Report: Nearly half of state's companies didn't comply with terms of incentives

COLUMBUS — A new report from the Ohio Attorney General's Office says when it comes to abiding by the terms of economic development incentives awarded by the state, only about half of the recipients live up to expectations.

The report is part of a measure passed by the Ohio General Assembly in 2008 to track the 2,990 awards administered by the Ohio Department of Development. The measure, however, doesn't require compliance reviews every year, just for those with performance periods ending in 2010.

The review found of the 420 awards subject to the compliance review, 220 were in compliance — a rate of 52.4 percent.

“In these challenging economic times, it is critical that Ohioans know whether companies receiving public money or tax credits from the Ohio Department of Development are delivering on their promises,” Attorney General Mike DeWine said. “I am pleased to provide this analysis of our findings to provide a benchmark for performance and to ensure transparency for Ohio taxpayers.”

The analysis examines the state's grants, tax credits, loans and workforce guarantee awards. With 18 closeout awards in Allen and the surrounding counties in 2010, the report found a 56 percent compliance rate, the fourth-highest among the state's 12 regions.

“It is an improvement over last year. It is not something we deem good enough,” said Katie Sabatino, a spokeswoman for the Ohio Department of Development. “We are taking action on all the noncompliance issues.”

A number of the noncompliance issues stemmed from businesses failing to submit the required closeout report. Such was the case with the $450,000 roadwork development grant awarded to the city of Lima for the Greater Ohio Ethanol roadwork expansion project.

In cases like that, efforts will be taken to obtain the report, but no punitive action is taken since there has been a benefit from jobs created, Sabatino said.

“I would say that from the projects and the awards that were given out, the state received significant benefit in job creation,” Sabatino said. “For instance, if a company doesn't send in an ending report, that doesn't mean the state didn't receive the benefit.”

In other instances, companies such as AAP St. Marys in Auglaize County that received a $2.5 million direct loan but failed to create or retain the promised number of jobs, no action will be taken by the state because the company paid off the loan early.

David Zak, chief of the business services division at the Ohio Department of Development, said the department recognizes the challenges the economic downturn and slow recovery is having on businesses trying to meet incentive requirements.

“We definitely take it into account,” he said. “We'll work to maybe adjust the term or the percentage that way they can stay complaint.”

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