The chairman of JobsOhio said Gov. John Kasich's privatized development agency is determined to solve a public-image problem that he said has been caused by the news media.
The chairman of JobsOhio said Gov. John Kasich’s privatized development agency is determined to solve a public-image problem that he said has been caused by the news media.
In an interview with The Dispatch last week, James C. Boland and other key JobsOhio officials said that the organization has been incorrectly portrayed as self-dealing, secretive and unaccountable, and they laid out plans to rewrite the narrative, including hiring a public-relations firm and visiting editorial boards across the state.
“Do we have a problem? You’re damn right we do, because the people who are writing about us don’t know what the hell they’re talking about, and we’ve got to educate them,” said Boland, leader of JobsOhio’s nine-member board and former president and CEO of the Cleveland Cavaliers Operating Co.
“We’ve got to get on the offense and really let people understand what the hell we’re doing."
John Minor, president and chief investment officer of JobsOhio, defended the nonprofit entity as a more-effective job-enticer than the state’s former, public economic-development model. He said an experienced and nimble staff of professionals who understand business enables JobsOhio to react faster than a government bureaucracy.
“What we’ve proven over the last year and a half is that this model that we put in place, it works,” Minor said.
While Kasich’s team views the job-creation initiative as one of his greatest strengths, Democrats are attempting to turn JobsOhio into a liability heading into next year’s gubernatorial election. Cuyahoga County Executive Ed FitzGerald, Kasich’s likely Democratic opponent, expects to host a news conference in the next two weeks to discuss how he would make JobsOhio a more-transparent agency.
Although JobsOhio is still gearing up, its on-field performance — how it is helping the state to grow jobs — already is becoming a big part of the campaign debate.
Since July 2011, when JobsOhio opened for business, Ohio has added 110,500 jobs — the 13th most in the United States, according to the federal Bureau of Labor Statistics. Midwest neighbors Michigan, Indiana and Illinois all have added more jobs than Ohio during that time frame.
By comparison, Ohio ranks eighth nationally in jobs added since Kasich took office in January 2011, counting the months before JobsOhio took over.
“If all JobsOhio had was an image problem, Ohio wouldn’t rank 47th in job creation,” FitzGerald said, selecting a snapshot of Ohio’s jobs picture that Democrats routinely cite — a comparison of growth from June 2012 to June 2013.
“So it smacks of denial for the governor and his team to claim that bad press is all that ails JobsOhio. Of course, JobsOhio’s culture of secrecy seems almost designed to hide a clear view of whether it’s working.”
Boland said, “We have nothing to hide here,” and “If we were hiding anything, I’d be out of here so fast, because I’m not going to screw around with somebody who’s playing games.”
Boland said JobsOhio’s nine unpaid board members serve because “they love Ohio; they want to help Ohio.” He said that JobsOhio is “not a secret, clandestine organization,” and he released a comparison he said shows that JobsOhio is held to the same or greater requirements for audits, conflict of interest, ethics and public disclosure as the former Department of Development and its current replacement agency, the Ohio Development Services Agency.
“We’re operating as if this is a public company,” Boland said. “All the disclosure requirements, doing everything the right way, the ethics policies we have — they are as extensive as anything I’v e seen in a public company and much more extensive than what you see in most nonprofit companies."
Last month, the Dayton Daily News reported that six of JobsOhio’s nine board members have “direct financial ties” to companies that have received state tax credits or other state assistance since Kasich took office in 2011, and at least two of those companies received the help after JobsOhio opened for business.
Donald Grubbs, JobsOhio’s in-house attorney, said the tax credits had been recommended by state employees before JobsOhio was up and running. Boland and Minor emphasized that the JobsOhio board has no role in determining which firms receive state aid, and authorization for tax credits must come from a public entity, namely the Ohio Tax Credit Authority.
The Tax Credit Authority is a five-member panel, with three appointed by the governor, that has not rejected a proposed tax credit in at least 41/2 years, spanning two governors.
“It’s a political time of the year, and it’s going to be for the next year, and we know we’re going to get hammered by everybody who wants to taint the governor,” Boland said. “We are not the governor’s people.”
The entire JobsOhio board is appointed by Kasich, and many (but not all) members have given some money to Kasich’s campaigns. Among them are Boland, who gave $22,000 to Kasich’s 2010 campaign, and Minor, who gave $7,500. Board member Brad Lindner has donated about $12,500 to Kasich’s campaign since early 2012.
