Archive for David J. Robinson

Three Conclusions from Recent Ohio Campaign Finance Filings

Primary Elections for statewide offices in Ohio are won by two things: connection with ideological voters likely to vote in low turnout off year Primary Elections and money. It is too early to determine where the ideological Democrats and Republicans will align between the candidates but recent campaign finance reports submitted to the Ohio Secretary of State’s office indicate who is winning the money battle.

Monday, July 31, 2017 marked the filing deadline for semiannual reports illustrating fundraising activity since the state of the year. The semiannual reports, required to be filed for non-judicial candidates who did not file post-primary numbers in January, give the latest look at the candidates’ war chests with 10 months to go until the 2018 primaries. Three conclusions can be drawn from the recent Ohio campaign finance filings for those seeking a statewide office.

  1. Republicans seeking Ohio statewide offices hold a substantial lead over potential Democrat opponents. As the table above illustrates, Republicans while not holding any of the offices they are seeking hold a substantial fundraising lead against their Democratic counterparts. Three of the four Republicans seeking the Governor’s office have over $4M in bank while the leading Democrat seeking the office has just over $700,000. Now two of the leading Governor’s candidates are statewide elected officials themselves but the early money lead is substantial for Republican candidates seeking the Governor’s office as well as Secretary of State, Auditor, Treasurer and Attorney General. As an example, former Ohio Senate President and current State Representative Keith Faber has a 7 to 1 lead in fundraiser of over Democratic challenger, former Congressman Zach Space. State Auditor and Republican Attorney General candidate Dave Yost has a 2 to 1 fundraising lead over his Democratic opponent.
  2. Republican Primary Fundraising Leaders are Dewine, Husted, Renacci, LaRose and Sprague. Early results illustrate the strength of Ohio Attorney General Mike Dewine and Ohio Secretary of State Jon Husted. Both Husted and Dewine have over $4M in the bank with Dewine raising the most funds at $4.6 M cash on hand. Congressman Jim Renacci has raised a low amount of money but loaned himself $4M just in time for the campaign finance filing so he has a similar amount in the bank. Dewine, like Congressman Renacci, has the ability to self-finance what is likely going to be a Governor’s race costing well over $20M. Ohio Lt. Governor Mary Taylor is far behind the Husted and Dewine fundraising race with only $436,883. State Senator Frank LaRose is leading his Republican and fellow Ohio Secretary of State candidate State Representative Dorothy Pelanda by a 5 to 1 fundraising margin. Also, State Representative Robert Sprague of Findlay is leading his primary opponent Franklin County Auditor Clarence Mingo in fundraising and cash on hand by a 3 to 1 margin.
  3. Democratic Front Runner Betty Sutton Trailing in Fundraising. On paper, former Congresswoman Betty Sutton appears to be the most experienced candidate the Democrats have for their declared four candidates for Governor. However, Sutton is not leading the fundraising battle. Former Cincinnati area State Representative Connie Pillich is leading among the announced Democratic candidates for Governor with $720,525 in the bank. Sutton is behind not only Connie Pillich but also Democrats Senator Joe Schiavoni, and Dayton Mayor Nan Whaley who are also seeking the Governor’s job. Democratic Governor’s candidates fundraising efforts could be harmed by the questions about whether any of the current candidates will actually be the Democratic standard bearer. Former Ohio Attorney General and current Director Consumer Financial Protection in Washington DC Richard Cordray remains a focus for Democrats to return home and run for Governor. Even Cincinnati’s own Jerry Springer is rumored to be considering a run.

Mid-year campaign finance reports 10 months away from a Primary Election do not tell the tale of the Primary Election results but they do begin to create opportunities and obstacles for the winners and losers in the battle for fundraising dollars.

Ohio Charter School Policy Webinar

Join us for a webinar on Aug 24, 2017 at 9:00 AM EDT

The recent state of Ohio budget battle left many funding, regulatory and policy issues unsettled for Ohio charter school management companies and sponsors. The Montrose Group, LLC, a Columbus based lobbying firm and leader in K-12 education policy advocacy, will provide an hour long, free webinar to review how Ohio charter school’s program works and what the policy agenda will be in the coming months for charter school management companies and sponsors.

After registering, you will receive a confirmation email containing information about joining the webinar.

Ohio Charter Schools Have Aggressive Statehouse Agenda in Wake of ECOT Battle, State Budget Funding & Kasich Vetoes

Ohio K-12 education policy issues generally slow down after the adoption of the state operating budget but that is unlikely to be the case in 2018. Driven by the battle to close the largest on-line charter school in the state and a series of state operating budget veto’s by Governor John Kasich, K-12 education policy issues will remain front and center as the Ohio General Assembly returns to the Statehouse in September following the traditional summer recess.

