Ohio Environmental Law Blog : Ohio Environmental Lawyer & Attorney : Joseph Koncelik : Frantz Ward Law Firm : Environmental Regulation, Land Use, Compliance : Cleveland, Ohio

Yesterday, the Ohio Department of Develop put the following notice on the Clean Ohio Fund webpage:

NOTICE

Effective immediately: The Clean Ohio Assistance Fund is no longer accepting applications. If you have a project and would like to discuss other funding opportunities please contact us.

Back in October, Governor Kasich announced that he was redirecting the funding for the Clean Ohio program to his JobsOhio economic development program.  Funding would remain for one additional round of the Clean Ohio Revitalization Fund which provides up to $3 million in clean up grants for brownfield redevelopment.. 

In addition, funding for the Clean Ohio Assistance Fund (COAF) was thought to last through June 2012.  However when the announcement was made that funding was shifted to JobsOhio it cast doubt on the future of the Clean Ohio program.  As a result, the Department of Development was flooded with COAF applications in December.  No one wanted to risk missing what could the last of the Clean Ohio funding. 

Due to the rush of applications, all available funding was already allocated in December for the COAF program.  Several projects that were also seeking funding were told they were too late.

With the last round of CORF this month and the announcement ODOD is no longer accepting applications for the COAF program, the Clean Ohio program in Ohio is effectively closed.  This announcement is disappointing since the program was one of the most successful in the country in spurring revitalization of brownfield properties. 

In November, the Governor's spokesperson indicated the Administration was looking to find new revenue to continue the program.  No such funding has been identified to date.  The prospects for finding new revenue must be very uncertain because the Department is not even allowing developers to submit applications to form a line when funding does come available. 

Signs point that the Country and State's economy may slowly be turning the corner. If that is indeed the case, It would be nice to have the tools in place to direct new development to abandoned sites and contaminated properties which populate Ohio's urban core.

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Current Debate Regarding the Future of the Clean Ohio Program

The Kasich Administration has announced that it is re-evaluating the Clean Ohio program.  The next round of the Clean Ohio Revitalization Program (Round 12) will be the last.  Also, funding under the Clean Ohio Assistance Fund, which pays for sampling on brownfield properties, is likely to run out as soon as February 2012.

It appears the Administration is discussing other funding sources that may allow the program to continue.  (See Clean Ohio Funding End 2012....What Next?)  Last week, an article in Crain's Cleveland discussed the potential end of the program:

Ohio Department of Development spokeswoman Katie Sabatino said the state considers these successful programs, but is evaluating its options for assisting with the redevelopment of brownfield sites. Of the Clean Ohio Fund in particular, she said, “The Ohio Department of Development is working with the (Kasich) administration to chart a path to assist with brownfield issues....."

“It was supposed to end June 2014, but word out of Columbus is it will end sooner,” said one observer who asked not to be identified because he's shepherding brownfield projects still under review. “I'm very concerned about them pulling the rug out from under us.”

 In the article, it states that the Administration may be interested in moving towards loans instead of grants. 

In addition, Mark Kvamme, chief investment officer of JobsOhio, is said to prefer loans over grants, according to a half-dozen economic development professionals who work with the state's programs. He was not available last week for comment.

A similar change is under way at the Third Frontier Commission, which runs loan and grant programs for technology companies. Crain's reported in June that Mr. Kvamme was behind recommendations the commission is adopting to move to loans from grants.

Advocates of the change say loans not only stretch the reach of public funds, but also cause applicants to be more discerning about what they propose when they're on the hook to pay the money back.

Loans versus Grants

The problem with loans is that the require the developer or company considering a brownfield to pay for the entire cost of investigation or clean up.  Total clean up costs can range from $500,000 to $5 million or more.  This is the cost just to clean up the land, not the overall development costs. 

If developers and companies are required to utilize their own funding to pay for all the clean up and investigation costs, most will look to greenfield sites instead of re-utilizing urban properties that have pre-existing contamination.  Heavy industrial properties will simply sit idle unless the value of their location is so great it outweighs the clean up costs.  This is an unlikely scenario for the vast majority of brownfield sites.

Ohio already has a brownfield loan program that almost no one is currently utilizing- Ohio Water Development Authority's Brownfield Loan Program.  Under the OWDA program you can obtain a low interest loan for sampling (up to $500,000) or clean up ($5 million).  Despite the fact more sites are eligible for OWDA's program than Clean Ohio, OWDA has had trouble attracting interest in the program.

Under the grant program, applicants still have "skin in the game."  Under the Clean Ohio program, applicants are required to provide a 25% match.  Paying 1/4 of the clean up costs makes many for brownfield sites attractive to development. 

Future of Clean Ohio

Funding had been available for Clean Ohio to continue until July 2013.  However, as discussed in the Crain's Article funding has been shifted to other priorities. 

Word is the Kasich Administration is looking for a funding source to continue a brownfield redevelopment program.  The Administration may also be overhauling the program. Let's hope that what ever emerges provides a real opportunity for our urban core to attract development.

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Last Friday, I attended the Clean Ohio Council meeting with my client Miceli Dairy Products, Inc. (Miceli Dairy).  I had worked with Miceli Dairy over the last couple years on evaluating five parcels of property adjacent to their current facility on which the Dairy would like to expand its operations. 

The Dairy submitted an application to receive approximately $3 million in grant funds to assist with demolition, clean up and installation of infrastructure on the brownfield parcels.  The Dairy's application was competing with fourteen (14) other brownfield redevelopment projects from around the State. 

The fourteen projects were in competition for the available funding.  Each project is scored using various factors such as how much contamination is being cleaned up, number of jobs, etc.  In the end, the Miceli application was the number one project in the State and the Council voted to fund the application.  (Click here for press release from the Clean Ohio Council)

Miceli Dairy's expansion is a great story. Did you know that Miceli is the largest ricotta cheese manufacturer in the U.S.?  The Company has a wonderful Cleveland history that is best described in the Plain Dealer story profiling the Dairy's expansion plans. 

However, without the Clean Ohio program the expansion may never happened in the City of Cleveland.

Why the Project Wouldn't Have Worked without Clean Ohio

During the Clean Ohio Council meeting several comments were made the the Miceli project was one of the most complicated to every go through the program.  Here were some of the issues that complicated use of the brownfield parcels for expansion:

• Two businesses operated on the parcels- a drum reclamation facility and plating operation;
• Both businesses were the subject of environmental enforcement actions by the Ohio Attorney General's Office;
• No environmental sampling has been performed prior to the project so it was impossible to know the levels of contamination present;
• Liens were on the properties that exceeded $1 million dollars;
• Hazardous waste units and drums were located on the parcels that needed to be cleaned and that work is ineligible for Clean Ohio funding;
• Buildings in poor condition were located on site that made it difficult to obtain samples; and
• Large debris piles were across the site.

All of these issues had to be addressed for the project to move forward.  It is clear that without funding through Clean Ohio the costs of sampling and clean up alone would have prevented expansion onto these parcels.  Without funding it was quite possible Miceli may have been forced to look outside Cleveland to expand its operations.

(Map:  From Cleveland Plain Dealer Article cited above)

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One of Governor Kasich's top priorities is to restructure the Ohio Department of Development shifting some of its core functions to the private sector. The General Assembly passed the JohsOhio Bill which launched an evaluation of the current Department.

The bill allowed for the creation of a non-profit corporation which would assume some of the duties and responsibilities of the existing Department. The bill also required the Director of the Ohio Department of Development to evaluate all powers, functions, and duties of the existing Department and submit a report to the General Assembly that includes recommendations in the following areas:

• Improve the functions and efficiency of the Department
• Transfer specified powers, functions, and duties to other existing state agencies or to JobsOhio (private sector entity);
• Eliminate specified powers, functions, or duties of the Department.

On August 18^th, the Administration released its report with the results of its review and proposal for restructuring the Ohio Department of Development to the Ohio General Assembly. In the report, the Administration makes the recommendation to transfer core duties to the non-profit corporation. The Department will also undergo a restructuring relative to those duties and responsibilities that remain with the Department.

