Is a 64% compliance rate satisfactory for economic development incentive programs?

This article is part of an occasional series examining state

and local reports evaluating economic development incentive programs.  Here we look at Ohio’s 2012

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 255 projects in four major award

categories with a performance period ending in 2011.  Most awards were made between 2006 and

2008.

162 of the 255 of the awards are substantially (meaning they

met 90% of their commitment) compliant, yielding a 63.5% compliance rate.

The compliance rate varies substantially by award category:

  • 90% compliance for workforce training awards,

    which had a total value $7.15 million

  • 49% compliance for grants, which had a total

    value of $34.9 million

  • 60% compliance for tax credits, which had a

    total value $7.15 million

  • 42% compliance for loans, which had a total

    value $65.4 million

    • Compliance rates range from 0% to 82% among the

      five loan programs evaluated

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.

It would be interesting to start comparing evaluation

reports to come up with a benchmark for program compliance, but different

assumptions make this a challenge.  For

example, Ohio counts “substantially” compliant firms while Montgomery County

counts “fully” compliant firms.  Both

choices are understandable, but the difference may “substantially” change the

results. 

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