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INDEX TO SECTIONS
Introduction
JobsOhio Overview
JobsOhio’s Role as Ohio’s Lead Economic Development Entity
JobsOhio Regional Network
How to Contact JobsOhio or a JobsOhio Regional Network Partner
JobsOhio II Bills Passed in the Ohio House and Senate
What’s Happening Now?
DevelopOhio Resources


Introduction

Economic development in Ohio is changing. In the midst of ongoing global economic struggles, the state is redesigning the way it does business with public and private entities. At the center of this process is the restructuring of the Ohio Department of Development and the development of the private, nonprofit corporation JobsOhio. The goal of the transition is to reallocate resources, streamline services and make Ohio’s economic development system more nimble in efforts promoting key job creation initiatives. 

With the passage of H.B. 489 and S.B. 314, also referred to as the JobsOhio II bills, clarity is surfacing as it relates to Ohio’s economic development landscape. The bills realign the functions of the Ohio Department of Development (ODOD), transferring certain roles and responsibilities to JobsOhio, leaving a leaner state agency called the Ohio Development Services Agency (ODSA). But before a number of provisions in the JobsOhio II bills are discussed, let’s review the background and evolution of JobsOhio and its achievements to date:


JobsOhio Overview

JobsOhio was created by the Kasich administration as a private, nonprofit corporation on February 18, 2011, pursuant to H.B. 1, to drive economic development and job growth for Ohio. After the enactment of H.B. 1, the director of the Ohio Department of Development (hereinafter the Ohio Development Services Agency) was authorized to negotiate and execute a contract with JobsOhio to reshape the face of economic development and lead Ohio’s job-creation efforts. This role includes assisting the ODSA with providing services or otherwise carrying out the functions and duties of the department, including the operation and management of programs, offices, divisions or boards as may be determined by the director of the ODSA in consultation with the governor. 

H.B. 1 provides that the term of the initial contract between the ODSA and JobsOhio may not extend past June 30, 2013.  Thereafter, the director of the ODSA and JobsOhio may renew the contract for subsequent fiscal biennia (two years), but at no time shall a particular contract be effective for longer than a fiscal biennium of the General Assembly. 


JobsOhio’s Role as Ohio’s Lead Economic Development Entity

JobsOhio became operational on November 4, 2011, and officially assumed responsibility for leading Ohio’s job-creation efforts. The creation of JobsOhio was a key component of Governor John Kasich’s vision for restructuring economic development service offerings at the state level by privatizing a portion of the state’s economic development functions. Using a private sector approach and partnering with economic development entities in each region of Ohio, JobsOhio’s goal is to assist businesses and public entities in streamlining the evaluation and incentive approval process, encouraging economic growth at a faster pace.

JobsOhio plans to execute its strategic framework for creating jobs by focusing on business attraction, retention and expansion in the following strategic industry sectors: 

  • Advanced manufacturing 

  • Aerospace and aviation 

  • Automotive 

  • Biohealth 

  • Business functions 

  • Energy 

  • Financial services 

  • Food processing 

  • Information technology 

  • Polymers 

To move these industries forward in Ohio, the role of general manager was created within JobsOhio to allow industry experts to shape and develop cluster strategies with support from project managers. To support these strategies throughout the state, JobsOhio has created a regional network to facilitate economic development efforts called the JobsOhio Network. 


JobsOhio Regional Network

JobsOhio will leverage statewide and regional strengths within six defined geographic regions supported by regional network partners located in Cincinnati, Cleveland, Columbus, Dayton, Nelsonville (for Appalachia) and Toledo. Refer to the JobsOhio Network map depicting the current regional configuration.

The existing private sector economic development organizations from each of the six regions have contracted with JobsOhio to be part of the JobsOhio Network. These organizations (referred to as Regional Economic Development Organizations, or REDOs) include the Cincinnati USA Partnership, Team NEO/Cleveland+, Columbus 2020, Dayton Development Coalition, Appalachian Partnership for Economic Growth and the Regional Growth Partnership. These organizations are charged with making job creation and economic development a regional priority and enhancing Ohio’s government-based economic development efforts, thus enabling more proactive and competitive responses for emerging and promising development opportunities. 