First, the saga of ECOT. The Electronic Classroom of Tomorrow (ECOT) was formed in 2000 as the infancy of Ohio’s charter school movement was beginning. ECOT is an on-line charter school serving over 15,000 Ohio students. ECOT has run into a buzz saw at the Ohio Department of Education and charter school opponents when it struggled to document when all of their students were actually on-line for instructional purposes. Lawsuits were filed and will continue. ECOT is now facing an edict from the Ohio Department of Education that the funding that will be provided to them will be reduced. Though the school and state are fighting in court over the attendance documentation matter and the case is awaiting a decision by the Ohio Supreme Court, the Ohio Department of Education has decided to act by deducting about $2.5 million a month from its ongoing payments to ECOT based upon questionable attendance reports. In Ohio, charter schools, unlike traditional public schools, are funded a set amount of state funding based upon the students attending the charter schools. The ECOT battle continues and it is likely to end up in the Ohio General Assembly’s lap most likely following a potential Ohio Supreme Court decision on the attendance issues.

Second, charter school funding remains far behind traditional public schools in the state and the issue will not be dropped by charter schools who teach over 100,000 Ohio students. Charter or community schools in Ohio are public school districts that are privately managed that operate under state regulation and funded with a set state allocation that diverts $6000 per student who chooses not to attend their local school district but attends a public charter school. Facilities based charter schools also receive a 25% allocation of the state’s billion dollar line item for Targeted Assistance funding designed to support low wealth communities, and all charter schools receive special education funding for students with those needs. Nearly all fifty states operate charter schools as an alternative to struggling traditional public schools. It is a little known fact that traditional public school boards are the prime authorizers of charter schools across the nation. In Ohio, charter schools can be facilities based which are limited to being located in one of just under 40 struggling, primarily urban school district or Internet based which can serve students from anywhere in the state. All Ohio charter schools must be authorized by a sponsor and the performance of charter school sponsors has come under heavy scrutiny in recent years. As charter schools generally do not have access to state property tax funds and only receive 25% of the state’s Targeted Assistance funding, Ohio’s charter schools are drastically underfunded compared to their urban counterparts. The recently passed state of Ohio operating budget continued the state’s underfunding of Ohio’s charter schools and this contentious issue is unlikely to go away.

Third, Governor Kasich’s recent veto of several charter school provisions will likely stir additional Statehouse Debate. Of the 47 Kasich state operating budget vetoes, several impact charter schools. Kasich vetoed a provision in HB 49 that would exempt from state assessment and graduation requirements all students at chartered nonpublic schools in which at least 75 percent of students are children with disabilities who receive special education and related services. The Governor also vetoed an HB 49 provision requiring the Department of Education to increase from 20 percent to 60 percent the weight given to the “Progress” category score when computing a total score for the “Academic Performance” component of the Department of Education’s community school sponsor evaluation system. Additionally, in certain cases the provision would prohibit the Department of Education from rating a sponsor “Ineffective” if it scores a “zero” in the system’s Compliance or Quality Practices components. Another Kasich veto impacted a provision that permits Educational Service Centers (ESC) rated “Effective” to sponsor a community school anywhere in the state. Currently, most ESCs can only sponsor schools in their own and contiguous counties, unless they obtain permission from the Department of Education and sign a contract to do so. In addition, Kasich vetoed a provision of HB 49 that would allow a community school sponsor that had its sponsorship authority revoked due to the 2015-2016 sponsorship evaluations due to poor performance to renew its sponsorship for the 2017-2018 school year if the sponsor received at least a “3” or “4” out of “4,” in the Academic component and “zeros” for the Quality Practices and Compliance components of the sponsor evaluation. Governor Kasich also vetoed provisions eliminating the four-year program for new teachers that they complete in order to prepare for a professional educator license issued by the State Board of Education, and would allow Ohio’s public and private schools to choose between administering state achievement assessments in either paper or online formats. The Ohio General Assembly will return in September and overriding a number of the Governor’s vetoes on HB 49 is on the agenda. However, even if these vetoes are not overridden, debate in the Statehouse is likely to continue in the coming months.

