost of the proceedings in the appeal of the determination and suspension and alleges that the person can show cause why the person's driver's or commercial driver's license or permit or nonresident operating privileges should not be suspended. (C)(1) Any person against whom at least two but less than twelve points have been charged under section of the Revised Code may enroll in a course of remedial driving instruction that is approved by the director of public safety. Upon the person's completion of an approved course of remedial driving instruction, the person may apply to the registrar on a form prescribed by the registrar for a credit of two points on the person's driving record. Upon receipt of the application and proof of completion of the approved remedial driving course, the registrar shall approve the two-point credit. The registrar shall not approve any credits for a person who completes an approved course of remedial driving instruction pursuant to a judge's order under section of the Revised Code. (2) In any three-year period, the registrar shall approve only one two-point credit on a person's driving record under division (C)(1) of this section. The registrar shall approve not more than five two-point credits on a person's driving record under division

11 (C)(1) of this section during that person's lifetime. (D) When a judge of a court of record suspends a person's driver's or commercial driver's license or permit or nonresident operating privilege and charges points against the person under section of the Revised Code for the offense that resulted in the suspension, the registrar shall credit that period of suspension against the time of any subsequent suspension imposed under this section for which those points were used to impose the subsequent suspension. When a United States district court that has jurisdiction within this state suspends a person's driver's or commercial driver's license or permit or nonresident operating privileges pursuant to the "Assimilative Crimes Act," 102 Stat (1988), 18 U.S.C.A. 13, as amended, the district court prepares an abstract pursuant to section of the Revised Code, and the district court charges points against the person under section of the Revised Code for the offense that resulted in the suspension, the registrar shall credit the period of suspension imposed by the district court against the time of any subsequent suspension imposed under this section for which the points were used to impose the subsequent suspension. (E) The registrar, upon the written request of a licensee who files a petition under division (B) of this section, shall furnish the licensee a certified copy of the registrar's record of the convictions and bond forfeitures of the person. This record shall include the name, address, and date of birth of the licensee; the name of the court in which each conviction or bail forfeiture took place; the nature of the offense that was the basis of the conviction or bond forfeiture; and any other information that the registrar considers necessary. If the record indicates that twelve points or more have been charged against the person within a two-year period, it is prima-facie evidence that the person is a repeat traffic offender, and the registrar shall suspend the person's driver's or commercial driver's license or permit or nonresident operating privilege pursuant to division (B) of this section. In hearing the petition and determining whether the person filing the petition has shown cause why the person's driver's or commercial driver's license or permit or nonresident operating privilege should not be suspended, the court shall decide the issue on the record certified by the registrar and any additional relevant, competent, and material evidence that either the registrar or the person whose license is sought to be suspended submits. (F) If a petition is filed under division (B) of this section in a county court, the prosecuting attorney of the county in which the case is pending shall represent the registrar in the proceedings, except that, if the petitioner resides in a municipal corporation within the jurisdiction of the county court, the city director of law, village solicitor, or other chief legal officer of the municipal corporation shall represent the registrar in the proceedings. If a petition is filed under division (B) of this section in a municipal court, the registrar shall be represented in the resulting proceedings as provided in section of the Revised Code.