JobsOhio holds the REDOs accountable for their efforts through contracts that measure performance across a number of key metrics. Focusing on strategic industry sectors, the JobsOhio Network is expected to aggressively pursue the retention, expansion and recruitment of businesses with high potential for job and wealth creation in Ohio, as well as the transition of technologies into new companies and products. The REDOs also perform project management services and provide local communities with a single point of contact to expedite responsiveness to job creation opportunities.

Although JobsOhio is leading the state’s job-creation efforts, it cannot execute contracts that obligate the ODSA for loans, grants, tax credits or incentive awards recommended by JobsOhio to the agency. The approval or disapproval of incentive awards involving public money shall remain a function of the ODSA. All contracts for grants, loans and tax incentives involving public money shall be between the ODSA and the award recipient, and will be enforced by the ODSA. 


How to Contact JobsOhio or a Regional JobsOhio Network Partner

Referrals and leads relating to possible job creation, retention and expansion activities are to be directed to JobsOhio or its regional network partners for qualification and development of incentive proposals, which may include recommendations as to tax credits, loan or grant funding, and the like. Although the ODSA will still have final approval authority with respect to the award of any state incentives, the goal is to expedite the approval process through JobsOhio and the network.

Refer to the JobsOhio Network map for the appropriate JobsOhio regional network partner or contact JobsOhio directly at 614.224.6446 to initiate a preliminary project discussion.


JobsOhio II Bills Passed in the Ohio House and Senate

By May 1, 2012, the JobsOhio II bills — each of which aims to solidify JobsOhio as the primary private sector entity in charge of economic development in Ohio — passed the Ohio House of Representatives (H.B. 489) and the Ohio Senate (S.B. 314). Governor Kasich signed S.B. 314 on June 26, 2012, and it became effective 90 days thereafter.

The legislation provides guidance and direction to the ODOD and JobsOhio. The bills reflect the desire of the ODOD to adjust its mission to better support JobsOhio, thereby defining the role of the newly created Ohio Development Services Agency (ODSA) in Ohio’s economic development efforts.

The JobsOhio II bills provide for a number of changes to the state’s economic development landscape. The list below briefly describes some of the most significant changes:

Ohio Development Services Agency (ODSA)

The bills officially change the name of the Ohio Department of Development to the Ohio Development Services Agency (ODSA), effective September 28, 2012, and specify that JobsOhio is required to enter into a contract with the ODSA, which will officially outline the respective roles of each entity. The term of the initial contract shall not extend beyond June 30, 2013, but may be extended for subsequent fiscal biennia (two years), one fiscal biennium at a time. 

Appropriations

H.B. 153, the biennial budget bill for the current biennium, had set aside a lump sum amount — $1.2 billion to the ODSA for FY ‘13, including $117.79 million from the General Revenue Fund — for JobsOhio. The JobsOhio II bills formally appropriate these funds to the ODSA. House sponsors intend that the ODSA’s role going forward will be to provide “essential services” to JobsOhio, including the administration and oversight of loans and tax credits that will assist in the creation and expansion of Ohio businesses.

Expansion of the Tax Credit Authority and Administration of the Job Creation Tax Credit

The bills expand the membership of the Ohio Tax Credit Authority (the Authority), specifying that the chief investment officer (CIO) of JobsOhio is now a member of the Authority and adding an additional member who is a specialist in the development of new technology. The bill also clarifies that the Authority be reconfigured to include the director of the Ohio Development Services Agency and four other members — economic development specialists appointed by the governor, the Senate president, the House speaker and a governor-appointed taxation specialist — increasing the Authority from five to seven members.

The bills also make changes to the “major factor” requirement for the job creation tax credit (JCTC) program. Under current law, JCTC recipients must demonstrate to the Authority that the receipt of the incentive is a major factor in the decision to construct a project in Ohio. In practice, this means that the construction of a project cannot commence until the JCTC is approved by the Authority. However, the legislation changes the operation of the major factor requirement by necessitating that the requirement be met based on a recommendation of the CIO and the director of ODSA. If a taxpayer has already started a project, the major factor requirement may be met through such a recommendation made within six months after the JCTC application was received by the Authority. This is a significant programmatic change that allows for more flexibility for JCTC applicants than what was allowed under the prior law, which heavily relied on the monthly Authority meeting schedule. 