JobsOhio Duties

The following functions will be moved to the non-profit corporation:

·        Office of Business Development- responsible for jobs retention, expansion and location. This includes incentive packages to attract or retain companies.

·        Office of Grants and Tax Incentives- responsible for grants and tax incentives associated with business attraction and development.

·        Office of Loans and Services- loan origination and servicing

·        Ohio Tourism- marketing of the tourism in the State

Ohio Development Services Agency

The old Ohio Department of Development will be renamed the Ohio Development Services Agency. It will have three key divisions that will retain a large portion of the remaining functions of the current Department.  The new organization of the Agency will consist of three divisions:

·        Business Services

·        Community Services

·        Operations

Impact on Environmental Grant Programs (Clean Ohio)

The Clean Ohio and Jobs Ready Site programs are the two largest grant programs available for redevelopment of brownfields. These programs will remain government functions and be housed under the Community Services Division of the newly formed Ohio Development Services Agency.

The report includes additional recommendations from stakeholders and staff about changes to the urban development functions including the Clean Ohio program. One possibility apparently not seriously discussed was moving these functions over to Ohio EPA’s brownfield program.  Other improvements suggested including reducing public notice periods and expediting grant administration.

It appears that the Clean Ohio program will largely be untouched by the major transformation at the Ohio Department of Development. The only possibility could be staff reductions. The report contains the following chart showing significant staff reductions. However, the report notes that most of those reductions will be through attrition (i.e. as people leave they won’t be replaced). 

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The Ohio Department of Development working with the Ohio Water Development Authority (OWDA) has released their policies for use of the revamped low interest brownfield loan program.  Under the program, private companies (among others) can get a low interest loan up to $500,000 for performing sampling (assessment) and up to $5 million for clean up.

As discussed in my prior post announcing changes to the loan program, the single biggest change is that the loan program now allows companies that own contaminated property and caused or contributed to the contamination to qualify for the program.  Any company that caused or contributed to contamination is not directly eligible for Clean Ohio funding.

Here are some key requirements that are spelled out in the new policies governing the program.

• Clean Up Loans- Must already have done all the assessment and have designed a remedy to qualify for a clean up loan. 
• Redevelopment Requirement?-  The ODOD website says the project must involve redevelopment for the property to be qualify for the loan.  Therefore, it would appear an existing company with no expansion plans cannot qualify for the loan if they simply want to address historical contamination issues on property they own.  As discussed below, the actual wording of the policy may provide greater flexibility.
• Eligible Costs- assessment, demolition, remediation and consultant costs
• Payment Term- below market interest rate over a 10 year term

Biggest Disappointment

The most disappointing aspect of the policies governing the new loan program is the requirement for redevelopment of the property.   The loan program will have a very limited appeal to only existing companies responsible for historical contamination wishing to expand. 

However, the actual wording of the policy says projects are eligible "where expansion or redevelopment is complicated by known or potential releases of hazardous substances.”  This is far more open ended that requiring a demonstration actual expansion or redevelopment will occur.

Hopefully, ODOD and OWDA will allow a more expansive interpretation of this language. Why not give the benefit of the low interest loan to companies who simply want to address historical contamination on their property?  Certainly the State could justify rewarding these "volunteers" because the policy explicitly make clear any company that is under a legal mandate (order or permit requirement) to clean their property is ineligible. 

 Policy 1.03 CERCLA Limitation for Eligible Borrowers:

Policy 1.03- Borrowers must be exempt from Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), as amended CERCLA liability for hazardous substance cleanup applications.

I don't know what "exempt from CERCLA" really means.  Is this a reference to Bona Fide Purchaser defense?  There are very few exemptions from CERCLA for companies responsible for existing contamination.  Policy 1.03 could use further clarification.

Will There Be Interest?

Whle the greater flexibility provided by the new policies make the program more attractive, it will be interesting to see whether it garners any interest.  Even with the changes, the program will appeal to a small subset of companies looking to address historical contamination.  Any other party that has no responsibliity for contamination has a far better option under the Clean Ohio program.

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On April 5th, Ohio EPA Director Nally testified on the Agency's proposed budget before the House Finance and Appropriations – Agriculture and Natural Resources Subcommittee.  According to the Director's Testimony, Ohio EPA is not asking for any fee increases.  Ohio EPA's proposed budget calls for a reduction of 11.8% for fiscal year 2012 and 13.8% for fiscal year 2013.  To meet these budget reductions, the Agency is planning on reducing 53 current positions through attrition.

The Director also mentioned the consolidation of the Division of Hazardous Waste Management  (DHWM) into the Division of Solid & Infectious Waste (DSIWM) along with other components in the Division of Emergency Remedial Response (DERR).  DHWM's permitting and inspection activities will be in DSIWM and clean up will be with DERR.

In addition to budget reductions and the consolidation of DHWM, Director Nally also hinted at other initiatives the Agency is planning to undertake in the near future. 

New Ohio EPA Initiatives

“In-lieu Fee” Program –  The Director signaled potential significant change on wetland and stream mitigation requirements.  Typically the 404/401 permit applicant must find appropriate mitigation projects and include those proposals in their permit application.  With an “in-lieu fee" program, the applicant is relieved of the burden of finding a mitigation project .  Rather, the applicant pays a few based on the acreage of wetlands or feet of stream impacted by the project.  The Director has recently announced a "listening session" to hear from the regulated community and others regarding the proposal.

Permitting efficiencies/Permitting Backlog – Most every Ohio EPA Director faces the pressure to get permits out the door faster.  Director Nally is no different.  Upon taking office, he announced this would be a top priority of his administration.  His testimony suggests he will be re-looking at permit-by-rule and general permits to streamline permit approvals.  While the Agency has utilized these tools in the past, business complain that the terms and requirements are too onerous.  Modifying air permitting requirements can present unforeseen issues, as the business community learned after the Courts stepped in blocking major changes adopted in Senate Bill 265.

IT initiatives and Compliance Assistance –  Ohio EPA has moved toward allowing more reports and permitting to be performed using the web or through special electronic systems.  These systems provide flexibility, but businesses complain they can be difficult to use.  The Director announced training sessions to assist businesses with understanding how to use these systems better. 

Brownfields redevelopment – The Director testimony contained a vague reference to a new initiative with brownfield redevelopment.  The current structure has the Ohio Dept. of Development passing out the grant money and Ohio EPA monitoring the clean up.  It will be interesting to watch whether Ohio EPA announces new initiatives in this area to accelerate re-use of  brownfields.

Marcellus and Utica Shale – ODNR has the lead with regard to permitting for gas exploration.  However, U.S. EPA has indicated it will be closely watching and may exercise enforcement authority at sites where drilling has gone wrong or resulted in polluted groundwater.  The Director intends to support ODNR's efforts in light of U.S. EPA's scrutiny.

Expedited Settlement Program (ESP) -- No details were given regarding this new concept to accelerate resolution of enforcement actions.  Here was the Director's testimony...Given my priority of compliance first, I am initiating modifications to the current enforcement process to help drive quicker compliance.  Historically, the existing enforcement options have been time consuming and resource intensive for both the agency and the regulated entity. By developing new steps to be used early in the enforcement process, I hope to resolve uncomplicated cases
expeditiously, putting a facility on notice of a problem, and quickly achieving compliance. 

Perhaps Ohio EPA intends to make modifications at the Notice of Violation (NOV) stage.  The Agency could improve tracking of NOVs and notify businesses more quickly when issues have been resolved.

The Director's testimony did provide a good insight into his early priorities.  Details were not provided so we will need to watch closely as they are released.

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In 2000, Ohio originally voted to approve the Clean Ohio Fund as a $400 million dollar bond program. In 2008, the Clean Ohio Fund was reauthorized through a ballot initiative known as Issue 2. The ballot initiative was overwhelmingly approved in all 88 counties which extended the Fund with another $400 million dollars.

Clean Ohio is probably the most successful brownfield redevelopment program in the Country.  Approximately $400 million of the $800 million in funding went to brownfield projects in the last twelve years.  Here is an outdated chart from the Clean Ohio Fund Report which shows the number of projects and dollars used for brownfield revitalization just in the first four rounds of the program. 