$280 M in ODOT TRAC Requests Creates Substantial Competition and Interest in P3s and EB-5 Transportation Funding

Funding for “major new capacity projects” with the Ohio Department of Transportation (ODOT) are awarded through the Transportation Advisory Council (TRAC). Applications for TRAC funding were due on July 31, 2017, and 13 projects filed for a total of $280 M. The Ohio Transportation Budget, House Bill 26, recently enacted allocated $59.5 M in funding for Major New Program funding per year in the FY 2018-FY 2019 biennium, considerably less than the amount spent in this area during FY 2017. The high demand for state transportation funding will create substantial competition through the TRAC process as well as interest in exploring alternative P3 funding options.

 

While the number of TRAC applicants is down the loss of the Ohio Turnpike proceeds for major new highway construction projects has dropped the funding allocation for TRAC projects by two-thirds the previous total (as illustrated by the chart below). In fact, the Cuyahoga County I-90 bridge project awarded TRAC funding in 2016 cost more than all the current TRAC applications put together.

First, communities hoping to gain funding for their transportation project through the ODOT TRAC process need to fully implement a project financing program. Successful project financing strategies will involve advocating aggressively for TRAC funding, increased ODOT support for the TRAC budget, forming Transportation Improvement Districts (TIDs) and alternative funding sources from private infrastructure financing through Public-Private-Partnerships (P3s) and EB-5 funds.

Highway transportation project financing needs to start with efforts to gain TRAC funding. TRAC funds Major New Capacity projects greater than $12 million which increase the capacity of a transportation facility or reduce congestion, impact economic development, have local financing and a strong overall financing plan. All projects that cost ODOT greater than $12 million, request Major New funding, and add capacity to a transportation facility must come before the TRAC. This definition includes all new interchanges proposed for economic development or local access, any significant interchange modifications, bypasses, general purpose lane additions, intermodal facilities, major transit facilities, or Intelligent Transportation Systems (ITS). TRAC put out specific limiting criteria for this round of funding focused on projects with non-ODOT funding commitments in the amount of 30% or greater of the total project cost and:

  • Projects that are an existing TRAC funded project (Tier I, II or III) and additional funds are needed to advance the project to the next stage of development; or
  • new projects that demonstrates significant impact to jobs, regional economic impact and has significant non-ODOT funding commitments.

ODOT Program Management Staff reviews the applications submitted and scores applications in accordance with TRAC policy to provide a draft project score based upon four factors- transportation, economic, local investment and project financing. Draft scores are shared with project sponsors to determine if any additional information is needed. Once a final score has been assigned, ODOT Program Management Staff provides the information to TRAC for their evaluation and consideration. Also, the TRAC will hold public hearings around the state in September and October, providing project sponsors with the opportunity to convey information about their respective projects that may not be captured as part of the on-line application process. After the public hearing process, TRAC will develop a DRAFT funding list which is published for public comment. Once public comment has been received and reviewed, TRAC will move to adopt a FINAL Major New Construction Program Funding List. From application submission to adoption of a FINAL Major New Construction Program Funding List is approximately six months to allow for sufficient time for review, questions, and public comment.

The fact is TRAC is not allocated the funding it needs to support all the applications filed. In fact, the TRAC applications nearly total the entire highway construction budget for ODOT. TRAC funding could be support by additional funding from the Ohio Turnpike Commission. ODOT is planning on $250 million in Turnpike infrastructure bond funding in the Major New projects area in FY 2019. Additionally, ODOT has pursued the financing of large Major New projects through P3 agreements in recent years. This has led to the private financing and building of the Portsmouth Bypass, estimated to cost $1.2 billion. This financial arrangement allows the state to make payments over a negotiated period of time, reducing the amount of upfront outlays needed to pay for these types of projects. P3s are driven by global private infrastructure companies that fund highway construction projects. The Portsmouth Bypass proves they will work in Ohio and P3s are an option for major highway construction projects.

Forming a Transportation Improvement District (TID) could also provide additional major highway financing options. Multi-local governmental entity reaching agreement on funding for a specific transportation project. TIDs fund improvements to streets, highways, parking facilities, freight rail tracks and necessarily related freight rail facilities, or other transportation projects that are newly constructed or improved as well as the administrative, storage, and other buildings or properties, and facilities the district needed for the operation of the TID. The recently passed ODOT budget has funding for TID projects but it is capped at $250,000 per project. However, TIDs ability to develop local financing options through a multi-jurisdictional revenue model offer substantial funding sources.