12 (G) If the court determines from the evidence submitted that a person who filed a petition under division (B) of this section has failed to show cause why the person's driver's or commercial driver's license or permit or nonresident operating privileges should not be suspended, the court shall assess against the person the cost of the proceedings in the appeal of the determination and suspension and shall impose the applicable suspension under this section or suspend all or a portion of the suspension and impose any conditions upon the person that the court considers proper or impose upon the person a community control sanction pursuant to section or of the Revised Code. If the court determines from the evidence submitted that a person who filed a petition under division (B) of this section has shown cause why the person's driver's or commercial driver's license or permit or nonresident operating privileges should not be suspended, the costs of the appeal proceeding shall be paid out of the county treasury of the county in which the proceedings were held. (H) Any person whose driver's or commercial driver's license or permit or nonresident operating privileges are suspended under this section is not entitled to apply for or receive a new driver's or commercial driver's license or permit or to request or be granted nonresident operating privileges during the effective period of the suspension. (I) Upon the termination of any suspension or other penalty imposed under this section involving the surrender of license or permit and upon the request of the person whose license or permit was suspended or surrendered, the registrar shall return the license or permit to the person upon determining that the person has complied with all provisions of section of the Revised Code or, if the registrar destroyed the license or permit pursuant to section of the Revised Code, shall reissue the person's license or permit. (J) Any person whose driver's or commercial driver's license or permit or nonresident operating privileges are suspended as a repeat traffic offender under this section and who, during the suspension, operates any motor vehicle upon any public roads and highways is guilty of a misdemeanor of the first degree, and the court shall sentence the offender to a minimum term of three days in jail. No court shall suspend the first three days of jail time imposed pursuant to this division. (K) The registrar, in accordance with specific statutory authority, may suspend the privilege of driving a motor vehicle on the public roads and highways of this state that is granted to nonresidents by section of the Revised Code. (L) Any (1) Except as provided in division (L)(2) of this section, any course of remedial driving instruction the director of public safety approves under this section shall require its students to attend at least fifty per cent of the course in person. The and the director shall not approve any course of remedial driving instruction that permits its students to take more than fifty per cent of the course in any other manner, including via video teleconferencing or the internet.

13 (2) The director may approve a course of remedial instruction that permits students to take the entire course via video teleconferencing. In accordance with division (C) of this section, upon receiving an application with a certificate or other proof of completion of a course approved under this division, the registrar shall approve the twopoint reduction. Sec (A) Any person whose driver's or commercial driver's license or permit is suspended or who is granted limited driving privileges under section , under division (H) of section , or under section of the Revised Code for a violation of a municipal ordinance that is substantially equivalent to division (B) of section of the Revised Code is not eligible to retain the license, or to have the driving privileges reinstated, until each of the following has occurred: (1) The person successfully completes a course of remedial driving instruction approved by the director of public safety. A minimum of twenty-five per cent of the number of hours of instruction included in the course shall be devoted to instruction on driver attitude. The course also shall devote a number of hours to instruction in the area of alcohol and drugs and the operation of vehicles. The instruction shall include, but not be limited to, a review of the laws governing the operation of a vehicle while under the influence of alcohol, drugs, or a combination of them, the dangers of operating a vehicle while under the influence of alcohol, drugs, or a combination of them, and other information relating to the operation of vehicles and the consumption of alcoholic beverages and use of drugs. The director, in consultation with the director of alcohol and drug addiction services, shall prescribe the content of the instruction. The number of hours devoted to the area of alcohol and drugs and the operation of vehicles shall comprise a minimum of twenty-five per cent of the number of hours of instruction included in the course. (2) The person is examined in the manner provided for in section of the Revised Code, and found by the registrar of motor vehicles to be qualified to operate a motor vehicle; (3) The person gives and maintains proof of financial responsibility, in accordance with section of the Revised Code. (B) Any (1) Except as provided in division (B)(2) of this section, any course of remedial driving instruction the director of public safety approves under this section shall require its students to attend at least fifty per cent of the course in person. The and the director shall not approve any course of remedial driving instruction that permits its students to take more than fifty per cent of the course in any other manner, including via video teleconferencing or the internet.

14 (2) The director may approve a course of remedial instruction that permits students to take the entire course via video teleconferencing or the internet.

