Delay in Clean Ohio Funding Doesn't Appear Connected to JobsOhio Lawsuit

The Kasich Administration has decided that it wants to put the legal challenges to JobsOhio to rest once and for all. Through legal maneuvering the Administration has put the ultimate question- is JobsOhio constitutional- before the Ohio Supreme Court.  At issue is whether transfer of liquor profits to JobsOhio violates the Ohio Constitutional prohibition on providing credit/funding to a private corporation.

As discussed in the Columbus Dispatch, David Goodman, Director of the Department of Commerce, has refused to sign the Franchise and Transfer Agreement which would transfer Ohio's liquor distribution operations to JobsOhio.  Director Goodman's refusal was in reality a legal maneuver to allow the Ohio Supreme Court to hear the legal challenges to JobsOhio.

Though I personally question the validity of these constitutional challenges, I believe my oath of office to uphold the Ohio Constitution precludes me from executing the Franchise and Transfer Agreement until the Ohio Supreme Court is given an opportunity to address the merits of these claims,” Goodman wrote in a letter this week to Mark Kvamme, interim president and chief investment officer for JobsOhio.

Implications for Brownfield Redevelopment in Ohio

The Kasich Administration has made clear that their ultimate goal is for JobsOhio to take over most of the economic development activities from the former Ohio Department of Development.  Those responsibilities would include control over brownfield funding and redevelopment.

JobsOhio officials and the Kasich Administration have hinted that the future of Ohio brownfield funding will be much different than the $40 million per year that has been handed out as grants over the last decade through the Clean Ohio program.  The most controversial aspect of changes to funding is the Administration statements that brownfield redevelopment funding will be more heavily geared towards loans instead of grants.

While it is clear that the legal fight over the constitutionality of JobsOhio has delayed any announcement regarding Ohio's future brownfield programs.  The Kasich Administration's midterm budget (H.B. 487) set aside $15 million in funding.  The availability of this funding does not appear to be in any tied to the legal fight over JobsOhio.

Here is the language from H.B. 487 regarding the $15 million in funding:

SECTION 301.21. The items set forth in this section are hereby appropriated out of any moneys in the state treasury to the credit of the Clean Ohio Revitalization Fund (Fund 7003) that are not otherwise appropriated.


C19500 Clean Ohio Revitalization $ 12,000,000

C19501 Clean Ohio Assistance $ 3,000,000

Total Development Services Agency $ 15,000,000

TOTAL Clean Ohio Revitalization Fund $ 15,000,000

The foregoing appropriation items C19500, Clean Ohio Revitalization, and C19501, Clean Ohio Assistance, shall be used in accordance with sections 122.65 to 122.658 of the Revised Code, and are subject to all provisions of Am. Sub. H.B. 482 of the 129th General Assembly that are generally applicable to such appropriations.

The budget language makes clear that the current Clean Ohio Revitalization Fund (CORF) and Clean Ohio Assistance Fund (COAF) will be used to administer the $15 million in funding.  The language also seems to suggest that the current process for awarding grants under COAF and CORF will be utilized.

While H.B. 487 passed in May, the Administration has yet to announce when the $15 million in funding will be made available. The need for this funding is great.  New brownfield projects are not entering the pipeline due to the lack of assessment money. 

A Phase II environmental assessment answers the biggest question with regard to a property- how much will it cost to clean up and is redevelopment feasible.  Unless a property is just perfect for redevelopment, most companies and re-developers are unwilling to pay for the cost of a Phase II assessment out of their own pocket. 

COAF funding for Phase II environmental assessment ended last December.   Since that time no new funding opportunities at the State level have been presented.

While the shape of the State's brownfield funding may be uncertain until the JobsOhio fight is resolved, the $3 million in COAF funds could be made available immediately so we do not continue to lose momentum on brownfield redevelopment in the State.

Brownfield Redevelopment: Clean Ohio's New Grant Option

On June 4, 2008, the Clean Ohio Council approved two new grant rounds (Rounds 5 and 6) to encourage brownfield redevelopment through its Clean Ohio Revitalization Fund (CORF).  As noted in a recent stakeholder report on the Clean Ohio Program, the CORF is "seen as a significant national model that other states strive to replicate."  If you are not familiar with the program, I urge you to take the time to learn about the benefits. 

While the main benefit of the program is that it allows participants to offset clean up costs associated with industrial and commercial properties, there are also significant tax and legal advantages to participation. Attached is a client note that I prepared that provides more detail regarding the program. 

The most significant change made to the program is the creation of a new grant option called the "development ready track."  Now applicants have two options, they can elect to participate in the "known end use track" or the "development ready track."  The major difference is that under the "development ready track" an applicant for grant funds does not need to identify an end user that has committed to the property post clean up and development. 

The "development ready track" favors properties that have potential to attract future economic development.  For example, properties that have existing sewer and water service or are in close proximity to transportation will receive higher scores using the new scoring methodology developed for this track. 

Under the "development ready track" the maximum amount an applicant can request is $2 million instead of the $3 million potentially available under the "known end use track."   You may not use any of the grant funds for acquisition of the property, whereas the "known end use track" allows up to 33% of your total grant request to go toward acquisition. 

Even with these differences, the "development ready track" presents a new opportunity to communities, businesses and developers.  For communities, it provides an opportunity to drive economic growth toward priority development areas.   For developers, it increases the number of properties that could potentially be viable projects.

The new grant application forms can be obtained from the Ohio Department of Development's web page.