Since the first four rounds that State has gone to two rounds per year.  We are now up to Round number 10. 

The Clean Ohio Fund Interactive Map provides the location and project information for over 1,200 projects financed through the Clean Ohio Fund, representing over $627 million in awards to date.

Four Rounds Left After July 

Round 10 is in July.  Then there is enough funding for Round 11-2 (Round 12 will be May 2012).  That is not a lot more opportunities to use the program if you have a project that you think would be a good match for Clean Ohio funding.  It takes around 6-8 months to get a project ready for a Clean Ohio Revitalization Fund (CORF) project.  Which means projects for Round 10 are basically getting ready to be finalized and Round 11 projects are already being discussed.

Will Clean Ohio Continue?

The Clean Ohio program has been wildly successful.  Funding projects across the State.  Many significant development projects simply would not have happened with out the grant funds available through the program. 

While perhaps a little premature, its time to start planning another ballot initiative if suporters are going to seek to renew the program.  Governor Kasich has not been asked his opinion as to whether the program should continue.  While the program is funded through bonds it still takes state revenue to retire those bonds.  With an $8 billion budget hole and a difficult budget process, the challenges facing renewal have never been greater.

What Happens if Clean Ohio is Not Renewed?

The major source of assistance in Ohio to spur brownfield redevelopment will disappear.  There are other federal and local programs, but none with the resources and successful track record like Clean Ohio.  Unfortunately, if the program is not renewed, many brownfield sites with significant contamination will simply be avoided.  New development will be pushed out to greenfields and perhaps away from our urban core.

With the number of brownfield sites remaining in the State, the need for the program remains as strong as it was in 2000.

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The Governor's top legislative priority is the privatization of the State's economic development functions.  House Bill 1, known as "JobsOhio", has been introduced and a vote in the Senate may come yet this week. 

The Ohio Department of Development (ODOD) plays a critical role in the administration of the Clean Ohio program which provides millions in grants for brownfield redevelopment.  The Department's current role includes the following:

• Review for Clean Ohio grant applications for completeness;
• With the assistance of Ohio EPA, makes eligibility determinations;
• Meets with applicants to discuss projects (known as "PRAMs");
• Selects which projects will receive Clean Ohio Assistance Fund (COAF) funding which has recently become Phase II assessment grants;
• Assists the Clean Ohio Council in evaluating projects for Clean Ohio Revitalization Fund (CORF) funding for clean up; and
• Determines which projects can be reimbursed with grant funds.

On the brownfield projects I work on, the ODOD personnel are the key point of contact when evaluating projects and through out implementation of the project.  More than once, ODOD personnel have made absolutely critical decisions that impact the viability of projects or have made significant reimbursement decisions that cost  developers hundreds of thousands of dollars. 

With the privatization of economic development functions, ODOD's key role will almost certainly be absorbed by another state agency.  Most likely, Ohio EPA will pick up these functions, but its possible the functions could stay with the newly created non-profit corporate entity.

How far away are we from that transition? House Bill 1 is only the first step in privatization of the Ohio Department of Development and the associated transfer of existing functions to other state agencies.  The bill basically establishes the non-profit corporation to be known as JobsOhio.  The Bill then calls for a six month consultation process to evaluate transition of the other functions of ODOD. 

Here is the relevant section of H.B. 1:

Sec. 187.05. The director of development, as soon as
practical after the effective date of this section, shall, in
consultation with the governor, evaluate all powers, functions,
and duties of the department. Within six months after that
effective date, the director shall submit a report to the general
assembly recommending statutory changes necessary to improve the
functioning and efficiency of the department and to transfer
specified powers, functions, and duties of the department to other
existing agencies of the state or to JobsOhio, or eliminate
specified powers, functions, or duties. The recommendations shall
be submitted in writing to the speaker and minority leader of the
house of representatives and the president and minority leader of
the senate.

After submitting the report, the director, in consultation
with the governor, shall continue to evaluate the department and
make additional recommendations on such matters to the general
assembly.

We are probably at least a year away from seeing any of ODOD's responsibilities transition to other agencies or to the JobsOhio entity.  For now it will be the status quo.  But in the near future a crucial decision will be made as to who will administer ODOD's critical Clean Ohio responsibilities.

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Ohio is facing a $8 billion dollar budget gap.  Governor-elect Kasich has stressed the need to streamline state government as part of solving the budget crisis as well as making government more efficient. 

During his campaign he already announced one very creative proposal to eliminate the Ohio Dept. of Development.  Could an idea being tested in other states- combining State environmental programs-be a proposal worth considering in Ohio? 

Good in Theory?

A brief overview of the current state structure suggests combining responsibilities would gain efficiencies.  Similar functions and staff with similar capabilities are spread across five different state agencies. 

Combining functions and potentially agencies could benefit those organizations.  Greater efficiency is not only good for business, its good for agencies that are constantly fighting for funding to support their programs.

The counter argument is that combining large government agencies you run the danger of creating even a larger bureaucracy.  Not only could there be even more layers of management the organization could become too large to effectively manage. 

An Overview of the Current Ohio Structure

Most environmental regulatory functions are split between the Ohio EPA and the Dept. of Natural Resources.  However,  there are clean up, regulatory and grant programs related to the environment spread across a total of five different state agencies. 

Here is just a quick look at various functions that have commonalities and are divided up between multiple agencies.

Brownfield Redevelopment and Clean Up

• Clean Ohio Program- divided between Ohio Dept. of Development and Ohio EPA

Federal Water Pollution Permitting Programs

• Combined Animal Feeding Operations NPDES (Clean Water Act) permit program-  Department of Agriculture
• NPDES (Clean Water Act) permit program- Ohio EPA

Litter and Recycling

• Division of Soil & Water Resources (Previously Divisions of Soil & Water Conservation and Division of Recycling & Litter Prevention)- ODNR
• Division of Solid Waste Management (manages Solid Waste Management District recycling efforts)- Ohio EPA

Wetlands

• Environmental Review Program (Wetlands)- ODNR
• Division of Surface Water (401 and Isolated Wetlands Permitting)- Ohio EPA

Ground Water Management

• Ground water well information (within Division of Soil & Water Resources)- ODNR
• Division of Drinking and Ground Waters- Ohio EPA

Surface Water and Lake Erie

• Soil and Water Conservation programs - ODNR
• Coastal Zone Management Program - ODNR
• Great Lake Compact Program (Under development)- ODNR
• Lake Erie grants program- Lake Erie Commission
• Surface water Lake Erie Unit- Ohio EPA
• Surface water regulatory and permitting programs- Ohio EPA

Underground Storage Tanks

• Bureau of Underground Storage Tanks (BUSTR)- regulation and clean up of releases of hazardous substances from USTs- Dept. of Commerce
• Clean up of hazardous substances un-related to USTs- Ohio EPA
  Diesel Engine Grant Programs

Diesel Emission Reduction Programs

• Diesel Emission Reduction Grant Program- Ohio Dept. of Development
• School bus diesel emission grant program- Ohio EPA

The list of similar functions spread across multiple agencies is probably longer.   In addition to similar regulatory functions, each of these agencies maintain their own Information Technology Offices, HR, Motor Pools, Facilities Management, Press Offices and Director's Offices.  Combining support offices could also gain efficiencies.

Not a Budget Fix

After modifications to its funding strategy, Ohio EPA utilizes no general revenue funds to support its programs.  ODNR has substantially reduced its reliance on GRF.  So combining agencies is not going to do much to fix the $8 billion dollar budget hole.

However, both agencies (as well as the other three agencies) assess multiple fees to business to support their programs.  These fees have regularly been increased to support rising human resource expenses within the Agencies.  Fees, while imposing costs on businesses, have traditionally not received the same political attention as GRF.

While streamlining and combining functions may not solve the $8 billion budget hole, it could avoid or reduce the need to raise fees on businesses. 

For a discussion of what has occurred in other states...continue reading.

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Clean Ohio Council has expanded the types of eligible projects that can receive funding under the Clean Ohio Revitilization Fund (CORF).  Parks, urban waterfronts, solar and wind projects are now eligible for funding so long as these projects take place on a brownfield. 