15 Allow insurance companies to take part in Ohio Historic Preservation Tax Credit by allowing it against foreign & domestic insurance taxes. Sec (A) As used in this section: (1) "Historic building" means a building, including its structural components, that is located in this state and that is either individually listed on the national register of historic places under 16 U.S.C. 470a, located in a registered historic district, and certified by the state historic preservation officer as being of historic significance to the district, or is individually listed as a historic landmark designated by a local government certified under 16 U.S.C. 470a(c). (2) "Qualified rehabilitation expenditures" means expenditures paid or incurred during the rehabilitation period, and before and after that period as determined under 26 U.S.C. 47, by an owner of a historic building to rehabilitate the building. "Qualified rehabilitation expenditures" includes architectural or engineering fees paid or incurred in connection with the rehabilitation, and expenses incurred in the preparation of nomination forms for listing on the national register of historic places. "Qualified rehabilitation expenditures" does not include any of the following: (a) The cost of acquiring, expanding, or enlarging a historic building; (b) Expenditures attributable to work done to facilities related to the building, such as parking lots, sidewalks, and landscaping; (c) New building construction costs. (3) "Owner" of a historic building means a person holding the fee simple interest in the building. "Owner" does not include the state or a state agency, or any political subdivision as defined in section 9.23 of the Revised Code. (4) "Certificate owner" means the owner of a historic building to which a rehabilitation tax credit certificate was issued under this section. (5) "Registered historic district" means a historic district listed in the national register of historic places under 16 U.S.C. 470a, a historic district designated by a local government certified under 16 U.S.C. 470a(c), or a local historic district certified under 36 C.F.R and (6) "Rehabilitation" means the process of repairing or altering a historic building or buildings, making possible an efficient use while preserving those portions and features of the building and its site and environment that are significant to its historic, architectural, and cultural values. (7) "Rehabilitation period" means one of the following:

16 (a) If the rehabilitation initially was not planned to be completed in stages, a period chosen by the owner not to exceed twenty-four months during which rehabilitation occurs; (b) If the rehabilitation initially was planned to be completed in stages, a period chosen by the owner not to exceed sixty months during which rehabilitation occurs. (8) "State historic preservation officer" or "officer" means the state historic preservation officer appointed by the governor under 16 U.S.C. 470a. (9) "Application period" means any of the following time periods for which an application for a rehabilitation tax credit certificate may be filed under this section: (a) July 1, 2007, through June 30, 2008; (b) July 1, 2009, through June 30, 2010; (c) July 1, 2010, through June 30, (B) For any application period, the The owner of a historic building may apply to the state historic preservation officer for a rehabilitation tax credit certificate for qualified rehabilitation expenditures paid or incurred after April 4, 2007, for rehabilitation of a historic building. The form and manner of filing such applications shall be prescribed by rule of the director of development, and, except as otherwise provided in division (D) of this section, applications expire at the end of each application period. Each application shall state the amount of qualified rehabilitation expenditures the applicant estimates will be paid or incurred. The director may require applicants to furnish documentation of such estimates. The director, after consultation with the tax commissioner and in accordance with Chapter 119. of the Revised Code, shall adopt rules that establish all of the following: (1) Forms and procedures by which applicants may apply for rehabilitation tax credit certificates; (2) Criteria for reviewing, evaluating, and approving applications for certificates within the limitations under division (D) of this section, criteria for assuring that the certificates issued encompass a mixture of high and low qualified rehabilitation expenditures, and criteria for issuing certificates under division (C)(3)(b) of this section; (3) Eligibility requirements for obtaining a certificate under this section; (4) The form of rehabilitation tax credit certificates; (5) Reporting requirements and monitoring procedures;

17 (6) Any other rules necessary to implement and administer this section. (C) The state historic preservation officer shall accept applications and forward them to the director of development, who shall review the applications and determine whether all of the following criteria are met: (1) That the building that is the subject of the application is a historic building and the applicant is the owner of the building; (2) That the rehabilitation will satisfy standards prescribed by the United States secretary of the interior under 16 U.S.C. 470, et seq., as amended, and 36 C.F.R or a successor to that section; (3) That receiving a rehabilitation tax credit certificate under this section is a major factor in: (a) The applicant's decision to rehabilitate the historic building; or (b) To increase the level of investment in such rehabilitation. An applicant shall demonstrate to the satisfaction of the state historic preservation officer and director of development that the rehabilitation will satisfy the standards described in division (C)(2) of this section before the applicant begins the physical rehabilitation of the historic building. (D)(1) The director of development may approve an application and issue a rehabilitation tax credit certificate to an applicant only if the director determines that the criteria in divisions (C)(1), (2), and (3) of this section are met. The director shall consider the potential economic impact and the regional distributive balance of the credits throughout the state. (2) A rehabilitation tax credit certificate shall not be issued before rehabilitation of a historic building is completed or for an amount greater than the estimated amount furnished by the applicant on the application for such certificate and approved by the director. The director shall not approve more than a total of sixty twenty-five million dollars of rehabilitation tax credits for an application period per fiscal year. (3) Of the sixty million dollars approved for application periods July 1, 2009, through June 30, 2010, and July 1, 2010, through June 30, 2011, forty-five million dollars shall be reserved in each application period for the award of rehabilitation tax credit certificates to applicants who, as of March 1, 2008, had filed completed applications that met the criteria described in divisions (C)(1), (2), and (3) of this section, who have not withdrawn the application, and who have not yet been approved to receive a certificate. If the total amount of credits awarded for such applications is less than forty-five million dollars in an application period, the remainder shall be made available for other qualifying applications for that application period.

