Governor John Kasich’s divided the state of Ohio’s economic development work among two distinct groups that work together to encourage the development of jobs and capital investment. JobsOhio is a private sector economic development corporation that operates based upon a $100M plus annual subsidy gained from the sale of the state of Ohio’s liquor profits to JobsOhio. JobsOhio may have $300M in the bank during 2015. However, few realize the large job left to state government with the large role of the Ohio Development Services Agency. State government still has a large number of economic development programs they administer and the state plays a major role in the Ohio’s economic growth and success.
House Bill 64’s proposed budget for the Development Services Agency will ensure it remains focused on implementing the state and JobsOhio’s economic development strategy but its focus also includes implementing community development programs, energy programs, minority business programs and serves as the staff for Ohio’s Third Frontier Program- a nationally acclaimed technology based economic development program. From an economic development standpoint, the Ohio Development Services Agency administers a large number of programs critical to business growth, including:
- Alternative Fuel Transportation Program
- Alternative Stormwater Infrastructure Loan Program
- Business Incentive Grant Servicing
- Career Exploration Internship Program
- Contingency Grant Servicing
- Conversion Facilities Tax Exemption
- Collateral Enhancement Program (CEP)
- Economic Development Grant Servicing
- Energy Loan Fund
- Innovation Ohio Loan Fund Servicing
- Ohio Brownfield Fund
- Ohio Capital Access Program
- Ohio Coal Research and Development Program
- Ohio Community Reinvestment Area
- Ohio Incumbent Workforce Training Voucher Program
- Ohio Job Creation Tax Credit Servicing
- Ohio Motion Picture Tax Incentive
- Ohio Enterprise Bond Fund Servicing
- Ohio Enterprise Zone Program
- Ohio Historic Preservation Tax Credit Program
- Ohio Minority Business Bonding Program
- Ohio Minority Business Direct Loan Program
- Ohio New Markets Tax Credit Program
- Ohio Training Grant
- Ohio Vacant Facilities Fund
- Ohio Workforce Guarantee
- Regional 166 Direct Loan
- 166 Direct Loan Servicing
- Roadwork Development (629) Account Servicing
- Research and Development Investment Loan Fund Servicing
- Research and Development Investment Tax Credit
- Research and Development Sales Tax Exemption
- State Small Business Credit Initiative
- State Energy Program
- Targeted Investment Program
- Tax Increment Financing
- Technology Investment Tax Credit Program
- Volume Cap
- Qualified Energy Project Tax Exemption
Governor Kasich’s Development Services Agency proposed budget calls for fiscal year 2016 spending for all funds at $1.3B (6.1% increase from FY 2015) and the same amount for FY 2017 (1.2% increase from FY 2016). Development Services Agency proposed budget highlights includes some winners and losers.
The Development Services Agency will remain an important player in the implementation of tax credits, investment programs and monitor of local tax abatement programs. The Ohio Job Creation Tax Credit is an incentive based on jobs created and new payroll tax generated and is performance-based and, in 2013, 106 Job Creation Tax Credits, reflecting commitments to create 8,792 new jobs, retain 35,667 jobs, generate $366.7 million in new payroll and invest $885.5 million in fixed-assets were awarded.
The Governor’s proposed budget has big changes for the JCTC program; the amount of the JCTC will now be based on a percentage of new payroll created by employers, minus baseline payroll. Under current JCTC provisions the JCTC is based on the amount of new income tax revenue created, minus existing revenue. However, as the personal income tax has been reduced the amount of the credits has also been reduced. This budget provision means that employers will receive larger credits as they increase their payroll. Current agreements that are based on income tax revenue may request that the Tax Credit Authority convert to the new payroll based system. The Governor’s budget also proposes eliminating the refundable Job Retention Tax Credit (JRTC); the non-refundable JRTC remains in place.
The Ohio New Markets Tax Credit Program is another program administered by the Development Services Agency. It provides investors with state tax credits in exchange for delivering below-market rate investment options to Ohio businesses in low-income communities and works in tandem with the successful federal government program by the same name. In FY 2014, the program supported the investment of more than $12.8M into five different businesses in low-income communities across the state. Development Services Agency’s Collateral Enhancement Program provided 60 loans which generated $27,970,486 in private investment during 2013. The Capital Access Program provided 92 loans totaling $1,145,554 in state and federal funds, and the Targeted Investment Program provides financing to small businesses that demonstrate high growth potential over a relatively short period of time and have received first or second round equity investments.
The Ohio Historic Preservation Tax Credit is another important element of the state’s economic development strategy. Across 41 different communities in Ohio, the program is leveraging the private redevelopment of 272 buildings. Former schools, theaters, department stores, churches and industrial buildings are being transformed for new uses with modern amenities while retaining significant historic features and spaces. In 2014, the program accomplished: 80 Total Completed Projects that have led to $1,022,464,608 Total Project Investment, 85 Buildings rehabilitated, 2,428 Housing units created, and 21 Communities with completed projects through a competitive award of a tax credit equal to 25 percent of Qualified Rehabilitation Expenditures incurred as part of historic rehabilitation projects leveraged with the 20% Federal Historic Preservation Tax Credit.
The Ohio Development Services Agency is also a major player in energy related projects. The Energy Loan Fund provides low-interest financing for Ohio businesses and communities to improve energy efficiency and provide technical assistance to convert to renewable energy. In FY 2014, 16 projects were funded through the Energy Loan Fund. The Ohio Coal Development Office continues to fund a range of projects from applied research to deployment of full-scale demonstration projects that enhance the viability of Ohio coal while reducing environmental impact and maintaining affordability and $30M in projects were administered during FY 2013-14. New in FY 2014 is the Ohio Port Authority Loan Loss Reserve Program that provided credit enhancement to eligible Ohio Port Authorities as they originate loans for energy efficiency projects.
Ohio’s Development Services Agency has plenty going on, and the 2016-17 Kasich budget proposal insures its activity will continue.