Proposes break on electric rates for automakers, suppliers like GM, Delphi
By Laura A. Bischoff

Dayton Daily News

COLUMBUS | Automakers and parts suppliers such as General Motors and Delphi may get a break on their enormous electric bills next year in the hopes of lending a helping hand to the ailing industry in Ohio.

Senate President Bill Harris, R-Ashland, a former GM dealer, said Senate Republicans are preparing legislation to give a tax credit to auto industry members toward the kilowatt hour tax, which is paid on electricity use.

The kilowatt hour tax, started in 2001, brings in about $540 million a year to the state.

The largest electricity users about 170 hospitals, universities and manufacturers pay a special rate and account for about $54 million of the revenue generated by the tax, according to the state Department of Taxation.

The department estimated the proposed tax break would save large auto manufacturers and suppliers about $8 million a year.

Harris did not have details on which manufacturers would be eligible for the tax credit or whether any strings would be attached, such as a promise to retain jobs. One out of six jobs in Ohio are connected to the auto industry, he noted.

“When you’re using the amount of electricity that they use, it’s a huge amount of money,” Harris said.

Zach Schiller, research director for Policy Matters Ohio in Cleveland, was skeptical of the proposal.

“I think we should be careful in adding tax incentives. It’s not at all clear they have a major impact on employment and business. Everyone understands that our auto industry is troubled and we all want to do something to help that. However, we need to examine carefully what the benefits are going to be versus what the costs might be,” Schiller said.

Spokesmen for the Ohio Manufacturers Association and Delphi Corp. could not be reached.

In the Ohio House, legislation is pending to rework Ohio’s job retention tax credit by lowering the investment required of auto industry employers for up to a 75 percent tax break.

Supporters hope it will encourage Delphi and automakers to invest in their plants and keep jobs in Ohio.

It’s tailored to help auto and parts makers with more than 7,500 employees in Ohio, which includes only Delphi, Honda and the Big Three.

Policy Matters Ohio is lobbying against the bill, saying it would create expensive loopholes in the new commercial activities tax and give away 20 percent of the expected CAT revenue before the first penny is even collected.

The bill has the support of Gov. Bob Taft and House Speaker Jon Husted, R-Kettering.

In November, Taft released a plan to help the auto industry that includes tax incentives to retain jobs in Ohio, assistance for automakers with on-the-job training programs and streamlining environmental permits for automakers.

Dayton Daily News

By Stephanie Irwin

DAYTON | As energy costs rise, many say there’s a growing urgency in raising the minimum wage. Currently, the federal minimum is $5.15 per hour and Ohio’s minimum is set at $4.25. Employers’ lobbyists say raising the rate would be disastrous, but for the state’s working poor, the time for debate is running out. With consumer prices and home heating costs on the rise, Ohio workers earning minimum wage will be hitting food pantries to help fill in the financial gaps over the holidays.

Nearly half of the able-bodied adults who rely on donated food are low-wage workers, say officials at local food banks.

In Ohio, they work as restaurant servers, dishwashers, cooks, retail cashiers and clerks, cleaning maids, hotel workers and child care workers, according to 2003 figures from the Bureau of Labor Statistics.

“Because of wage stagnation, we have people coming to us for the first time people who said last year they were donating to our food banks, not using them,” said Lisa Hamler-Fugitt, director of the Ohio Association of Second Harvest Foodbanks in Columbus.

The majority of the 3 million pounds of food distributed each year in the Miami Valley by the Foodbank at 427 Washington St. ends up on the tables of working families, the organization said. Its 25,000-square foot warehouse supplies 90 pantries in three counties; demand accumulates around the holidays.

“Seasonal workers earning minimum wage get their hours cut, for example, and the paychecks start decreasing,” said the Foodbank’s executive director, Burma Rai.

