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
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
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