This change will create greater competition begining in Round 10 of the program.  

Three Grant Tracks Under CORF

For round 10 of the CORF, applicants can now seek funding under three different development scenarios:

1. Known End Use Track- $3 million for projects with a use of the property identified as part of the application.
2. Redevelopment Read Track- $2 million for projects on land believed to be primed for redevelopment, but with no specific end use identified. 
3. Sustainable Reinvestment Pilot Track- $1.5 million for sustainable Infrastructure, which includes certain park projects and green infrastructure, urban waterfronts, and cleanfields and brightfields (Wind and Solar projects).

The CORF program has funded very good projects which have always been classic brownfield redevelopment projects, such as the following:

• Construction of new commercial or industrial facilities on a brownfield property
• Expansion of existing industrial and manufacturing facilities onto contaminated land
• Refurbishment and/or renovation of existing structures for reuse

The classic redevelopment projects with known end users have become less frequent in recent rounds.   In order to increase the number of applicants, the Clean Ohio Council decided to create the Known End User Track.  This allowed clean up of brownfields in key locations in hopes of attracting development on these parcels.

Perhaps because the State fears future reductions in applications submitted for CORF, the Clean Ohio has decided to expand eligible projects far beyond the classic brownfield redevelopment project.

Sustainable Reinvestment Pilot Track

In Round 10 of the program, there will be up to $8 million available for these projects.  Here are some of the key aspects of the Sustainable Reinvestment Pilot Track:

• Can only get a maximum of $1.5 million in funding
• Must be on a brownfield
• Can spend the grant funds on demolition, clean up and infrastructure activities
• Infrastructure expenditures are capped at $400,000
• For this track, the definition of "infrastructure" is expanded to include:
  • pathways
  • structures used to manage stormwater
  • wetlands
  • stream restoration
• 25% Match is required, and the following can be used as match:
  • park amenities
  • plants, trees, landscaping, urban gardens
  • solar panels and components
  • wind turbine components
  • green roofs
• Projects must meet the following for infrastructure or new construction:
  • Follow sustainable best practices
  • LEED
  • Green Infrastructure Guidelines
  • Local ordinance mandating all future construction on the project property meet LEED guidelines for a period of 10 years

Parks and Waterfront Restoration Projects Now Eligible

Under the new track, parks and urban waterfronts redevelopments can also be projects.  This subcategory is called the Signature Parks, Sustainable Infrastructure and Urban Waterfronts category.  All park and waterfront projects must meet the following:

•  80% of area must be greenspace or public space
• max 20% of area can be used for parking
• deed restrictions good for 10 years
• commitment for maintenance and stewardship
• Signature Parks or Sustainable Infrastructure must be a minimum of 1.5 acres
• Urban Waterfront projects must be a minimum of 1.0 acre

Cleanfields/Brightfields (Wind and Solar)

Nothing is provided in the Round 10 CORF policies regarding restrictions on this subcategory of the Sustainable Reinvestment Track.  However, if you review the scoring methodology the Council will use to evaluate these projects, the following a key considerations:

• project site has grid access with a participating electric company; or
• project will result in net-metering for an existing entity
• the electric generation site will be a minimum of 25 acres

Impact of New Track

Clean Ohio has not increased funding by $8 million.  Rather, the Council decided to make up to $8 million of the total $23 million available in CORF Round 10 available for the new Sustainable Reinvestment projects. For future applicants, this change likely means increased competition. 

While grant funding for wind, solar, parks and urban stream restoration is understandable, the Clean Ohio program is moving away from classic brownfield redevelopment projects.  The core of the program has always been to remove the barriers to commercial and/or industrial reuse of contaminated land.  In essence, with more competition less money will be available for these classic clean up projects.

Deadlines

Applications are due to your local library by January 14, 2011 as a part of the scheduled Round 10 of the Clean Ohio Revitalization Fund. Approved applications will be announced in May 2011. 
 

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Ohio has one of the best state brownfield grant programs in the country.  There are two pots of money available at the state level:

• Clean Ohio Revitalization Fund (CORF)- Grant that offers up to $3 million to reimburse clean up and some redevelopment costs.  Requires a 25% match.  Typically awards are made twice a year and applications for projects compete against one another for limited funding.
• Clean Ohio Assistance Fund (COAF)- Grants are awarded on a rolling basis so long as money remains available in the grant cycle.  COAF pays up to $300,000 in assessment costs (Phase II) and $750,000 for clean up.

A year ago, the Ohio Department of Development (ODOD) announced a major change to COAF-greatly expanding areas eligible to submit COAF applications.  ODOD has just released the 2010 Priority Investment map which shrinks the eligible areas back down the "normal" coverage under the program.

Properties eligible to request COAF funding are those located in a "inner city area", a "labor surplus area" or a "situational distress area" as defined by O.R.C. 122.65(H). Each year the Ohio Department of Development releases a map of the State that identifies which areas fall under one of the three categories and could apply.

ODOD also announced a freeze on COAF clean up grant requests because the number of applications in the pipeline already exceed available funds for FY 2011.  You can still submit an application, but you will not receive clean up funding in FY 2011.  This is in part because ODOD decided to prioritize Phase II grants last year thereby reducing available funding for clean up.

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Ohio is using federal stimulus money to establish a new grant opportunity in the renewable energy area.   The Ohio Department of Development has released an RFP soliciting proposals with a total of $10 million in available funding. 

Minimum award is $500,000 and maximum is $1 million.

The grant program is looking for projects that convert feedstocks such as municipal solid wastes, food and farm wastes, or other bio-mass or waste materials to electricity, heat, fuel and/or bio-products.

There is a cost share requirement of 25% of total cost of the project. Cost share can take the form of financial or in-kind contributions.

Grant funds can only be used to purchase and install eligible project equipment for conversion of wastes and biomass into energy , heat, fuel or products.  Due to limitations placed on federal stimulus funding, you may not use grant funds for any of the of the following:

• Construction costs;
• Purchase of buildings or land; and
• Purchase of equipment for renewable energy techniques that are deemed not commercially available.

More information on the Transforming Waste to Value grant program offered by ODOD.

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Hush-Hush Hazards

 

State kept unaware of environmental dangers at casino site

 

Delphi spent about a year identifying toxins at the West Side manufacturing plant it closed in 2007 but never told the state about what it found. It wasn’t required to. New owner Penn National Gaming has shared Delphi’s 3,000-page report with the EPA and plans to clean up the site before opening a casino in 2012... Prospective buyers have a right to know about any potential problems, said Tiffani Kavalec, the agency's (Ohio EPA) cleanup and reuse-section manager.

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The administration of the Clean Ohio program is largely governed by the policies developed by the Clean Ohio Council. Separate policies have been generated for the Clean Ohio Assistance Fund (COAF) and the Clean Ohio Revitalization Fund (CORF).

Over the life of the Clean Ohio program, the Clean Ohio Council has routinely updated the program policies to address issues and provide additional clarification to applicants. The policies govern critical components of the brownfield grant program including eligibility, evaluation of projects and administration of grants.

The policies are used as a mechanism to address many of the more common issues that arise and to modify the program. Every brownfield project is different and on most Clean Ohio projects issues will arise that are unique to that project or that are not clearly addressed by the policies. However, it is important to pay attention any time the Council updates their policies.

On March 19, 2010, the Clean Ohio Council approved changes to the policies that govern projects seeking funding under the Clean Ohio Revitalization Fund (CORF). CORF funding is awarded on a competitive basis semi-annually by the Clean Ohio Council. The new policies were placed on the Clean Ohio web page today and are effective immediately.

An Ohio EPA newsletter states the changes were made based upon recommendations received from the Ohio Department of Development (ODOD), Ohio EPA, grantees and other interested parties. While the changes do adjust some of the administrative procedures, there are no changes on the scale of past policy updates. Prior changes included creation of the Redevelopment Ready Track and the addition of extensive conflict of interest provisions.