So when price spikes come along, minimum wage workers are drastically and quickly affected. “They are using all of their paychecks to buy fuel to get to work and some basics,” said Amy Hanauer, economist and executive director for Cleveland-based Policy Matters Ohio. The nonpartisan research group studies unemployment, wage distribution and other workforce policy matters.

While low-wage workers often qualify for emergency assistance programs, “inflation will really hit them, even though they might get those other kinds of benefits,” she said.

That could make for a hard winter with the double-whammy of increased home heating costs during the holiday shopping season.

But the focus on making ends meet won’t end this year with Christmas dinner and natural gas bills.

Food pantries are also facing the possible deluge of 5,700 unemployed Delphi workers, should local plants close as part of the auto-parts maker’s Chapter 11 restructuring.

“Everybody’s really concerned about Delphi workers and what will need to be done,” Hamler-Fugitt said.

The Foodbank, Ohio chapter of the AFL-CIO and the United Way are working on a plan modeled after other Ohio communities that have survived plant closings, such as the Mahoning River valley in Northeast Ohio, Hamler-Fugitt said.

“We’ve seen this all over Ohio, communities that move from having world-class manufacturing industries to service industries. And those service workers in those communities have survived on charities,” she said.

Meanwhile in Columbus, lawmakers and business interests are winding up for a November 2006 ballot battle over an increase in the state’s minimum wage.

Two days before Thanksgiving, a coalition called Ohioans for a Fair Minimum Wage announced an effort to raise the state’s minimum to $6.85.

Ohio is one of only two states with a minimum wage lower than the federal minimum of $5.15 per hour.

Ohio’s minimum has been $4.25 since 1991.

The coalition, led by the AFL-CIO, plans to gather 322,000 signatures from registered voters to put a constitutional amendment on the ballot.

If that happens, business interests who historically oppose wage hikes will plan an aggressive campaign against it, the Ohio Council of Retail Merchants told the Dayton Daily News last week.

The number of workers earning less than the proposed $6.85 is about 350,000-400,000, Hanauer estimated.

She helped research an April study on a proposed state minimum wage increase to $7.15. The study found that the real buying power of the federal minimum wage is at its lowest point for the second time in 50 years.

The minimum wage bill, sponsored by Senate Democratic leader C.J. Prentiss of Cleveland, is currently hung up in the Senate.

A trip to the food pantry can provide one person with a minimum of three meals a day for 5 days.

“When you get laid off, you’ll start to feel it in about 6-8 weeks.
Unfortunately, many think of charity food relief as homelessness, soup kitchens,” Rai said.

“But food pantries are going to be your first line of defense.”

An Ohio minimum-wage worker who works 37 hours a week every week during 2006 will not qualify for unemployment compensation. That will be the result of the eligibility requirements for 2006 released recently by the Ohio Department of Job & Family Services. Under a formula that ties eligibility to the state average weekly wage, workers will have to average at least $193 a week over a minimum of 20 weeks, up from $186 this year.

Ohio’s earnings test is among the highest of any state in the country. It means that a worker may earn as much as $10,000 next year and not be eligible for benefits.

A study released last year by National Employment Law Project and Policy Matters Ohio examined what would happen if Ohio’s requirements were changed so that those making at least $100 a week for 20 weeks would qualify for benefits. It found that an additional 352,000 individuals, or 6.8 percent of the state’s workforce, would potentially be eligible should they become unemployed (a copy of the study is available at http://www.policymattersohio.org/ucompohio.htm).

Four years after recession ends, Ohio’s labor market remains troubled

Four years after the recession officially ended in November 2001, Ohio employment remains 161,800 jobs or 3 percent below its pre-recession level in March 2001 and 57,200 jobs or 1 percent below the immediate post-recession employment level, according to the latest seasonally adjusted payroll numbers for non-agricultural employment issued December 16, 2005 by the Ohio Department of Job & Family Services (ODJFS).