Finally, major transportation projects have been funded by EB-5 funds in Pennsylvania that may provide a new model for transportation funding in the Buckeye state as well. Entrepreneurs (and their spouses and unmarried children under 21) are eligible to apply for a green card (permanent residence) if they: make the necessary investment in a commercial enterprise in the United States; and plan to create or preserve 10 permanent full-time jobs for qualified U.S. workers and transportation projects have qualified for EB-5 investments as construction jobs qualify as job creation. A major interstate project in Pennsylvania was funded through the use of EB-5 funds and may provide a model for major highway financing for Ohio projects searching for funds.

JobsOhio Helps Drive Down the Cost of Brownfield Redevelopment

Infill and urban development is becoming increasingly popular as the Millennial generation choses to live and work in walkable, new urbanist communities. Despite that trend, a greenfield site is much easier to sell and less costly to develop than a brownfield-infill site. A greenfield site with all the infrastructure in place may sell for $45,000 an acre while a competing brownfield site may need to sell for twice that much to cover the considerable costs of environmental assessment and remediation and demolition. In many instances a public-sector partner is needed to help drive down the costs of the brownfield site to make it compatible cost-wise with a greenfield site.

JobsOhio, the private sector economic development corporation for the state of Ohio, has helped many companies, developers, and public agencies develop brownfield sites through its JobsOhio Revitalization Loan and Grant Program, and its JobsOhio Revitalization Phase II Grant Program. From June 2016 through May 2017, JobsOhio invested $19,200,000 of loan proceeds, $23,107,858 in grants, and $1,230,928 in Phase II grants into 56 projects that leveraged $239,956,277 of private capital investment. Because of these investments 2,194 jobs will be created with a cumulative payroll of $105,487,317 and the retention of 10,344 jobs.

JobsOhio Revitalization Loan and Grant Program projects must have an end user in mind that is willing to commit to the creation of jobs and payroll, the retention of jobs and payroll and capital investment. Loans range anywhere between $500,000 and $5,000,000 and grants can be up to $1,000,000. The Phase II environmental assessment program is a grant program that can cover some of the costs of the environmental assessment.

Through the JobsOhio Revitalization Loan and Grant Program companies, developers and public agencies can turn former productive facilities into job generating, revenue generating and tax generating operations. Through this program JobsOhio is helping to solve one of the main issues and challenges with redeveloping brownfield sites, the considerable cost.

AT&T Creating $200 Million VC Fund

AT&T recently announced that it has formed a partnership with venture capital firm Coral Group to invest up to $200 million in a new venture fund. The fund will seek to identify technology start-ups focused on connected services and platforms and to more quickly develop solutions for AT&T and other carriers.

AT&T’s venture capital fund will provide investments into technologies that are running on the Open Network Automation Platform, an operating system for software-defined networks. ONAP is rapidly becoming the standard for virtualized networks and is the result of a platform created in AT&T Labs and an open source existing effort.

AT&T and Coral Group will work together to identify other companies to potentially invest in the fund and to share connected services and platforms solutions developed through their partnerships. Coral Group, based in Minneapolis and the fifth largest VC firm in Minnesota, will run the fund.

This new $200 million fund represents AT&T’s latest innovation program and builds on the company’s current AT&T Labs and Foundry innovation centers.  Launched in 2011, the Foundry innovation centers work closely with the start-up and open source communities to develop solutions for a host of technology-driven businesses and industries, including automotive, healthcare, and sensors. AT&T’s centers include the IoT Foundry in Plano, Texas; the Drive Studio in Atlanta; and, the Healthcare Foundry in Houston.

JobsOhio Targets Funding of Middle-Market Companies

Growing and prosperous companies in the middle market, defined as those companies with annual revenue between $100 million and $1 billion, face numerous challenges as they decide to expand their business and market. The two most often sited challenges to growth by these companies is:

  1. Financing their expansions
  2. Recruiting and retaining talent

JobsOhio, the private sector economic development corporation for the state of Ohio, has helped many middle market companies solve the first challenge, and grow in Ohio through its JobsOhio Growth Fund Loan. From June 2016 through May 2017, JobsOhio invested $37,700,000 of loan proceeds into 12 projects that leveraged $453,551,994 of private capital investment. Because of these investments 1,632 jobs will be created with a cumulative payroll of $59,204,836 and the retention of 814 jobs. The average loan size was $3,140,000.

Through the JobsOhio Growth Fund Loan Program, middle market companies can utilize other sources of capital, from both internal (cash) and external (banks) sources to generate more jobs and capital investment than would otherwise be possible without funding from JobsOhio. Through this program JobsOhio is helping to solve one of the main issues that middle market companies have experienced since the Great Recession, access to capital.