LIMA — Nearly a year ago, the state of Ohio crossed an initial funding hurdle and decentralized its economic development work from Columbus to six regions, with the creation of the still-controversial JobsOhio program.
Allen County is nearly the southernmost county in the 17-county Northwest Ohio region, headed by Toledo-based Regional Growth Partnership. A year in, development officials say the start of a new way of doing business has been rocky but improving every day. The work to pull together as a region is happening against the backdrop of JobsOhio’s structure, which continues to generate multiple questions about its long-term viability.
“The simplest thing I tell people is that the state of Ohio decentralized its economic development activity. In the past, one way or another, it all led back to the Ohio Department of Development,” said JobsOhio Northwest Ohio Region Director Gary F. Thompson. “Trade missions, trade shows, sites, incentives, they handled it. But a lot of people in Columbus realized they couldn’t know everything about the state. They understood that regions are different, and that we could be more efficient and effective if they handed over some of the reins.”
The model is a major structural change for local economic development officials, who were used to working with regional representatives from the governor’s office when they needed to involve the state. Now, their first call is to Toledo, not Columbus.
About two months ago, RGP hired John Recker as a regional project manager for seven of the 17 counties. The move has helped a great deal, Allen Economic Development Group President Marcel Wagner said.
As the structure got off the ground, local officials complained about a lack of attention to the region. Today, they stop short of that. While Thompson said he’d give the effort so far a grade of “B,” Wagner signaled more of an incomplete.
“This is still a new partnership for everybody. We’re still feeling our way around,” Wagner said. “But having someone here that we’ve worked with before has been a huge help. John’s from the area. His office is here. He’s more accessible for us. He knows the companies, the territory here.”
Recker is a Putnam County native; he lives and bases his office in Ottawa. He has a strong connection to Allen County as well, as he previously served as a governor’s representative to the region and ran The Strategy Store, a data collection and survey group, at OSU-Lima.
Thompson agreed that Recker has been a big plus for the effort, but also said his hiring was not in response to local officials’ complaints. RGP had always planned on hiring a regional project manager, but couldn’t find the right candidate, until Recker came along.
“I know your service area. I live in the service area. I know the officials; my number’s in their speed dial. We’re just doing business on a routine business. The good news is that Northwest Ohio is doing well. There’s good activity in economic development,” Recker said, while talking about how he would evaluate the agency’s job so far.
Cutting a direct link to Columbus isn’t always a good thing, Wagner said.
“With John, we have a closer connection to RGP. But we’re more distant from Columbus,” Wagner said. “It’s a different structure and a different partnership. We’ve always been an independent organization, but we feel like there is more pressure put on us at the local level, especially when you look at how you structure projects. We feel more pressure as a local organization to come up with our leads, our own marketing.”
The way the state divided the new regions separated traditional local partnerships. For example, while Allen County belongs to the Toledo region, Auglaize County now belongs to the Dayton region. The surrounding counties haven’t let that prevent them from working together. They formed a West Central Ohio development group and continue to work as their own region, supporting each other’s projects and sites and attending trade shows, for example, together.
AT THE STATE LEVEL
At the state level, one of Kasich’s signature policy transformations is far from having a stable future. Two issues, whether the JobsOhio model — with public money funding a private organization — is constitutional, and how the organization will be funded long-term, are connected.
In September, the Ohio Supreme Court dismissed a case that was an attempt by state officials to determine whether JobsOhio passed muster with the Ohio Constitution. JobsOhio has faced multiple legal challenges from the left and right since its creation.
Along with whether the General Assembly can even by law create such an organization, the issue of how Kasich wants to fund it remains. The governor wants to transfer liquor operation dollars, currently used by the Commerce Department, to JobsOhio to finance bonds. Until those legal questions are settled, JobsOhio can’t access the bulk of its funding.