Here is a quick summary of the changes made:

• Eligible Grant Costs- Costs incurred responding to Ohio EPA comments are now eligible. However, costs associated with re-issuance of a No Further Action letter are not eligible. Clarification was provided that costs incurred in preparing an application are not eligible.
 

• Clarification of Eligible Infrastructure Work- To be eligible as match, infrastructure work must be performed on or at the project property. Infrastructure work used as match must be completed prior the end of the grant. The 10% limit on use of grant funds for infrastructure costs was maintained. A new definition of what constitutes “infrastructure” was added which states:

            o “Infrastructure” means technical structures that support society, including but not limited to roads, bridges, water supply, sewers, power grids, and telecommunications, but excludes vertical structures, such as buildings and parking garages. The exclusion of buildings and parking garages is the most important clarification of this added definition.
 

• Requires a Project Resource and Advisory Meeting (PRAM)- The PRAM meeting includes ODOD and Ohio EPA at the Site. This is where any issues identified with the clean up or proposed project can be discussed early on with the State Agencies. While these meetings have been routine, the policy update makes clear that the meeting is mandatory and must be conducted prior to placing the grant application in the library for public comment.
 

• Integrated Rankings- Under the policy revisions, if an Integrating Committee ranks multiple projects, and a project is withdrawn prior to the Clean Ohio Council award meeting, lower ranked projects will move up in ranking. This is an important change because projects do routinely drop out of the process and some areas of the state (including Cleveland) typically have multiple projects submitted. The Integrated Committee related points are crucial you’re your application is in a competitive grant round.
 

• Initiation and Completion of the Project- New requirements were added regarding funding projects. Applicants are not required to open a Technical Assistance Account with Ohio EPA within 60 days of grant award. These accounts are used to discuss clean up issues with Ohio EPA. Work must commence on site within 12 months of the effective date of the grant agreement. Finally, projects must be completed within 48 months (including issuance of the Covenant Not to Sue by Ohio EPA) of the date the grant contract is executed.

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On May 18, 2009 the Clean Ohio Council finalized new policies that will govern future rounds of the Clean Ohio Revitalization Fund (CORF).  A major change has been incorporated into the policies that will impact developers, consultants and contractors who work on Clean Ohio projects.  For the first time the Council has included conflict of interest prohibitions. 

The conflict of interest prohibitions are directed primarily at consultants who have previously acted as both developer and environmental consultant on a project.  Contractors are also prohibited from taking any interest in the development if they want to received Clean Ohio funds to perform work on the project. 

Another important prohibition applies to consultants and prohibits participation as both consultant for the developer and a company who caused or contributed contamination at the property.  This has occurred at projects because it appeared to create continuity on the project.   Some public entities saw it as a positive to continue to involve the consultant who has the most knowledge about the challenges presented by contamination at the property.

If you are involved in Clean Ohio projects, this new provision carries important implications that could shape future involvement at brownfield redevelopment projects.  It will also be important to monitor your partners in a project because a conflict of interest could hold up the whole project. 

Here are the new provisions:

10.02 Entities paid for with Clean Ohio Revitalization Fund grant dollars on a funded property must avoid conflicts of interest. A conflict of interest occurs when an individual or organization involved in the cleanup project has an interest that might compromise their ability to execute the project in a manner consistent with the intentions of the Clean Ohio Revitalization Fund program. A conflict of interest may exist even if no proven illegal act results from it, and will include an appearance of impropriety that undermines confidence in the individuals or organizations involved in the project. To avoid a conflict of interest and ensure that proper checks and balances exist, the following restrictions are placed on funded properties:
    • The Certified Professional may not act as the developer or an investor in  the development on the funded project.
     • The selected environmental consulting firm or their employees may not act as the developer or an investor in the development on the funded project.
     • The selected contractor or subcontractors may not act as the developer or an investor in the development on the funded project.
      • The selected environmental consulting firm and the contractor or subcontractor for the funded project may not be the same firm or related firms.
     • The selected environmental consulting firm may not be engaged in concurrent service agreements for the grantee and the party that caused and contributed to the contamination on the funded project.

(Photo: Patriarca12/everystockphoto.com)

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On May 26th, the Ohio Department of Development announced the recipients of the second round of the Diesel Emission Reduction Grant (DERG) program.  The announcement once again highlights issues with implementation of this grant program. 

After two grant rounds, school buses, transit and rail received the lion share of the total $19.8 million in available funding under this program.  There are issues with this allocation:

• School buses already have available funding through Ohio EPA Clean Diesel School Bus Fund
• Transit has received $203 million in stimulus money
• Rail projects are very costly- the project funded in the two DERG rounds took up nearly 1/2 of the available funding

In concept, the DERG program selects projects based upon cost effectiveness.  This should mean money is directed toward projects that will result in the biggest reductions at the lowest cost. According to U.S. EPA data, the transit sector in Ohio accounts for only 2% of diesel emissions. Other sectors eligible under DERG, such as construction equipment and heavy duty trucks, account for nearly 50% of the diesel emissions.

Yet after two DERG rounds, only 8 pieces of construction equipment and/or heavy duty trucks will be repowered/replaced/retrofitted. 

While I can quibble with how successful DERG has been at targeting sectors for reductions, it is still is a very good program that has resulted in substantial reductions. As detailed in previous posts, DERG is also good for Ohio's economy by promoting voluntary emission reductions that reduces air pollution costs for businesses.   Unfortunately, the Transportation Bill (H.B. 2) cut DERG's funding by 80% (see discussion at the end of this post).

Let's hope the State Legislature doesn't give up on a very worthwhile program.

From' the ODOD DERG press release here is the list of recipients in the second round:

• City of Dublin, in partnership with City of Westerville - Replacing eight model year
1999/2000 short haul diesel trucks.
• Columbus City Schools - Replacing 15 model year 1990 school buses with new school buses.
• CSX Transportation, Inc. - Repowering four Switcher Locomotives with GENSET diesel
engines.
• Great Lakes Construction - Repowering two model year 1987/1988 track type bulldozers.
• Industrial Railway Switching & Services - Retrofitting three switcher locomotives with the
private vendor's "Lean and Green Locomotive Package" technology to reduce overall vehicle
emissions.
• John R. Jurgensen - Replacing two track type bulldozers and four hydraulic excavators with
new vehicles.
• Kenston Local School District - Replacing one model year 1998 school bus with a new plugin
hybrid school bus.
• Manchester Local School District - Replacing one model year 1991 school bus with a new
plug-in hybrid school bus.
• Osnaburg Local Schools, in partnership with Massillon Local Schools and North Canton
Local Schools – Retrofitting six school buses with DPF/CCFS applications and replacing three
school buses with new model year buses.
• Portage County Solid Waste Management District - Replacing one model year 1999 diesel
truck used for the collection of recyclables.
• Ross Local School District - Replacing five model year 1988/1990/1991 school buses with
new buses.
• Southwest Ohio Regional Transit Authority - Repowering 50 model year 2001/2002 public
transit buses.
• Stark County Commissioners, in partnership with Stark County Board of Mental
Retardation and Developmental Disabilities - Replacing seven model year 1993/1995 school
buses with new model year buses.
• Toledo-Lucas County Port Authority - Replacing an existing diesel generator set on port
facility gantry crane.
• Wood County Commissioners, in partnership with Wood County Board of Mental
Retardation and Developmental Disabilities - Replacing five model year 1998/2001/2002
diesel powered school buses with new liquid propane- injected (LPI) engines
• Wood County Engineer’s Office – Replacing two model year 1990/1996 diesel powered dump
trucks with new trucks

Update on DERG Funding

In the last State budget, Ohio set aside $20 million over two years from federal transportation dollars known as Congestion Mitigation and Air Quality (CMAQ) program.  Federal legislation made clear that diesel emission reduction projects were not only acceptable they should be a priority.

After the last budget, Ohio had the largest dedicated diesel fund in the entire Midwest.  Ohio received awards for the DERG program.  The Ohio Diesel Coalition sought to renew the DERG program for another two years at the same level of funding.  Ultimately. H.B. 2 included only $5 million in funding for DERG over the next two fiscal years.  This is a $15 million dollar reduction from the past two years. 