Lastly, the bills change the date from which the JCTC is measured. Under the old law, the “baseline income tax revenue” that serves as the base for the JCTC is equal to the income taxes withheld during the 12 months immediately preceding the date on which the Authority approves the JCTC. The new legislation changed this language to measure the baseline income tax revenue based on either the income taxes withheld during the 12 months immediately preceding the Authority approval date or the date on which the Authority receives the recommendation from the CIO and the director of the ODSA, whichever occurs first. This adjustment provides greater flexibility regarding the date from which new income tax revenue subject to the JCTC is measured. 

Expansion of the Ohio Third Frontier Commission

The bills expanded the membership of the Ohio Third Frontier Commission (the Commission) by two members (increasing from 9 to 11). The two new members are the CIO of JobsOhio and another member at large. Rounding out the Commission is the director of the ODSA, the chancellor of the Ohio Board of Regents, the governor's science and technology advisor, and six others geographically situated throughout the state and appointed by the governor with the advice and consent of the Senate.

Changes to the InvestOhio Program

The InvestOhio program was established in H.B. 153 and provides for a refundable income tax credit to investors who make “qualifying investments” in certain “small business enterprises” in Ohio. The JobsOhio II bills make several changes to the InvestOhio program. First, and most significantly, the bills specifically exclude from the definition of “qualifying investment” any investment of money that is the basis of a tax credit under any provision of the Revised Code. Second, participation in the InvestOhio program is prohibited for entities that owe money to the state. Third, the bills provide for an application fee to support the administration of the InvestOhio program. Finally, applicants would be required to provide information about any job creation or retention activities associated with the qualifying investment.

Increase Capital Access for Small and Minority Businesses

The bills increase the amount of financing available to small and minority-owned businesses and provide more access to capital, which is essential for growth. Specifically, the amount to be loaned by the director of development through the Capital Access and Minority Business Direct Loan programs was increased from sixty percent to seventy-five percent of the total amount expended in the procurement or improvement of a project. Additionally, increased funding to the recently announced State Small Business Credit Initiative will help improve the state’s lending environment for job creators.

Public Records Laws

The bills addressed the Ohio public records laws for certain records created or received by JobsOhio. Records of JobsOhio are not subject to disclosure for public inspection unless expressly provided by statute (see ORC Section 187.05(C)(1)). This is the opposite of public agencies, where records are presumed to be subject to disclosure. 

Several exceptions are listed with respect to records created by JobsOhio that are presumed to be subject to disclosure for public inspection (see ORC Section 187.05(B)(2)). The records that are specified for public inspection are limited to: 

  • JobsOhio’s federal income tax returns 

  • An expenditure report for JobsOhio 

  • The total annual compensation paid to JobsOhio officers and employees 

  • A copy of the financial audit report for JobsOhio

  • Records of any fully executed incentive proposals

  • Records related to the monitoring of incentive commitments 

  • Minutes of all JobsOhio public meetings

The contract between JobsOhio and the ODSA is required to identify the records that would be available to the public.

Records received by JobsOhio from other entities are covered under ORC Section 187.05(C)(2) and (3), providing one of the broadest possible exclusions from Ohio public records laws. Under ORC Section 187.05(C)(2), records received from entities that are not subject to Ohio public records laws are not considered public records unless specifically designated as such pursuant to ORC Section 187.05(B)(2). Under ORC Section 187.05(C)(3), records received from public agencies that are exempted from public records laws under ORC Section 149.43 remain exempted when held by JobsOhio.

The Creation of the Office of TourismOhio

The Office of TourismOhio was created within the ODSA and will be responsible for overseeing official tourism activities in Ohio. TourismOhio, which will be funded through a five-year pilot program, will link funding for the office to the growth in sales tax revenues of tourism-related industries around the state. Under the pilot program beginning in 2014, TourismOhio will get a portion of increased sales tax collections generated by their efforts, capped at $10 million. The current state budget provides $5 million for tourism marketing, while the previous budget provided nothing.