Full Report

Hamilton Journal-News

By Chris Dumond

HAMILTON – Ohio has maintained its distinction as the leading state in the nation in foreclosure rates, according to a report from the Mortgage Bankers Association Wednesday.

The report showed 3.17 percent of Ohio home loans in foreclosure in the third quarter this year, more than three times the national average of .97 percent. Locally, the Butler County Sheriff’s Office reported that 1,255 properties went to auction this year, up from 1,091 last year.

Butler County’s foreclosure rates are typically among the highest in the state. According to Cleveland-based research group Policy Matters Ohio, Butler was 11th of 88 counties in the state last year in foreclosure filings per person and fifth among the 10 most populated counties.

Foreclosure filings in Butler County more than tripled in the past decade.

Neighborhood Housing Services of Hamilton Executive Director Lorie Batdorf said much of the problem is rooted in subprime and predatory lending.

Subprime loans have higher interest rates and fees than so-called prime loans and are typically made to buyers who wouldn’t qualify for a normal home loan. Predatory lending can be more narrowly defined as inappropriate loans that take advantage of buyers.

“I think there’s a lack of education in the community, particularly among first-time home buyers,” Batdorf said. “A lot of this is emotionally-based. People go house hunting and fall in love with the house and it’s all emotional.”

With the rise in subprime lending and other kinds of nontraditional loans, almost anyone can get a house and that’s not always a good thing, she said.

“The difference between now and five years ago was that if you were credit-worthy, you got a loan and if you weren’t, you didn’t get the loan,” she said.

Although Ohio just recently surpassed Indiana in foreclosures, other neighboring states are getting in on the act, the Mortgage Bankers Association report showed. Indiana was second among the states in the third quarter with 2.69 percent of loans in foreclosure; Kentucky was third at 1.8 percent; Michigan was fifth at 1.61 percent; and
Pennsylvania was sixth at 1.58 percent.

Batdorf said the losses in manufacturing job losses shared by these states in the past five years are not entirely to blame for the foreclosures, but have contributed.

Others blame weak laws in Ohio governing the mortgage industry. Three reform bills now under consideration in the Ohio Senate are the subject of a predatory lending forum scheduled for Monday at LifeSpan on Ohio 4 in Hamilton.

The bills would expand Ohio’s Consumer Sales Practices Act to cover mortgage lenders, keep the private right of action intact so that individuals can sue lenders, limit points and fees to 5 percent of a loan, prohibit common predatory lending schemes and make public information related to the investigation of lenders.

Those interested in attending have been asked to RSVP to LifeSpan by calling (513) 868-3210.

Hamilton Journal-News

By Chris Dumond

HAMILTON – Complicated terms and huge dollar amounts can make financing a home a frightening prospect.

Marauding lenders are lurking to capitalize on those fears.

Authorities say predatory lending, where lenders or brokers take advantage of buyers through high-cost, inappropriate loans, is a major reason why foreclosures have increased more than 300 percent in Butler County in the last decade.

Butler County ranked 11th among Ohio’s 88 counties in foreclosures per person, according to a 2004 report by Policy Matters Ohio, a nonprofit research agency.

“That happens quite often here,” LifeSpan credit counselor Ruth Atha said of predatory lending. “It happens particularly with the elderly.
Unfortunately, they move in on them and they’re trusting people.”

The scams

Predatory lending comes in several forms, but a common trick is to sell a buyer on a monthly payment without explaining what’s included in the payment, Ohio Department of Commerce spokesman Dennis Ginty said.

Lenders may offer a lower payment by leaving out costs such as insurance and taxes, by extending the term of the loan, or by including a large payment at the end of the loan known as a balloon payment.

“It’s important for borrowers to be able to compare apples to apples and to ask questions,” Ginty said. “One important question to always ask is whether that payment includes taxes and insurance.”

If not, buyers could be hit with those unbudgeted costs after the fact.