Meanwhile, $15 million has been set aside for public transportation, which has already received, according to the Plain Dealer, nearly $203 million in stimulus funding. 

While DERG has had its issues starting up, most new government programs do.  There certainly is enough demand for the program.  Unfortunately, DERG funding has been reduced by 80%.  This reduction comes at a time when only a few small scale construction equipment projects have received funding.  Ohio has not even scratched the surface of possible reductions from this sector, by far the largest source of diesel emissions.  Now is not the time to be reducing funding for this program.

(Photo: terinea/everystockphoto.com)

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These are great times to investigating potential brownfield projects in Ohio.  The State has two pots of money available under its Clean Ohio brownfield program.  1)  the Clean Ohio Revitalization Fund (CORF); and 2) the Clean Ohio Assistance Fund (COAF).  CORF is a competitive grant process where applications are pooled into rounds and the top projects in that round receive funding.  Under COAF, projects are evaluated on an individual basis and decisions are made by the Director of the Department of Development.

COAF- Areas Eligible to Apply for Funding is Greatly Expanded

This month, the Ohio Department of Development announced a major change to COAF-greatly expanding areas eligible to submit COAF applications.  Properties eligible to request  COAF funding are those located in a "inner city area", a "labor surplus area" or a "situational distress area" as defined by O.R.C. 122.65(H).  Each year the Ohio Department of Development releases a map of the State that identifies which areas fall under one of the three categories and could apply. 

On May 1, 2009, the Ohio Priority Investment Area Map was modified to reflect the recent changes made to the Federal Labor Surplus map. Under the old map 41 counties and certain cities were designated "priority investment areas" based on one of the three categories.  The new map designates 83 counties in Ohio as Labor Surplus Areas. This includes all of Cuyahoga County and most of the surrounding Counties. 

All areas designated on the Priority Investment Map are therefore eligible to file applications for the Clean Ohio Assistance Fund for assessment grants of up to $300,000 and cleanup grants of up to $750,000. COAF will have approximately $12 million for new grants in the coming year. Applications can be submitted on a rolling basis (no deadline). 

The Ohio Department of Development also modified the policies governing COAF.  One notable change is the prioritization of Phase II Environmental Assessment projects.  Here is what the Department said about this change:

In order to maximize assistance to distressed communities during the economic crisis and meet a critical need to prepare sites for cleanup and redevelopment, the Clean Ohio Assistance Fund will now reserve 75% for funding Phase II Environmental Assessments grants and 25% for funding cleanup grants.

CORF's - Redevelopment Ready Track

If you are looking at a project with much higher clean up costs than $750,000, then CORF is still a great option.  The State recently provided more flexibility to the program.  Last summer, the Ohio Department of Development made a major change to the CORF program by adding the "redevelopment ready track." Before this change an applicant for CORF had to identify in its application a committed end user post clean up. Under the "redevelopment ready track" an applicant could qualify for up to $2 million in grant funds to pay for clean up costs even without an end user.

A significant amount of cleanup funding is available in the upcoming rounds of CORF. Funding for Round 7 (deadline July 25th) and Round 8 will total $48 million in the coming year ($24 million per round), which is the largest amount the program has experienced in its history.

Unlike other States, Ohio has a lot of funding available for brownfield investigation and clean up.  Over the last year the State has increased the flexibility in the program and expanded areas within the State eligible for funding.  While the economy is down, it is a great time to explore development options for brownfield sites.  As the economy comes back the competitiveness of these programs will increase. 

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The American Reinvestment and Recovery Act (ARRA) contains the highest federal funding yet for the 5 r's of diesel- retrofits, replacements, repowers, replace and refuel.  The competitive announcements for the ARRA Funding for National Diesel Emissions Reduction Program became available on March 20, 2009. Better get your act together if you still want an application in- the deadline is April 28th to submit a request for funding.  If you can't make the deadline there will be normal funding available ($60 million) in the fall. 

Who can file the application?

1. Regional, state, local, tribal or port agency with jurisdiction over transportation or air quality; and
2. Nonprofit organization or institution which:

a) Represents or provides pollution reduction or educational services to persons or organizations that operate diesel fleets; or

b)Has, as its principle purpose, the promotion of transportation or air quality

What will it pay for?

• 75% for engine repowers
• 25% for all replacements except
• 50% for school buses that meet 2010 standards
• 100% for retrofit technologies
• 100% for idle reduction technologies
• 100% for engine upgrades (kits only)
• 100% for incremental cost of cleaner fuels

Much more information is available on U.S. EPA's Region 5's web page.  Just page down to the section on ARRA. 

Helpful information and tips are available from the Diesel Technology Forum.  For example, here is some very helpful advice on addressing one of the more perplexing components of filing a DERA application- calculating jobs retained or created.

How to Calculate Job Creation - Follow the Flow. Finally, the issue which appears to be causing the most apprehension among applicants is the need to demonstrate how a project will preserve or create new jobs. The sheer range of retrofit options (remember the 5 Rs of retrofit: retrofit, rebuild, repower, replace and refuel?) as well as the varying locations and productivity of individual equipment manufacturing facilities make it very challenging to offer solid figures of new jobs added. But don’t despair. Everyone is in the same situation, so applicants are advised to focus on writing a credible, well-reasoned narrative which highlights the general labor/job impacts along every step of the project flow.

For example: project manager oversees grant award, progress, reporting; device manufacturers produce XXX new devices for the grant (incremental increases in manufacturing, packaging, processing, shipping jobs affected); equipment dealer schedules service to install devices (estimated XXX man-hours for mechanics, helpers and administrative); and so on, specific to your project. If you are not installing equipment yourself, you can ask the equipment manufacturer who has helped assess the fleet to provide an estimate of time necessary to conduct the type of installation you’re seeking. A formula which seeks to quantify jobs through use of a multiplier building on study by Keybridge Research is also available at www.meca.org.
 

UPDATE ON OHIO'S DIESEL EMISSION REDUCTION GRANT PROGRAM (DERG)

At $20 million over two years, Ohio had the largest dedicated diesel fund in the entire Midwest.  Ohio received awards for the DERG program.  Round 2 of funding was just completed and the State will be passing out nearly $11 million in funding.  Seemed like a program well worth continuing...

The Diesel Coalition sought to renew the DERG program for another two years at the same level of funding.  Ultimately. H.B. 2 included only $5 million in funding for DERG over the next two fiscal years.  This is a $15 million dollar reduction from the past two years.  While the Legislature included the full $20 million in funding, the Governor issued a line item veto of the funding (see below).

The Ohio Diesel Coalition still intends to request $20 million in funding for DERG in the regular budget bill.  The Coalition, of which I am a member, will be asking that the $15 million designated for the Public Transportation Green Fleets Program in H.B. 2 to be consolidated with DERG. 

Green Fleets are eligible for funding under DERG.  The Coalition believes it would be better to create a single competitive grant program and allow the best and most effective projects to get funding.  Hopefully we can restore funding for this very successful and worthwhile program.

Governor's Veto message in H.B. 2:

SECTION 512.43.

This provision establishes a diesel emission reduction grant program using federal Congestion Mitigation and Air Quality funds from the Federal Highway Administration.

This provision would have a negative impact on the Department of Transportation’s operations because it diverts a large portion of available flexible funding to specific purposes.

I have directed the Department to dedicate $5 million toward a diesel emissions reduction program for purposes consistent with the intent of the legislation. This funding will provide assistance to small businesses and disadvantaged business enterprises. Therefore, this veto is in the public interest.
 

(Photo: terinea/everystockphoto.com) 

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After reauthorization of the Clean Ohio program this November by Ohio Voters, the State has announced their intention to maintain two grant funding rounds per year going forward.  Hopefully this will allow the program to operate more consisentely.  In the past, project developers were often forced to try and rush projects because future funding rounds were uncertain. 

Round 5 was completed in December, with seven projects recieving around $12.7 million in funding.  This was less than the $17 million the state had available in that round.  This marks the first time less then the full amount of funding available was awarded. 

The State has already announced the schedule for the next two funding rounds:

Round 6- Unless your project is already been listed on Ohio's Brownfield Inventory, you are too late to qualify for this round.  The deadline for filing the form to be listed in the inventory was December 5th.