The JobsOhio II bills also create the TourismOhio Advisory Board, which will include industry experts to provide guidance and support efforts to promote Ohio tourism. The CIO of JobsOhio will be appointed to the TourismOhio Advisory Board.

Elimination of the Development Financing Advisory Council

The Development Finance Advisory Council (DFAC), the entity that currently approves all economic development financing programs prior to loan approval by the Controlling Board, has been eliminated. Previously, state loans required approval from two state boards. This redundancy sometimes slowed the process for companies making capital investments in Ohio. Enabling the ODSA to recommend loans directly to the Controlling Board will save time, allowing businesses to move forward on projects at an accelerated rate. 

Elimination of the Water and Sewer Commission

The Water and Sewer Commission, which has not met or taken action since 2007, has been eliminated. 


What’s Happening Now?

While JobsOhio is operational, its funding stream from Ohio’s liquor enterprise has not yet begun to flow. JobsOhio has agreed to pay $1.4 billion upfront to the state for a 25-year lease on the state's liquor enterprise, which will be funded through a bond issue, plus a potential share of future profits. The long-term lease of the state’s liquor operations will provide a dedicated funding source of approximately $100 million dollars per year for JobsOhio.

Those funds will be used to cover administrative costs, to maintain a contract with the Department of Commerce to continue performing most of its regulatory liquor control and enforcement functions on behalf of JobsOhio, and to develop new programs to complement existing state programs. Details of the prospective programs have yet to be released due to two ongoing cases related to JobsOhio regarding the issues of the constitutionality of JobsOhio and standing to sue JobsOhio as summarized below:


I.   Constitutionality of JobsOhio

State ex rel. JobsOhio v. Goodman
Slip Opinion No. 2012-Ohio-4425

On September 28, 2012, the Ohio Supreme Court in State ex rel. JobsOhio v. Goodman declined to rule on the constitutionality of JobsOhio. The two-year budget bill (H.B. 153), which took effect July 1, 2011, authorized the state budget director, in consultation with the commerce director, to negotiate the transfer of Ohio’s liquor-distribution operations to JobsOhio. The franchise-and-transfer agreement was reached; however, David Goodman, director of the Ohio Department of Commerce, refused to sign it.

In a letter to Mark Kvamme, interim president and chief investment officer of JobsOhio, Director Goodman voiced concern over “lingering constitutional issues” regarding the transaction, including “whether JobsOhio violates the prohibition of the General Assembly from conferring corporate powers via special act; and whether the transfer improperly allows the state to lend credit to a private corporation.” Therefore, JobsOhio chose to challenge the Kasich administration in court when it responded to Goodman’s refusal to sign the agreement to transfer the state’s liquor operations by filing a mandamus complaint (a legal action to compel a government official to take an action the official is required by law to do) with the Ohio Supreme Court to settle the matter.

In the 4-2 ruling, the Supreme Court ruled that although on the surface the complaint seeks to compel Director Goodman to comply with the transfer of the state’s liquor-distribution operations to JobsOhio, it is actually trying to get “an expedited ruling” from the high court declaring JobsOhio, by way of “H.B. 1 and 153 constitutional, so as to preclude any further challenges.” Moreover, the justices said the court lacks “original jurisdiction” to resolve the complaint filed by JobsOhio and render a declaratory judgment and therefore dismissed the action because “parties who seek an advisory declaratory judgment . . . have adequate remedies in the ordinary course of law,” namely the lower courts, that must be exhausted before the Supreme Court would have jurisdiction. The court said that JobsOhio should file a declaratory-judgment action in common pleas court if it truly wants to resolve the matter.


II.   Standing: The Right to Sue JobsOhio

ProgressOhio.org, Inc. v. JobsOhio
2012-Ohio-2655

On June 14, 2012, the Franklin County Court of Appeals in ProgressOhio.org v. JobsOhio affirmed a December 2, 2011, decision by Franklin County Court of Common Pleas Judge Laurel Beatty finding that the plaintiffs, State Senator Michael Skindell, State Representative Dennis Murray and ProgressOhio, seeking to challenge the constitutionality of JobsOhio “have not met their burden to establish that they have standing to bring their action” because they were unable to demonstrate injury.