Equity stripping happens when lenders offer loans based not on the buyer’s ability to pay it back, but in their ability to foreclose on the home to recapture their costs. According to the Department of Commerce, some lenders will illegally encourage buyers to overstate their income on the application to qualify them for the loan, take their fees and then take the house once that buyer realizes he or she can’t afford the payments.

Other schemes involve inflated appraisals which increase buyers’ debt and fees paid to brokers, packing unnecessary credit insurance into home loans and repeatedly refinancing debt at lower interest rates all the while recharging the buyer for fees and other closing costs.

Staying out of trouble

Ginty said the best way to avoid becoming a victim of predatory lending and foreclosure is to be informed. “Don’t sign anything until you’re confident you can repay the loan and that you understand and agree with the terms of the loan,” he said.

Part of that is doing some research before visiting a lender, he said. Buyers should review their credit histories and check prevailing mortgage rates. One source for those rates is bankrate.com.

Buyers should also check with the Department of Commerce to make sure their lender is licensed. Disciplinary actions are a matter of public record.

Karen Stypinski, president of the Ohio Association of Mortgage Bankers and an account manager with Washington Mutual Home Loans, said buyers should know what they can afford going in to the lender’s office, and to focus on the entire deal they’re being offered instead of a monthly payment.

“The best way to make sure you re getting good terms is to interview your lender,” Stypinski said. “There’s nothing wrong with someone going to see two or three different lenders. And if they’re not answering your questions or explaining things to where you re satisfied, don’t be afraid to walk away.”

Atha advises buyers not to sign anything on a first visit to a lender and to take away information in writing to review.

Even better, Ginty said, is to have loan documents reviewed by an attorney.

Worse than signing things buyers don’t understand is when buyers sign blank documents or falsify income information because it opens the door to mortgage fraud, Stypinski said. A buyer is not only at risk of foreclosure for getting into a loan he or she can t afford, but also criminal penalties.

Getting out of trouble

Atha said the best insurance against foreclosure trouble is to take action before there’s a real problem. If bills start piling up or there is a financial catastrophe such as sickness or unemployment, counselors are available, she said.

“Seek help immediately,” she said. “If you don’t start right away, you’re going to be playing catch-up. People start living on credit card debt or let different payments go and that only works for so long.”

The U.S. Department of Housing and Urban Development provides referrals to housing counseling agencies by calling (800) 569-4287.

Locally, LifeSpan may also be able to provide counseling.

Depending on the lender and the type of loan, buyers may be able to restructure their loans or even get a temporary reduction or suspension of their payments.

When looking for help, though, it’s important to be cautious and to only work with reputable counselors. LifeSpan Director Cheryl Burns said scammers are just as willing to take advantage of those desperate to save their homes as they are to catch people on the front end of the deal.

Getting out of a predatory lending scam often involves a lawyer, Ginty said. Although the Department of Commerce can refer buyers who believe they’ve been scammed to regulatory agencies, they will often have to go to court to nullify legal documents.

Hamilton Journal-News

By Lisa A. Bernard

BUTLER COUNTY – With Ohio leading the nation in foreclosures, state legislators and the mortgage lending industry are locked in heated battle over how best to protect consumers.

Since the late 1990s, Ohio’s foreclosure rate has soared to three times the national average, with more than 59,000 filings in 2004, according to the Ohio Supreme Court.

Among the state’s most populated counties, Butler County ranks fifth in home loan defaults, according to a report by Policy Matters Ohio, a Cleveland-based research group.

The troubled climate, some officials say, is compounded by weak laws governing the mortgage industry which have fueled deceptive and unfair lending practices.

“It’s one of the leading contributors that force people into foreclosures,”
said Sen. Gary Cates (R-West Chester) of predatory lending. It’s something we want to address.” Predatory lending encompasses a variety of abusive lending practices, such as charging excessive fees and points and steering consumers into more expensive loans.

Bills in the Senate geared toward curbing predatory lending would bring the mortgage lending industry under the scrutiny of the state’s Consumer Sales Practices Act.