- Grant applications are due January 9th

- Awards will be announced in May of 2009

Round 7

- No deadline for listing a property with the brownfield inventory has been announced to date.  Typcially, the deadline is 30 days prior to the deadline for filing a grant application.

-Grant applications are due July 25th

-Award will be announced in November of 2009

The Ohio Department of Development (ODOD) who administers the program also announced other enhancements to improve the program.  These include:

• Clean Ohio Assistance Fund applications will be processed in 10 days instead of 30 days
• Disbursement requests can be made every 30 days instead of 60 days
• Information regarding public bidding of work associated with Clean Ohio projects will be made available to small and minority owned businesses

The announcement to make the program more consistent should be great news for everyone who works with the program.  This will allow project developers and governments to tee up projects when they are truly ready versus trying to rush the project to meet the funding deadline. 

With the overall lack of development occurring in Ohio right now due to the poor economy, this is a great time to develop Clean Ohio projects because the next few rounds will likely be less competitive.  This was certainly true for Round 5 in which the State did not even award all the money that was avaiable.

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The Ohio Department of Development launched today the second round of funding under the Diesel Emission Reduction Grant (DERG) program.  There will be at least $9.8 million in funding available in the second round.  You can receive funding of up to 80% of the cost (requires a 20% match) for cost of equipment related to reducing diesel emissions.

 You can access the new application, updated guidance and sample Public Private Partnership (PPP) agreement directly on their web page.  Here is the schedule for the second round:

Release of RFP -December 18, 2008
Bidder Conferences- January 12, 2009, 10:00 a.m.
                                       February 9, 2009, 10:00 a.m.
Deadline to submit applications- March 2, 2009
Announcement of award- May 1, 2009

Changes were made to the program to try and overcome the issues experienced in the first round.  They include:

1. One application for any type of project (Repair, Replacement or Repower)
2. Two bidder conference calls where anyone can call in and ask questions regarding the application or requirements for the program.
3. Application checklist to ensure all the required documents have been submitted.  Failure to file a complete application will result in disqualification.  In the first round 32 applications were deemed incomplete and rejected. 

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DERG Round Two Schedule:  Tentatively, Ohio will begin soliciting grant applications on December 15th for the second round of funding under the Diesel Emission Reduction Grant (DERG) program administered by the Ohio Department of Development (ODOD).  DERG will have approximately $11.2 million in available funding in the second round.  The grants pay for retrofits of emission controls, engine rebuilds, and a portion of the purchase price of new diesel vehicles.  Here are the tentative dates as discussed in a meeting with ODOD last week: 

• Monday, Dec. 15: release of the RFP with a press event, media release and posting of application documents on the website.
• Monday, Jan. 12 at 10 a.m.: first of two bidders conferences
• Monday, Feb. 9 at 10 a.m., second bidders conference
• Monday, March 2, applications due
• The selection team will take up to 60 days to review, score and forward successful applications to the Federal Highway Administration. Projects selected for funding will be notified by May 1, 2009

Grants are available to both public and private entities.  Because the source of funding is the federal Congestion Mitigation Air Quality (CMAQ) program, private companies must enter into a contract (called a Public Private Partnership- PPP) with a public entity.  The money follows from the state to the the public entity who then reimburses the company. 

What Does DERG Pay For? Diesel grants are a great way to pay for fuel saving equipment, like auxiliary power units (APUs), that reduce idling.  Engine or vehicle replacements can be partially funded through the DERG program.  Also, companies who want a greener fleet for contract bidding or as part of the company's sustainability efforts can pay for retrofits that dramatically reduce emissions from their diesel engines.  All applications require a twenty percent (20%) match.

Issues With Round One of DERG:  As discussed in prior posts, the DERG program experienced significant problems and delays in the Round One of funding. Most notable, 42 applications were filed in round one, but only 10 applications were deemed complete- all of which received funding.  As a member of the Ohio Diesel Coalition, we have advocated for a series of improvements to the grant application process to ensure a transparent and competitive grant process.

Improvements to DERG Round Two:  Last week, representatives of the Ohio Diesel Coalition, including myself, met with members of an inter-agency team working on the DERG program to review changes to the program. The State's inter-agency team is composed of officials with the Ohio EPA, Ohio Department of Development and Ohio Department of Transportation.  To help improve the overall application process and to ensure complete applications are submitted, the inter-agency team will put in place the following changes for Round Two:
 

1. A concisely written Request for Proposals (RFP) will be released by ODOD
2. A template of the Public Private Partnership agreement (a major stumbling block for many in round one) has been posted on the DERG website
3. All successful round one applications have been posted on the website
4. Applicants are given more time to prepare applications (up to 2 months)
5. Two separate bidders conferences (in person, by telephone or over the web) will be offered in advance of the application due date to answer questions
6. The State developed a consolidated application form to cover all types of projects (retrofits, repowers and replacements)
7. A checklist will be included in the application packet to ensure applicants include all required information

Other Developments:  ODOD made a policy decision to set aside $5 million of the remaining $11.2 million in funding for public transit projects. However, if total transit requests are below $5 million, all other fleets can compete for these funds. There is no ceiling on project amounts, but the minimum amount that could be requested is $20,000 per project.
 

When To Look For The New Application:  The new RFP has not yet been posted on ODOD's web page.  I imagine all the documents, including the RFP, checklist and other documents will be posted on the release date of the RFP (December 15th).  Keep an eye on ODOD's website for this information.  In the meantime, it may be a good idea to evaluate projects and approach a public entity about a PPP contract

(Photo: Flickr terinea/everystockphoto.com)

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The gloom and doom of today's economy, especially in Cleveland, is covered almost daily.  Job's have been disappearing from the area at a rapid clip.  The front page of the Cleveland Plain Dealer has almost been dedicated to breaking the bad news.  See, Plain Dealer Article "Northeast Ohio Job Loses Spread."

The Article includes the graphic to the left which shows areas of job growth and declines.  The question swirling around Norheast Ohio is how to get the overall economy growing again. 

The most important change is to adopt a Statewide strategy to pursue jobs of the future, rather than putting most of our efforts and money to try and protect struggling industries like the auto companies. We need to look to where the jobs of the future are going to develop and be aggressive about jumping into that space.

Northeast Ohio has done that well with its efforts on attracting medical innovation investment.  Growth in health care is here to stay. 

So what is another job growth area of the future?  It has been discussed with ever increasing regularity- Shifting towards attracting clean technologies jobs that will be associated with the monumental changes associated with energy and Climate Change. 

I am by no means the first to point out Northeast Ohio needs to be aggressively positioning itself to attract those jobs.  For example, locally we have had champions like the Cleveland Foundation pushing leaders to fully embrace a strategy to attract Clean Tech to Northeast Ohio (see, Rich Stuebi's recent op-ed piece in the Plain Dealer)  And leaders are paying attention.  You may not know this but the Greater Cleveland Partnership was the only chamber of commerce in Ohio that supported including renewable mandates in Ohio's Energy Bill that passed this summer.

Progress is being made, but we better double our efforts or will be beat out by other states and regions who have their eyes on the same jobs.  Like it or not, Northeast Ohio's chances at success are intertwined with State leadership efforts on developing a Clean Tech economy.

What is leadership?   Leadership means being out front, not coming late to the party.  For example, Iowa long ago embraced wind energy and has a large portion of generation from wind.  So which state is landing a multi-million dollar new manufacturing facility? Of course it is Iowa.  Meanwhile, Ohio was one of the last states to adopt a mandate on renewable energy.

Texas has also been taking notice and positioning itself to tie its economy to the forthcoming growth in Clean Tech.  An organization call Catalyst just completed a study of Clean Tech opportunities in Texas.  The study includes a series of recommendations for State leadership to adopt to ensure Texas is well positioned. 

Below I have taken out the recommendations that are included in the Texas study and provided my own analysis as to how Ohio is doing in these areas.  It is intended as a scorecard on Ohio's strategy to attract Clean Tech jobs.