18 (4) If an applicant whose application is approved for receipt of a rehabilitation tax credit certificate fails to provide to the director of development sufficient evidence of reviewable progress, including a viable financial plan, copies of final construction drawings, and evidence that the applicant has obtained all historic approvals within twelve months after the date the applicant received notification of approval, or if the applicant fails to provide evidence to the director of development that the applicant has secured and closed on financing for the rehabilitation within eighteen months after receiving notification of approval, the director shall notify the applicant that the approval has been rescinded. Credits that would have been available to an applicant whose approval was rescinded shall be available for other qualified applicants. Nothing in this division prohibits an applicant whose approval has been rescinded from submitting a new application for a rehabilitation tax credit certificate. (E) Issuance of a certificate represents a finding by the director of development of the matters described in divisions (C)(1), (2), and (3) of this section only; issuance of a certificate does not represent a verification or certification by the director of the amount of qualified rehabilitation expenditures for which a tax credit may be claimed under section , , , , or of the Revised Code. The amount of qualified rehabilitation expenditures for which a tax credit may be claimed is subject to inspection and examination by the tax commissioner or employees of the commissioner under section of the Revised Code and any other applicable law. Upon the issuance of a certificate, the director shall certify to the tax commissioner, in the form and manner requested by the tax commissioner, the name of the applicant, the amount of qualified rehabilitation expenditures shown on the certificate, and any other information required by the rules adopted under this section. (F)(1) On or before the first day of December in 2007, 2008, 2009, 2010, and 2011 each year, the director of development and tax commissioner jointly shall submit to the president of the senate and the speaker of the house of representatives a report on the tax credit program established under this section and sections , , , , and of the Revised Code. The report shall present an overview of the program and shall include information on the number of rehabilitation tax credit certificates issued under this section during an application period the preceding fiscal year, an update on the status of each historic building for which an application was approved under this section, the dollar amount of the tax credits granted under sections , , , , and of the Revised Code, and any other information the director and commissioner consider relevant to the topics addressed in the report. (2) On or before December 1, 2012, the director of development and tax commissioner jointly shall submit to the president of the senate and the speaker of the house of representatives a comprehensive report that includes the information required by division (F)(1) of this section and a detailed analysis of the effectiveness of issuing tax credits for rehabilitating historic buildings. The report shall be prepared with the

19 assistance of an economic research organization jointly chosen by the director and commissioner. Sec (A) As used in this section, "certificate owner" has the same meaning as in section of the Revised Code. (B) There is allowed a credit against the tax imposed by section of the Revised Code for an insurance company subject to that tax that is a certificate owner of a rehabilitation tax credit certificate issued under section of the Revised Code. The credit shall equal twenty-five per cent of the dollar amount indicated on the certificate, but the amount of the credit allowed for any company for any year shall not exceed five million dollars. The credit shall be claimed in the calendar year specified in the certificate and in the order required under section of the Revised Code. If the credit exceeds the amount of tax otherwise due in that year, the excess shall be refunded to the company but, if any amount of the credit is refunded, the sum of the amount refunded and the amount applied to reduce the tax otherwise due in that year shall not exceed three million dollars. The company may carry forward any balance of the credit in excess of the amount claimed in that year for not more than five ensuing years, and shall deduct any amount claimed in any such year from the amount claimed in an ensuing year. (C) An insurance company claiming a credit under this section shall retain the rehabilitation tax credit certificate for four years following the end of the year in which the credit was claimed, and shall make the certificate available for inspection by the tax commissioner upon the request of the tax commissioner during that period. Sec (A) To provide a uniform procedure for calculating the amount of tax imposed by section of the Revised Code that is due under this chapter, a taxpayer shall claim any credits and offsets against tax liability to which it is entitled in the following order: (1) The credit for an insurance company or insurance company group under section of the Revised Code; (2) The credit for eligible employee training costs under section of the Revised Code; (3) The credit for purchasers of qualified low-income community investments under section of the Revised Code; (4) The nonrefundable job retention credit under division (B)(1) of section of the Revised Code; (5) The offset of assessments by the Ohio life and health insurance guaranty association permitted by section of the Revised Code;