At the beginning of 2012, the state Controlling Board approved a contract between the state and JobsOhio to provide funding for two years, this year and next. In the case of the Northwest Ohio region, that meant the state provided $2.1 million to Regional Growth Partnership to manage that JobsOhio region. RGP and some regional partners had to match the funds, for a pot of about $4 million.
The governor’s office hasn’t explained what happens at the end of 2013 when the seed money runs out, and the liquor profit issue isn’t settled. At a recent meeting of development officials in the state, people asked where the money will come from, Wagner said.
“JobsOhio President John Minor said he has been assured by the governor that the funding will be there,” Wagner said.
That original outlay of cash to the JobsOhio region came from Ohio Third Frontier funds, which is not what voters intended the funding for. Ohio voters approved in 2002 and reapproved in 2010 the Third Frontier bond program, to create new technology-based products, companies, industries and jobs. The money is supposed to back those efforts, especially with help in commercializing new technology. The region, especially American Trim, has benefited greatly from the grants.
More recently, the state is sitting on its Third Frontier money. For example, the program ended its fiscal year June 30 having spent only about 20 percent of the $190 million available to invest, The (Cleveland) Plain Dealer reported in July.
Also, in October, Kasich’s handpicked man to create and lead JobsOhio, Mark Kvamme, resigned to start his own venture capital firm. Minor, who had served as a JobsOhio managing director, replaced him. Kvamme leaving was a blow, because Kasich wanted him to create a venture capital-like group with Ohio’s new development effort.
The latest JobsOhio effort, a marketing campaign funded with $1.4 million in public money, is also drawing criticism. The ads are running out of state, but also in Ohio, in major newspapers, on TV and online. The “Live.Work.Thrive.” campaign is designed to promote and celebrate the state’s economic successes, Minor said in a statement at the launch of the campaign. Others, including Cuyahoga County Executive Ed FitzGerald, have called the ads a waste of taxpayer money that seem more like a re-election effort by Kasich.
EVALUATING THE SYSTEM
Administratively, the new system got off to a “rough start,” Thompson said, as officials had to sort through new roles and expectations.
Today, those things are sorted out and the system is “running pretty smooth,” Thompson said. And, some interesting things are happening — new communication, for example. Officials from the six state regions talk regularly now, Thompson said, sharing ideas and best practices.
Operationally, Thompson said RGP can move quickly on projects, developing a state package of incentives within a week or two, much more quickly than a month or more it would sometimes take in the past.
“We’ve seen a dramatic impact when it comes to things like that,” Thompson said.
JobsOhio has received one consistent criticism, that it only reports one half of the equation: companies moving to or expanding in the state. Without the other half, it is impossible to effectively evaluate JobsOhio.
RGP existed before the state designated it the lead agency for the region; several years ago it moved from a public-private partnership to entirely private. Thompson said the change helped the agency’s efforts “tremendously.” Companies instantly were more comfortable dealing with a private agency, he said.
However, RGP is funded through investors, such as companies, banks and utilities. JobsOhio is using money of taxpayers who can’t fully evaluate a return on their investment.
When companies do agree to locate or expand in Ohio and do receive tax incentives, those packages do eventually show up through the Ohio Tax Credit Authority. But those are only the successful projects, and they are reported only after the project is finalized. JobsOhio officials have repeatedly said the details they keep private are “trade secrets” and that the lessened transparency helps the state work with companies.
A year in, not everything has been thought of.
As JobsOhio was ramping up, for example, RGP was finishing a two-year project revamping its website. So, it finished the work it started with the knowledge that it wasn’t going to represent the larger region.
It remains that way today.
While it is the online portal for the Northwest Ohio region, the RGP website doesn’t list Ford or Procter & Gamble or Whirlpool among major employers; doesn’t list Lima’s Foreign Trade Zone in a list of foreign trade zones; doesn’t include Bluffton University, OSU-Lima, Rhodes State, University of Northwestern Ohio or Ohio Northern in its higher education list; and doesn’t list Wagner’s group, Allen Economic Development Group, or any other economic group outside Toledo, on a list of development resources for the region.