Market Recommendations

• Spur the creation of renewable energy markets by modernizing the state’s Renewable Portfolio Standard to promote non-wind generation, and update the state’s wind policy to promote the next generation of wind investment. (Ohio passed S.B. 221 that includes a broad RPS to encourage varies technologies.  The key issue with Ohio's RPS are the "out clauses" if costs to comply exceed 3%. Hopefully these clauses don't render the mandate useless)
• Incent and reward residential and commercial energy customers who choose renewable electricity options, including aggressive rebates or tax credits for solar installation or other distributed generation. (Ohio does include some limited incentives for renewables. The Ohio Department of Development (ODOD) has information regrading solar for consumers.  But an analysis should be done to compare Ohio incentives to those provided by other states. Growth in residential demand helps attract companies to Ohio.)
• Promote Texas companies by tying customer rebates and incentives to products designed, manufactured or marketed by Texas companies. (I am not aware that Ohio is doing anything in this area.  I know there is a "Buy Ohio" program, but I don't think it has much value in the Clean Tech arena)

Economic Development Recommendations

• Conduct a comprehensive analysis of how Texas' new energy economic development incentives compare to those of other key states. (Ohio should perform such an analysis.  Ohio has new funding for alternative energy projects through the Ohio Air Quality Development Authority (OAQDA).  However, more information is needed as to whether this is enough of an incentive to put Ohio ahead of other states)
• Consolidate existing and new incentives into a comprehensive and simple New Energy Incentive Package, and actively promote and market it by establishing a visible, coordinated state office to serve as a single point of entry for new energy economic development inquiries. (Ohio gets a mixed scorecard on this one.  Governor Strickland gets credit for creating an Energy Advisor position.  Also, he has increased available incentives.  However, authority and funding is split between OAQDA and ODOD.)
• Commit specific and significant portions of the Emerging Technology Fund and Texas Enterprise Fund to companies and efforts in new energy industries. (Again, Ohio has created the Alternative Energy Fund as part of its Job Stimulus Package.  However, grants are limited to between $50,000 to $250,000 on renewables which seems hardly enough to attract series development. It may be a good program for helping bridge research to commercial deployment, but a larger effort is needed.)
• Create a state-sanctioned venue through which university and community college officials, workforce development officials, regional and local chambers of commerce, and state leaders can develop a Green Jobs education and training strategy. (This has not been done at all in Ohio.  Efforts are scattered and not coordinated across the State.)

State Reputation Recommendations

• Change the political rhetoric surrounding the new energy economy. The world has recognized this is no longer a partisan issue, but an economic opportunity. As long as Texas leaders position the future—and the new energy economy—as bad for Texas’ economy, businesses will go to other states where they’re welcome. This will require current leadership to demonstrate more enthusiasm for the future economy. (This same sentiment can apply equally to Ohio.  Due to its historical manufacturing base and reliance on coal, associations and leaders view major changes such as Climate Change as only bad for Ohio's economy.  To be a leader, the State must be willing to embrace the changes and work to take advantage of them.)
• Convene a blue-ribbon commission on the new energy economy—consisting
  of traditional energy companies, renewable energy companies, universities,
  entrepreneurs, utilities and economic development entities—to design
  a long-term new energy economic development strategy for the state. This strategy should build upon the general suggestions of the Governor’s Competitiveness Council’s Report and State Energy Plan, and provide specific, executable strategies for promoting the new energy economy in Texas. (Another suggestion that would be wise for Ohio to adopt.  While there have been smaller efforts, development of a comprehensive plan is the only way to position the State for success.  A piece meal approach to incentives, RPS and training only means Ohio will be at best a middle tier state in attracting Clean Tech jobs)
• Appoint a statewide, cabinet-level New Energy Economy Czar, responsible for identifying, articulating and executing a statewide strategy for maximizing Texas’ New Energy economic development opportunity. (Governor Strickland did create the position of Energy Advisor filled by Mark Shanahan. However, this position certainly does not have equal status to the recommendation in the Texas study.)
• Launch a Manhattan Project-style initiative to design the model “future grid” that could serve as a national proving ground for emerging energy technology and a model for networks nationwide.  (While I don't have enough insight to determine if this is a worthwhile recommendation, the notion is correct that the State must take nationally visible efforts to distinguish itself from all the other States competing for these jobs.)

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PTIO Program is Launched-  Effective June 30, 2008 Ohio EPA finalized this new permit program which combines the Permit to Install (PTI) and Permit to Operate (PTO) into a single permit for non-Title V facilities.  Facilities will no longer have to apply for a separate PTO.  This program is intended to deal with Ohio EPA's backlog of PTOs which is in the thousands.  Ohio EPA's new PTIO application is up and must be used for new permits.

Electronic Reporting through Air Services- Effective June 30, 2008 Ohio EPA transitioned from its STARship electronic air reporting software to Air Services.  Air Services is part of Ohio EPA's larger effort to transition to more web based business interaction with the regulated community.  Following the release of the Air Services software, both Title V and Synthetic Minor Title V facilities will be required to use the eBusiness Center: Air Services for all emissions reporting, Title V Annual Compliance Certifications, Title V and other permitting applications.

Electronic Reporting of Surface Water Reports-  If you are using paper reporting or SWIMware to submit monthly-operating-reports (MORs) for NPDES permit compliance you need to quickly transition to Ohio EPA's new electronic reporting system.  Ohio EPA indicates it expects to cease accepting MORs by "end of the  summer". SWIMware has been replaced by the new online system called e-DMR, Electronic Discharge Monitoring Reporting System. The term, MORs (Monthly Operating Reports) is now being referred as DMRs (Discharge Monitoring Reports). The new reporting system is entirely web-based and accessible via any internet connection.

Ohio Diesel Grant Awards Announced-  On July 29th the Ohio Department of Development announced the recipients of the grants for diesel retrofit and repower projects for vehicles and fleets.  The award recipients originally submitted applications back in February.  The implementation of the Diesel Emission Reduction Grant (DERG) program was plagued with a number of issues that resulted in the rejection of a large number of applications and delay in announcing awards.  The Ohio Diesel Coalition is working in conjunction with the various State agencies to improve the grant process in the second round.  The Department of Development is expected to release the second request for proposals (RFP) in August. 

Brownfield Redevelopment- Clean Ohio Assistance Fund (COAF)-  As of July 1, 2008 the Ohio Department of Development has begun accepting applications for COAF grants to pay for Phase II site assessments (up to $300,000) and clean ups (up to $750,000) of brownfield properties.  ODOD has approximately $11.4 million to award.  To qualify the property must be in a designated priority investment area (see map).

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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.

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As part of the 2008-2009 State budget, Ohio set aside $19.8 million to be used for diesel grants to achieve reductions in air pollution from the transportation sector.  The set aside represents the largest dedicated pool of funds to diesel emission reductions in the Midwest. The grants could be used to pay for pollution control retrofits and anti-idling technology for diesel engines in public and private fleets across the state.

The Ohio Department of Development (ODOD) is charged with implementing the program.  In February 2008 it solicited its first applications.  However, there was a lack of guidance to applicants in the rush to get the program up and running.  As a result, those who still submitted applications did so without knowing whether their application would be deemed sufficient.

Awards were scheduled to be made in early Spring with a second round of applications to follow in late Spring.  Unfortunately, the Federal Highway Administration has raised concerns with the details of the Ohio program that has stopped the program in its tracks.  No announcement has been made regarding the first round of applications and now the second grant round in fiscal year 2008 has been shelved according to ODOD's website. 

Last year I wrote an op-ed piece in Crain's Cleveland Business that made the strong case for reducing emissions from the transportation sector. 

Unfortunately, I couldn't include a graphic with my article because I think this chart prepared by Ohio EPA sums it all up (click on the chart to see a larger version).  The majority of the pollution causing our ozone problems in Northeast Ohio are from the transportation sector, not area businesses.  With Ohio's economy hurting, achieving greater reductions from the transportation community is essential to reducing costs for Ohio businesses and allowing them to compete.  Hopefully, the impediments that have stalled this program can quickly be removed as it has become apparent Ohio will likely have one year to spend the $19.8 million. 

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