In late May, Kasich described how he came to hire Minor, who is paid $225,000 a year, to lead JobsOhio: “John’s a buddy of mine. I worked with him when I was at Lehman Brothers. And John basically got tired of a system that did not reward meaning and values. And he called me up and said I want to come to Ohio, what will I do? I said I have no clue, but when you get here, you will have something good.”
Early this year, JobsOhio issued more than $1.5 billion in bonds to lease the wholesale-liquor profits from the state for 25 years, and Minor said the agency has not yet used the money to provide loans and grants to businesses, or to revitalize downtrodden properties for economic development.
Kasich already rates JobsOhio a success and has said its effectiveness will be enhanced once it starts using some of the $100 million it expects to receive annually from the liquor profits. But it is difficult to measure just how much of a role JobsOhio has played in the state’s job growth, using the agency’s own metrics.
JobsOhio says it has produced about 37,000 new-job “commitments” from its inception through earlier this year.
Most of the deals JobsOhio closes allow the company a certain number of years to create the jobs promised in return for a tax credit. JobsOhio says its deals have generated $8.6 billion in new capital investment and about 108,000 “retained” jobs — a statistic that assumes every job at an existing company was saved in return for some tax incentive it received.So far, JobsOhio appears to be getting high marks from the business community.
Fabian Schmahl, president and CEO of ThyssenKrupp Bilstein, an automotive supplier, said working with JobsOhio to receive tax credits for a major expansion of the firm’s Cincinnati plant was “a very, very good experience,” unlike working with the previous Department of Development, which Schmahl called “a very frustrating experience.”
Two rounds of economic aid from the Kasich administration and JobsOhio helped the company to expand its plant and add 160 jobs.
“They are solution- and growth-oriented and have a great attitude about finding solutions,” Schmahl said of JobsOhio.
Minor said the former Development Department was not business friendly, saying that its failure to return phone calls was “a reason why you saw a lot of jobs, a lot of companies leave the state."
Lisa Patt-McDaniel, development director under Democratic Gov. Ted Strickland and a high-level development official for Republican Govs. Bob Taft and George V. Voinovich, rebutted that, saying, “ I am not aware of any company that told us they were leaving the state because they couldn’t contact the Department of Development.”
Patt-McDaniel said a number of former development employees now work for JobsOhio: “I stand by the people who worked for me, many of whom are over at JobsOhio. They were good people then and they’re still good people.”
Scott Ziance, an economic-development lawyer for Vorys, Sater, Seymour and Pease who has worked on development deals with the administrations of Voinovich, Taft and Strickland, said JobsOhio is better, but it “is hard to put a metric to” why.
“The high-level folks at the state have been almost universally very good, very responsive,” Ziance said, comparing JobsOhio with the old Department of Development.
“In the past there were mid-level folks, and this was under multiple administrations, who would just not return phone calls in a timely manner. High-level folks always return phone calls, but they’re busy, so you don’t want to call them on a daily basis.
“At JobsOhio, I always get my calls returned, and those people are working more than 40 hours, from top to bottom.”
Some issues JobsOhio confronted in its first two years:
• Democrats and ProgressOhio sued over the constitutionality of JobsOhio. The Supreme Court will soon hear arguments about whether the groups have standing to sue.
• JobsOhio’s funding stream, about $100 million annually, was delayed for 19 months, largely as a result of questions raised by the lawsuit.
• JobsOhio received millions of dollars in public grants, beyond the $1 million legislators set for startup costs, by acquiring an agency with access to the state funding. JobsOhio repaid $8.4 million to the state this spring.
• The agency raised nearly $7 million in private donations from five sources. The only known donor is American Electric Power.
• Auditor Dave Yost fought to view the agency’s private finances. Lawmakers passed a bill in May to basically bar such audits in the future.
• Six of JobsOhio’s nine board members have financial ties to companies that got state tax credits or other assistance since Gov. John Kasich took office. The Ohio Ethics Commission declined to investigate because it doesn’t have jurisdiction. Subsidiaries of Worthington Industries were approved for tax credits while Kasich, a former board member, received deferred payments from the company. The ethics board dismissed a complaint on that.
• Amid questions about potential conflicts, Kasich and JobsOhio pointed to the Ohio Tax Credit Authority, which approves tax credits, as proof that there were no conflicts. The Dispatch found the authority has not rejected a tax credit in 41/2 years.
— Joe Vardon