20 (6) The refundable credit for rehabilitating a historic building under section of the Revised Code. (7) The refundable credit for Ohio job retention under division (B)(2) or (3) of section of the Revised Code; (7)(8) The refundable credit for Ohio job creation under section of the Revised Code; (8)(9) The refundable credit under section of the Revised Code for losses on loans made under the Ohio venture capital program under sections to of the Revised Code. (B) For any credit except the refundable credits enumerated in this section, the amount of the credit for a taxable year shall not exceed the tax due after allowing for any other credit that precedes it in the order required under this section. Any excess amount of a particular credit may be carried forward if authorized under the section creating that credit. Nothing in this chapter shall be construed to allow a taxpayer to claim, directly or indirectly, a credit more than once for a taxable year. Sec (A) As used in this section, "certificate owner" has the same meaning as in section of the Revised Code. (B) There is allowed a credit against the tax imposed by section of the Revised Code for an insurance company subject to that tax that is a certificate owner of a rehabilitation tax credit certificate issued under section of the Revised Code. The credit shall equal twenty-five per cent of the dollar amount indicated on the certificate, but the amount of the credit allowed for any company for any year shall not exceed five million dollars. The credit shall be claimed in the calendar year specified in the certificate and in the order required under section of the Revised Code. If the credit exceeds the amount of tax otherwise due in that year, the excess shall be refunded to the company but, if any amount of the credit is refunded, the sum of the amount refunded and the amount applied to reduce the tax otherwise due in that year shall not exceed three million dollars. The company may carry forward any balance of the credit in excess of the amount claimed in that year for not more than five ensuing years, and shall deduct any amount claimed in any such year from the amount claimed in an ensuing year. (C) An insurance company claiming a credit under this section shall retain the rehabilitation tax credit certificate for four years following the end of the year in which the credit was claimed, and shall make the certificate available for inspection by the tax commissioner upon the request of the tax commissioner during that period. Sec (A) To provide a uniform procedure for calculating the amount of tax due under this chapter, a taxpayer shall claim any credits and offsets against tax liability to which it is entitled in the following order:

21 (1) The credit for an insurance company or insurance company group under section of the Revised Code; (2) The credit for eligible employee training costs under section of the Revised Code; (3) The credit for purchases of qualified low-income community investments under section of the Revised Code; (4) The nonrefundable job retention credit under division (B)(1) of section of the Revised Code; (5) The offset of assessments by the Ohio life and health insurance guaranty association against tax liability permitted by section of the Revised Code; (6) The refundable credit for rehabilitating a historic building under section of the Revised Code. (7) The refundable credit for Ohio job retention under division (B)(2) or (3) of section of the Revised Code; (7)(8) The refundable credit for Ohio job creation under section of the Revised Code; (8)(9) The refundable credit under section of the Revised Code for losses on loans made under the Ohio venture capital program under sections to of the Revised Code. (B) For any credit except the refundable credits enumerated in this section, the amount of the credit for a taxable year shall not exceed the tax due after allowing for any other credit that precedes it in the order required under this section. Any excess amount of a particular credit may be carried forward if authorized under the section creating that credit. Nothing in this chapter shall be construed to allow a taxpayer to claim, directly or indirectly, a credit more than once for a taxable year. Section The amendment, enactment, or repeal by this act of the sections listed below is exempt from the referendum under Ohio Constitution, Article II, section 1d and section of the Revised Code and therefore takes effect immediately when this act becomes law or, if a later effective date is specified below, on that date. Sections 9.06, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,