The proposals – Senate Bill 185, introduced by Joy Padgett (R-Coshocton) and companion bill 162, introduced by Tom Roberts (D- Trotwood) – would allow consumers to sue lenders and possibly rescind deceptive loans.

Some say the measures are sorely needed.

“We’ve been working on this for six years and the legislature has failed to protect consumers through a variety of mechanisms all this time”
said Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio. Forty-eight states already regulate mortgage lending under consumer practices laws, he said.

“It’s like the wild west out there,” Faith said. “They are preying on vulnerable people anyone they can strip equity away from they’re going after.”

Some mortgage industry advocates, however, have resisted such regulations, arguing that the proposals fail to protect those backing the loans.

“The main thing we are opposed to is having (mortgage loans) under the consumer sales practices act,” said Karen Stypinski, president of the Ohio Mortgage Bankers Association.

“Because the proposals would allow consumers to rescind loans made deceptively, mortgages sold on the secondary market would be in jeopardy,” she said.

“It would really hurt our industry,” she said. “We can’t buy loans because we don t know if 10 years down the road from now if we’ll have to rescind that loan and the borrower walks away.”

Stypinski also argued that laws already on the books to protect consumers are not being enforced to their potential.

“You actually have two bills that have been in effect, but the department of commerce’s hands are tied because they re not able to enforce those laws,” she said of a predatory lending law passed in 2002.

In November, the state controlling board approved an additional $1.5 million in spending this fiscal year and another $1.5 million next fiscal year to fund an additional 14 positions for regulating the mortgage broker industries and other consumer finance industries, according to a spokesman with the Department of Commerce.

Stypinski said she is doubtful that all the new positions will be applied toward enforcement. OMBA is working on alternative legislation to propose to lawmakers in lieu of 185 and 162, Stypinski said, but
declined to give details.

“We just want to make sure that it s going to be a win-win situation for everybody the lenders and the borrowers,” she said.

Hamilton Journal-News

By Lisa A. Bernard

BUTLER COUNTY- Neighborhood charm dies here one home at a time.

Vacant houses. Overgrown yards. Unkempt properties.

The problems are glaring, said longtime Hamilton resident Robert Prather.

“It started about five years ago”, said Prather of the empty houses scattered across his Ludlow Avenue neighborhood.

“Some of them sit there forever and fall apart. People throw trash all around them. They get boarded up, but people just break into them. It’s depreciating my property value terribly.”

Weighing in at three times the national average, Ohio leads the nation in home foreclosures.

It’s a problem compounded by predatory lending and illegal property flipping schemes that many argue have triggered the decline of countless neighborhoods across the state.

“As I look at what’s happened, it impacts the very fabric of these neighborhoods,” said Rep. Steve Driehaus, D-Price Hill, of a property flipping scandal that hit Greater Cincinnati.

More than 30 people have been indicted in U.S. District Court in Cincinnati in the last two years for crimes related to mortgage fraud and illegal flipping involving hundreds of area properties.

Driehaus is among those pushing for restitution to be set aside to help rebuild neighborhoods hit by the scam.

“We’re trying to restore some of the equity in some, if not all, of the neighborhoods impacted,” he said.

Of Ohio’s most populated counties, Butler County ranks fifth in home loan defaults, according to a report by Policy Matters Ohio, a Cleveland-based research group.

Locally, the county’s urban communities have been hit the hardest, a JournalNews study revealed. Home loan defaults were greatest in Hamilton and Middletown with 492 and 422 filings in 2004.

Houses left empty after foreclosures have far-reaching impact, said Elizabeth Blume, associate director of the Community Building Institute at Xavier University, who has provided expert testimony in the recent mortgage fraud cases heard in U.S. District Court in Cincinnati.

“It’s about confidence in a neighborhood,” Blume said. “If you get a sign that a neighborhood is deteriorating people aren’t going to make investments in that neighborhood. It affects people’s decisions whether they’re going to invest in their own properties whether or not they’re even going to stay there.”