The appeal, brought by the plaintiffs, was rejected by a vote of 3-0. The opinion of the court, written by Judge Gary Tyack and concurred by Judges Lisa L. Sadler and Julia L. Dorrian, stated that the lack of standing by the appellants effectively barred their consideration of the issues raised at the trial court level.

The 1851 Center for Constitutional Law has taken particular issue with the court’s finding that ProgressOhio lacks standing. Maurice Thompson, attorney for the 1851 Center, has stated that such a ruling “is akin to determining no Ohio taxpayer has a stake in controlling its government ‘when it’s out of control’ in terms of spending, indebtedness and taxation.” Moreover ProgressOhio, State Senator Michael Skindell, State Representative Dennis Murray and the 1851 Center for Constitutional Law (filing an amicus brief in support of ProgressOhio's lawsuit) have appealed the Court of Appeals recent ruling in favor of JobsOhio to the Ohio Supreme Court. Motions have been filed with the Supreme Court requesting that the Court clarify the issue of who has standing to sue the state. The Court has yet to decide whether it will hear the case.


III.   Conclusion

As a result of the current disposition of the aforementioned court cases, finalizing the transfer of the long-term lease of the liquor-distribution operations between the state of Ohio and JobsOhio is still in limbo, thus extending the timeline for execution of the financing transaction. On August 30, 2012, ProgressOhio submitted a motion to the Supreme Court seeking to consolidate the ProgressOhio.org, Inc., v. JobsOhio and the State of Ohio, ex rel. JobsOhio v. David Goodman cases. JobsOhio and the state have both filed motions opposing ProgressOhio’s motion. The Court has yet to rule.

Uncertainty as it relates to a definitive outcome regarding the constitutionality of JobsOhio has delayed JobsOhio from closing on the financing of the long-term lease of the Ohio Liquor Enterprise, thus delaying access to the funding stream of approximately $100 million per year, which will better allow JobsOhio to meet its job creation and retention mandates. However, JobsOhio has every intention of executing this transaction and plans to complete it sometime during the first or second quarter of 2013.


DevelopOhio Resources

Ohio Development Services Agency (formerly the Ohio Department of Development
State agency providing business and community development services and resources.

Economic Development Incentives
List of economic development incentives offered by the state of Ohio.

Ohio Third Frontier 
State of Ohio's job creation investment capital program for emerging and established high tech companies and research initiatives.

Ohio Third Frontier Current Funding Opportunities
Monthly listing of funding opportunities.

JobsOhio 
The private, nonprofit economic development organization leading Ohio’s job-creation efforts.

JobsOhio 2012 Strategic Framework
Information about Ohio's strengths as a place to do business and key strategies for building upon those strengths, and an overview of nine target industries and four business functions that comprise the predominant sectors that drive Ohio's economy.

JobsOhio Team 
A list, including job titles, of the members of the JobsOhio team.

JobsOhio Network 
Map of the JobsOhio Regional Network configuration.

JobsOhio Project Ownership and Categories 
Charts defining how projects will be managed (between JobsOhio and the REDOs) and how JobsOhio will classify various economic development projects.

JobsOhio Data Center 
Ohio demographic data, industry statistics, regional details and more.

JobsOhio Sites and Buildings Tool
A site selection tool that provides data to aid companies and site selection professionals in identifying available land and buildings and other applicable information to support a company's initial attraction, expansion or relocation to Ohio.

JobsOhio Regional Network Partners
Through its network of economic development organizations statewide, JobsOhio is responsible for carrying out program initiatives to attract and retain jobs in strategic industry sectors.

Cincinnati USA Partnership 

Columbus2020!

Dayton Development Coalition

Appalachian Partnership for Economic Growth

Team NEO/Cleveland+ 

Toledo Regional Growth Partnership 

JobsOhio Legislation

H.B. 1: Signed into law by Governor Kasich on February 17, 2011, effective February 18, 2011. 

JobsOhio II Legislation

H.B. 489: Introduced by Rep. Mike Dovilla (R-Berea) and Rep. Christina Hagan (R-Uniontown) and passed on April 24, 2012

S.B. 314: Introduced by Sen. Mark Wagoner (R-Toledo) and signed into law on June 26, 2012.

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