11426061-compliance-data-for-award-agreements

This post is part of an occasional series examining state and local reports evaluating economic development incentive programs.  Here we look at Ohio’s 2013 report to the General Assembly: Award Recipient Compliance with State Awards for Economic Development, prepared by the Ohio Attorney General.

As the title suggests, this report’s purpose is to monitor the compliance of economic development award recipients with agreed-upon terms and conditions.  It does not consider economic impact in Ohio or company actions beyond the performance period. 

Here is a summary of key points:

The report evaluates 266 projects in four major award categories with a performance period ending in 2012.  Most awards were made between 2008 and 2010.

146 of the 266 awards were substantially (meaning they met 90% of their commitment) compliant, yielding a 54.9% compliance rate.  Compliance means the company met the performance metrics defined in the award agreement, which typically included commitments for job creation, job retention, capital investment, worker wages, and/or workforce training. 

The compliance rate varied substantially by award category:

• 100% compliance for workforce training awards, which had a total value $2.06 million
• 49.5% compliance for grants, which had a total value of $21.3 million
• 54% compliance for tax credits, which had a total value $27.2 million
• 56% compliance for loans, which had a total value $79.8 million
• Compliance rates range from 0% to 100% among the six loan programs evaluated
• The Innovation Ohio and 166 Direct loan programs were among those with the lowest levels of compliance 

One of the best elements of the report is the Appendix, which lists the individual companies that did not comply, the award program, reasons for non-compliance and the state response.

The Ohio Development Services Agency also reported that 99% of companies submitted the required annual reports – which should not be noteworthy, but is, given the weak reporting patterns seen in other states. The agency also “standardized the monitoring systems allowing companies to file annual reports electronically and file only one consolidated report for all project incentives.”  While this may seem mundane, both the standardization and availability of electronic filing are important steps in improving reporting, transparency and accountability.