In Hamilton, the impact has been significant, said city Health Director Bill Karwisch.

“It’s happened all over our city, he said. In some areas, particularly the Fourth and Second wards, the concentration is high enough that you’ve started to see a major disinvestment.”

Each year Karwisch has more than 2,000 property maintenance complaints coming through his office.

“Typically we’re first alerted about problems by neighbors,” Karwisch said.

A yard is unkempt. In some instances, the building is standing open or windows have been broken out.

“Getting the problems resolved is often an uphill battle,” Karwisch said.

‘Some lending institutions will not get involved until after the home goes through a sheriff’s sale,” Karwisch said.

“That might run anywhere from nine to 12 months. In those cases it’s up to the city to maintain the property.”

Smaller communities also have been hit.

With a population of about 10,300, Trenton led the county in foreclosures per capita with filings for one in every 112 residents in 2004.

Trenton’s problems have also resulted in city staff spending an inordinate amount of time tracking down banks and mortgage companies because of problem properties, said Trenton City Manager Pat Titterington.

“That’s very difficult because when you’re dealing with out-of-state companies, they’re not very responsive,” he said, adding that problems center within many of the newer subdivisions.

“A large number of (foreclosures) are on some of the newer homes being built, where there is zero down and lower costs per month that goes on for a period of time,” he said. “Then when it comes time to pay the real principal, people realize they can’t afford them.”

As state legislators and the mortgage industry go to battle to curb Ohio’s rising foreclosure rates, communities like those in Butler County have been forced to create local preventatives against spreading blight.

“It’s a problem that has definitely been recognized by city council and the administration,” said Karwisch.

More than five ordinances have been put on Hamilton’s books in the last year to target dilapidated, vacant properties.

“The city is also keeping track of vacant buildings and working to better engage the lending institutions to maintain the properties that have been assumed through foreclosure,” he said.

“Those communities that are successful in doing that, in the long run, they don’t have the problems that arise from large areas becoming blighted and people leaving,” Karwisch said.

For 60-year-old Prather, leaving is not an option.

“With all the boarded up homes around here I can’t get nothing out of my home.” I’m surely not going to get out of this home what I’ve put into it,” he said. “I’m stuck.”

Middletown Journal

By Chris Dumond

HAMILTON – The number of foreclosure filings in Butler County has more than tripled in the last decade as Ohio has become the nation’s leader in home loan defaults. According to Butler County Clerk of Courts records, one of every 187 county residents experienced foreclosure last year.

Concentrated in the county’s urban areas, the foreclosure growth has contributed to the spread of blight in many neighborhoods and the destruction of the American dream of home ownership.

Between 1994 and 2004, foreclosure suits filed in Butler County grew 266 percent from 487 to 1,782. A JournalNews study of last year’s filings showed that Hamilton and Middletown led the county with 492 and 422 filings, respectively.

Trenton led the county in per capita foreclosures with filings for one in every 112 residents. Middletown and Hamilton followed with per capita rates of 117.5 and 124.

Foreclosure increases in Butler County have closely followed the state trend. Between 1994 and 2004, foreclosure filings in Ohio increased 246 percent from 17,026 to 59,007. According to a report by Policy Matters Ohio, a Cleveland-based research group, Butler County ranked 11th among the 88 counties in the state in per capita filings in 2004 and fifth among the 10 most populated counties.

There are multiple reasons for the increase. Between 2000 and 2004, as companies like Champion and International Paper closed local operations and others such as AK Steel cut hundreds of jobs, the unemployment rate in Butler County grew from a low of 3.6 percent to 5.4 percent last year.

But foreclosures can’t be explained by job loss alone. Growth in foreclosure filings, both in the county and at the state level, took off in the middle to late 1990s. This was at a time when unemployment rates were falling and household incomes were growing, according to both state and U.S. Census Bureau data.

