Third Frontier Implementation Passed on the Fast Track

- December 6, 2005

The Senate Finance and Financial Institutions Committee Tuesday quickly passed out SB236, which lays out the implementation of Third Frontier provisions and the Job Ready Sites program approved by voters in November in State Issue 1.

The bill passed with unanimous support and included amendments from both sides of the aisle.

Most of the amendments passed dealt with technical changes, although Democrats were successful in getting amendments that would 1) require out-of-state entities that break an agreement for Third Frontier money pay back both the grant money and other support given plus interest; 2) require the Third Frontier Commission provide written explanations that are presented at one of the commission’s meetings if it uses an independent reviewer of a proposal and then either awards support for a project that the reviewer doesn’t recommend or refuses to support a project a reviewer does recommend; and 3) require the Department of Development to post annual reports on the progress and status of eligible projects and the annual report of the director, among other reports.

The components of the bill were outlined by Tim Keen from the Office of Budget and Management and Mike Suver from the Ohio Department of Development.

The bill includes provisions that expand the Third Frontier Commission from three to nine members, including the director of the Ohio Department of Development, the chancellor of the Ohio Board of Regents, the governor’s science and technology advisor and six members from the central, west central, northeast, northwest, southeast and southwest portions of the state.

The bill specifies lead organizations on all Third Frontier Project awards must be an in-state entity that has a substantial presence in Ohio while specifically prohibiting the state from taking an ownership interest in any project it supports. The primary benefit must occur within Ohio.

SB236 also establishes the Job Ready Sites program to assist in the development of sites and buildings that companies looking to invest in the state can utilize.

The committee heard testimony from Jon Honeck of Policy Matters Ohio, who said the bill contains safeguards to ensure the Third Frontier program is open and accountable. He also recommended a number of other changes such as companies selling products and services that were commercialized using Third Frontier money should offer them to state and local governments at the lowest best price; the Third Frontier Advisory Board should include an owner or representative of a minority-owned business, an expert in community economic development from a nonprofit organization that works with economically and socially disadvantaged individuals to provide training or support for entrepreneurship, an expert from a nonprofit environmental advocacy organization with a background in regulatory affairs and a representative from a labor organization; periodic audits by the state auditor; and competitive bidding for contracts for program administration and requirements for the review of potential conflicts of interest by contractors and employees.

Honeck said Policy Matters would like the committee to consider penalties for nonperformance by a grantee and full disclosure reports from Third Frontier Commission members.

Christopher Derrington of the Ohio Center for Innovation and Commercialization discussed making sure Third Frontier money is used in all of Ohio. He said there is a disconnect that makes it harder for rural Ohio high technology entrepreneurs to gain investment capital because many pre-seed capital grants have gone to larger counties and have been invested primarily in urban areas.

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