State wants faster return on jobs funds
Springfield News - June 18, 2012
Local officials worry stricter rules could affect Prime Ohio II park
State jobs officials want to see return on taxpayer investment sooner, and that worries local economic development officials seeking funds for a long-term project they say could lead to hundreds of jobs.
The Ohio Department of Development is one of the main sources communities turn to for economic development funding.
But in tough economic times and with almost half of businesses failing to comply with aid requirements, the department is taking a harder line on when it wants to see the results of development.
“We’re just more explicit on the return on investment,” said Daryl Hennessy, ODOD assistant chief for the business services division. “We have a goal to see that return on invest early in the project — in the first, second, third year.”
Mike McDorman, president and CEO of the Greater Springfield Chamber of Commerce, argues that Prime Ohio II, located along Interstate 70 east of Springfield, is key to attracting major jobs creators that could bring more than 1,000 jobs to the area.
“We’re going for the dollars to help bring that infrastructure and jobs,” McDorman said.
In the past, ODOD gave grants or loans to projects such as the Prime Ohio II development that could provide jobs and attract businesses, even if it came years after the investment is made. The $7.5 million industrial park project has been discussed for 17 years but is still in the infrastructure development phase.
“They are saying you have to have jobs associated with the (road grant) as we move forward,” McDorman said. “The challenge is we’re already in process of doing a nearly $8 million project … what that means to us is we have to find another way to fund that.”
Hennessy said stricter guidelines don’t mean ODOD won’t fund longer-term projects. It just means people looking to fund projects with more speculative job creation goals need to make a stronger case.
In 2010, the Community Improvement Corp. was able to secure a $600,000 grant to help build road infrastructure in the park. But when it returned this year to ask for more money, the CIC and Greater Springfield Chamber of Commerce were advised they needed a stronger case to apply for a similar grant this time.
McDorman said he and CIC are working with local partners and still talking to the department of development and Jobs Ohio to garner additional funding and make a stronger case that Prime Ohio II is worth the risk.
“Every economic development project is based on a commitment to creating jobs that may not always materialize,” Hennessy said.
An attorney general’s report in January revealed not all businesses make good on loan/grant requirements. The report said 47.6 percent of businesses out of 400 in their final stages of economic development projects in 2010 failed to comply with their grant requirements.
Hennessy said the goal is to find the most efficient and productive way to use tax dollars.
Besides working with government, the chamber brought up the concern to the Buckeye Institute — a nonprofit organization that researches and discusses public policy — as the Institute toured Ohio counties to figure out what major economic development concerns communities have.
Kevin Holtsberry, president of the institute, said the organization has not done much research in economic development grant funding.
“I understand why communities are nervous, but I do think the government is on the right track,” Holtsberry said. “There’s a lot of tension over what’s being spent.”
Zach Schiller, research director of Policy Matters Ohio — another non-profit policy research group that focuses on economic policy — said he believes it’s important for there to be more transparency and thought on how tax dollars are spent for economic development.
“Let’s make sure that we do this in relation to already existing development,” Schiller said. “As best we can if we’re going to give incentives give more likely where its reachable by public transport rather than in a cornfield somewhere where we have to build a lot of infrastructure.”
Schiller said said Ohio populations aren’t really growing and spreading to new areas, so it’s best to develop in areas that are already near major transportation hubs and have some infrastructure to make funding cheaper.