“This was when the economy was really riding high, in the late 90s, when this rate took off and skyrocketed,” Policy Matters Ohio Research Director Zach Schiller said. “One thing that was happening at this time was major growth in the subprime market.”

Subprime loans, with higher interest rates and fees, are typically made to borrowers with a history of credit problems.

But their growth also is not the whole story, Schiller said.

“Predatory lending is an element within that where people are getting into loans they are being deceived into and are being taken advantage of,” he said.

The most recent national survey of mortgage delinquencies and foreclosures by the Mortgage Bankers Association of America showed that Ohio leads the nation in the percentage of mortgages in foreclosure at 3.28 percent more than three times the national average. When broken into prime and subprime loans, Ohio foreclosure rates still run around three times higher than other states. Subprime loans make up a slightly larger percentage of total loans in Ohio compared to the rest of the country, according to the delinquency survey.

Another factor is Ohio’s low home appreciation rates.

Statistics from the Office of Federal Housing Enterprise Oversight show that states with the lowest appreciation rates also have some of the highest foreclosure rates. Ohio s annual appreciation rate in the latest OFHEO study was the second lowest in the nation at 4.47 percent, compared to the national average of about 12 percent.

Of the 10 states with the lowest appreciation rates, four (Ohio, Mississippi, Indiana, and Michigan) were among the nation s top 10 in foreclosure rates. Those with the highest appreciation rates, Arizona, Florida and Hawaii, all more than 20 percent, had foreclosure rates ranging between half and a quarter of the national average.

Richard Stock, director of the University of Dayton s Business Research Group, has been studying regional foreclosure trends since 2001.

Stock said it makes sense that homeowners in areas with high appreciation would have been able to sell their homes to cover their loans before having to go into foreclosure more easily than those in states like Ohio, where home prices have been virtually stagnant.

“You get rapid appreciation where demand is very strong and that gets back to some other economic factors that would indicate an area is doing well,” Stock said.

Annual growth in foreclosure filings in Butler County dropped into the single digits in 2003 for the first time since 1997 and is expected to stay in single digits for 2005. According to the Butler County Clerk of Courts, 1,590 foreclosures were filed as of late November. At that rate, compared to 2004, growth would be less than 2 percent.

Schiller said it s good the numbers are leveling off, but it’s important to remember they’re leveling off at a high number.

Gongwer News Service

Issue 1 was a hit at the polls last month, and implementing legislation for the research and development bond package proved to be a one-hearing wonder in the Senate Tuesday.

The Finance & Financial Institutions Committee unanimously reported the bill (SB 236) after hearing from a handful of witnesses and adopting nine non-controversial amendments. The full Senate will vote on the measure Wednesday, and, barring any unforeseen complications, the House is expected to follow suit next week and send the bill onto the governor for his signature.

With a bipartisan deal having been struck on the bill, the panel’s speedy turnaround occurred with no hitches and – except for one witness’s observation – absent the complaints that oftentimes accompany such a fast-tracked process.

The bill appropriates only a portion of the $2 billion in bonds approved by voters 54-46% on Nov. 8, in part because the biggest chunk of the debt – $1.35 billion – is for the continuation of the current public works program for local infrastructure needs. Those monies won’t be needed until fiscal year 2009 due to the bond authority that remains from the last 10-year issue. (See Gongwer Ohio Report, December 2, 2005)

Office of Budget and Management Director Tim Keen said the bill: appropriates $100 million in each year of the current biennium for the Third Frontier research and development program; appropriates $30 million for the existing Job Ready Site program in the FY 2005-2006 capital biennium; amends the two-year budget bill (HB 66) with operating money for the aforementioned programs; establishes $4.1 million in general revenue fund debt service appropriations for the Job Ready program and non-GRF debt service appropriations for the two initiatives; authorizes the issuance of debt by the Ohio Public Facilities Commission and creates two new funds for Third Frontier and Job Ready proceeds.

