Monday, November 24, 2014YOUNGSTOWN, Ohio -- JobsOhio, the public-private agency created three years ago to promote economic development within the state, has seen “great strides” but has yet to show its full impact, its executive director allows.
John Minor, who took over as executive director about two years ago; Jim Boland, chairman of the Jobs-Ohio Board of Directors; Don Grubbs, general counsel; and Matt Englehart, spokesman; recently met with The Business Journal’s editorial board. During the meeting, which lasted about 90 minutes, they addressed how the agency operates and criticisms leveled at it.
Formed in July 2011, JobsOhio had more directors than employees its first six month and “really didn’t get going” until Minor led the bond offering in early 2013 that funded the agency to acquire the state liquor franchise, says its board chairman, Boland.
“Initially, there was a lot of talk about the secrecy of our organization, conflicts of interest. Certain people in the media, and some politicians were taking shots at us,” he recalls. “That was our fault. We didn’t get around to groups like yours, editorial boards of major cities, and we felt it important to try to educate people on what we do and what we don’t do.”
Minor picks up the narrative. “When we got started we were very focused on getting this platform, getting this model out in place,” he says. “We were not out there telling our story probably the way we should have been.”
Creation of a private nonprofit agency to spearhead economic development efforts – supplanting the role of the former state Department of Development – was Gov. John Kasich’s top priority when he took office in 2011, Minor says.
“If you look at what happened before JobsOhio” – a period when Ohio and the rest of the nation were still recovering from the Great Recession – “You can say it was less than effective,” he says with intended understatement. “You had a lot of jobs leaving the state.”
JobsOhio, the executive director maintains, is nimbler and better able to bring in its partners more effectively to form a comprehensive unit. “We can work with companies and deliver the entire state to them,” Minor says.
Using the proceeds of the bond sale, the agency acquired the state’s liquor franchise for a 25-year period, thus providing a more sustainable and stable source of funding. People drink in good times and bad, Minor observes wryly. The old Department of Development received its funding annually or biennially.
“So [JobsOhio] has a stable and sustainable revenue stream with funds that we can put to work,” Minor says. After expenses such as debt service and the cost of doing business, about $125 million is left for JobsOhio’s grant and loan programs.
“The 25-year aspect of this is key because it allows us to take a longer-term approach to economic development,” he continues. Companies considering projects are looking ahead two, three or even five years, sometimes longer, not six, 12 or 18 months. “When they start to plan their expansion and how they grow, they’re not just doing it in the near term. They’re also looking in the long term as well,” he says.
JobsOhio, governed by a nine-member board of unpaid directors, has 53 employees, including five general managers drawn from diverse business environments. “Attracting these types of people, it’s hard to do when you’re trying to attract them to some government agency,” Minor says.
The general managers possess industry expertise they bring with them when they talk to company executives or others. “They know how to sit across the table with a CEO or CFO [chief financial officer] or board of directors and talk strategically” about their business, something the former Department of Development lacked, Minor says. ”That’s impactful because you have more of a peer-to-peer relationship with these CEOs, it lends itself better to us winning these projects.”
“Our relationship with C-suite executives is much stronger than with the old Department of Development,” Boland adds.
The JobsOhio team has six regional partners – existing development agencies the program partners with, including Team NEO and through it the Youngstown Warren Regional Chamber. “They are key to this model because we rely on them heavily” for their knowledge and relationships, Minor says.
The officials point to the numbers as evidence of the success JobsOhio has achieved. For the second quarter of this year, it reported 75 projects that resulted in 7,370 new jobs and 16,999 retained jobs for a total payroll of $1.2 billion.
During 2013, according to its most recent annual report, JobsOhio helped 258 companies create 17,857 jobs, retain 70,449 more and add $3.6 billion in new capital investment.
Critics of the agency, however, charge its lack of transparency makes it difficult to evaluate its effectiveness. Last year, state Auditor Dave Yost engaged in a high-profile battle to conduct an audit of the agency, his effort thwarted when the Ohio General Assembly exempted it from the auditor’s oversight.
“Too many people try to make the terms ‘confidentiality’ and ‘secrecy’ the same thing,” Minor says. When it works with companies, JobsOhio has to keep certain information confidential. “On the transparency side, we are every bit as transparent as the previous Department of Development,” he asserts, although JobsOhio doesn’t provide “a couple of things” that its predecessor did. “You’re not going to see my emails,” he declares.
Adds general counsel Don Grubbs, “Only a certain amount of the deliberative process is public, ever” as when the Ohio Tax Credit Authority considers applications, and when certain grants and loans go to a body such as the state Controlling Board. In the cases of other grants and loans, they were awarded at the discretion of the development director.
“With JobsOhio, very little has changed there,” Grubbs says. “In fact, we have a greater degree of participation by at least a representative section of the public.” JobsOhio releases the same types of information on its website in terms of identifying the company, what it has promised regarding job creation and investment and what the state is giving in exchange. It is required only to report its activities to the state Development Services Agency once a year.
“Our deliberative process is more rigorous and, at least to some extent, a little more out in the open this way,” Grubbs continues. Jobs-Ohio project managers make recommendations at meetings held twice a week. Attending those sessions are DSA representatives, including its director, that determine whether state-funded incentives or solely JobsOhio funds are involved.
“The way this is structured, we are the sales force for the state of Ohio by a contract. … As part of that contract, DSA has an oversight function,” Grubbs adds. “DSA is very much in the room with us vetting the projects.”
Conflicts of interest – and their potential with the board of the private agency – represented another concern for critics. One news organization reported that six of the agency’s nine directors had conflicts, although Boland says a review by the state auditor showed none. “They [the critics] never knew the facts,” he says.
Directors, as well as management and key employees, must file disclosure statements with the Ohio Ethics Commission, Boland continues. Any projects that come before the board are compared with those disclosures. Should any conflicts of interest be found, the director involved is prohibited from participating at any stage of the project. “A conflict properly managed is not a problem,” he says.
Another topic that became fodder for critics was the 2013 job-creation number, 17,857, which was lower than the 21,099 the previous year. The 2013 new-job count came in “slightly less” than 2012, Minor concedes.
“We still haven’t seen the true, full impact of JobsOhio. We’re still growing. We’re still filling out the rest of the platform,” he says. “We have seen great strides in terms of the projects and the wins that we have had and there is a timing element to this. … You have to be careful in terms of some of the narrow comparisons.”
He also points out that JobsOhio “isn’t going to be covering the entire economy.” Instead it focuses on selected industries that have “core strengths within Ohio” (financial services, food processing and the automotive industry) and growth industries (health care, information technology, advanced manufacturing and oil and gas). “We’re not going to be all things to all people,” he says.
Exploration of the Utica and Marcellus shale plays has been a key driver for the Mahoning Valley economy, leading a $1 billion-plus expansion at Vallourec Star and attracting new companies such as Exterran. “This is a long-term play,” Minor argues, and even if drilling activity has shifted to points south, the potential remains for further development here.
The long-term objective for Jobs-Ohio is to create an entity that “will withstand whoever’s in office,” Minor said two weeks before Kasich’s re-election as governor. “If we’re performing and do what we said we’re going to do, it shouldn’t matter who’s in office because they’re going to want to continue to strengthen, enhance and make this organization better.”
Pictured are representatives of JobsOhio:Matt Englehart, JobsOhio spokesman; John Minor, executive director; Don Grubbs, general counsel; and Jim Boland, chairman of the board of directors.
Copyright 2014 The Business Journal, Youngstown, Ohio.
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