Mike Suver, deputy director of legislative affairs for the Department of Development, said that as part of the bipartisan agreement that required more consideration for rural areas of the state to receive funds, the Third Frontier Commission, which approves projects with input from an advisory panel and outside evaluators, is expanded from three to nine members in the bill. The governor will appoint all of the additional members, who will represent the six regions of the state: central, west central, northeast, northwest, southeast and southwest.

“The bill also specifies that the lead organization on all Third Frontier Project awards be an in-state entity that has substantial presence in Ohio while specifically prohibiting the state from taking an ownership interest in any project it supports,” Mr. Suver explained.

Additionally, Mr. Suver said the bill: requires that the primary benefit of the project must occur in Ohio; provides for refunds plus interest from grantee firms that fail to meet program requirements; includes several minority outreach provisions; requires the commission to establish procedures for public inspection of projects and mandates regular reports on those state-funded initiatives.

The amendments, including four proposed by minority Democrats, mostly clarified provisions and brought the measure more in line with the bipartisan deal struck in August to gain the supermajority legislative support required for ballot placement. Two witnesses requested further changes, but panelists only adopted the agreed-to amendments before voting out the bill, which was referred to the committee earlier in the day. Those provisions:

–”clean up” bond language;

–substitute “shall” for “may” in language regarding the DOD director’s requirement to bring discretionary grants to the Controlling Board for approval;

–state that higher education institution’s are not eligible for Job Ready funds;

–limit to $5 million each grant issued under the Job Ready Site Program;

–require Senate approval of the governor’s appointments to the Third Frontier Commission;

–add “economic distress of the community” to the criteria by which Job Ready projects are selected; and require DOD to note the amount of projects done in Priority Investment Areas and their impacts, to the extent possible, in its annual report on the program;

–require the Third Frontier Commission, if the project recommendations of a third-party evaluator are rejected, to issue a report detailing why another initiative is to instead receive the money; and require DOD to develop rules for the reports within six months;

–mandate biannual DOD reports to the Third Frontier Commission on projects and the sharing of “all relevant data” to ensure accountability; and require the posting of bond program information on the agency’s Web site, and;

–clarify that repayment of state support aside from grants is required for entities that default on their project agreements.

Prior to the panel’s adoption of the amendments, Policy Matters Ohio research analyst Jon Honeck asked members to consider further changes to better conform the bill with the constitutional amendment’s stated aims of “accountability, integrity and transparency” with respect to the three bond programs, and the charge to include “economically disadvantaged businesses and individuals in all areas of this state.”

Among other things, Mr. Honeck asked the committee to consider “additional safeguards” that would: require companies that benefited from Third Frontier money to make their products available to state and local governments at the “lowest, best” price; expand the Third Frontier Advisory Board to include representatives of minority business and labor, a community economic development expert in areas targeting the disadvantaged, and an environmental advocate; require performance audits by the state auditor; and mandate competitive bidding for all DOD program administration contracts.

“We urge the committee to consider these issues carefully, and not to rush to pass Senate Bill 236 before they have been adequately examined,” Mr. Honeck said.

Christopher Derrington, of the Ohio Center for Innovation and Commercialization and Ohio Commercialization Ventures, asked the panel to include language that would allow a non-profit group such as his to “aggregate the deal flow” for enterprises in rural areas of the state. “I don’t really see a focus on rural areas” with the programs, he said.

The current Third Frontier initiative has channeled $212 million into mostly urban areas of the state, and $18 million in “pre-seed capital grants” to only Cuyahoga, Franklin, Hamilton, Lucas and Montgomery counties, Mr. Derrington said. “Rural Ohio high technology entrepreneurs also need access to investment capital.”

“I think you’re right on target” with the concept, Sen. Ron Amstutz (R-Wooster) said, but added: “We just have to figure out how to do it.”