“We are working every day to help businesses create new opportunities and new jobs in Ohio. In recent months we’ve seen job growth in Ohio again because in recent years we’ve been investing in growing Ohio industries and jobs that can’t be outsourced,” Strickland said. “The Freeport Press is already the largest private employer in Harrison County, and the addition of another state-of-the-art printing press is expected to create 40 new jobs. We’re proud to have provided a loan to help make this new equipment purchase possible.”

Congressman Zack Space adds “Being creative, innovative, and industrious is critical to bringing jobs to our region — and Freeport Press has shown those qualities impressively. They’ve been aggressive in making new investments and they’ve had the ingenuity and smarts to capitalize on emerging trends in the publishing industry. Working with Freeport Press has been a joy – and our joint effort to bring new jobs to Harrison County represents a perfect partnership between business and government.”

Financing for the project was made possible by Finance Fund, which provided $6 million in New Markets Tax Credits by partnering with the Ohio Department of Development and PNC bank.

“The Freeport Press plays an important role in the region’s economic vitality,” said James R. Klein, CEO of Finance Fund. “By connecting Freeport Press to necessary funding, we are helping to sustain its growth and provide additional opportunities for employment to the residents of Harrison County.”

According to Freeport Press CEO and Owner, David Pilcher, the printing press will enable the company to expand the clients its serves beyond the region.

“This new state-of-the-art printing press enables the Freeport Press to better serve its existing clients while creating a wonderful opportunity to grow the business,” Pilcher said. “It also ensures job stability for our valued employees and their families.”

Finance Fund was able to provide more than $2.45 million from our Finance Fund Capital Corporation (FCAP) and the New Markets Tax Credits (NMTC) resources for expansion and new equipment for the sand and gravel facility. This will not only help OBM compete in new markets and increase revenue, but will enable the company to hire new employees and stimulate Jackson’s economy.

This Thursday we’ll proudly join OBM in celebrating the new facility with a ribbon-cutting ceremony, tours of the facility and special before and after displays. Several local and state dignitaries will be in attendance, in addition to company CEO, president, employees and business partners.

Here’s to Ohio Basic Minerals—another Ohio economic development success story!

The vacant and abandoned properties issue is twofold, including both homes and commercial buildings that have been left unoccupied. Both issues are intertwined and understanding their relationship is vital to the redevelopment of these neighborhoods. People need places to work, but they also need places to live with their families. It’s just as simple as that.

The road to redevelopment of these neighborhoods will be long and challenging, not something Ohio will finish overnight. Some of the first steps simply involve taking care of the security and financial risks associated with abandoned properties, such as crime, garbage waste and lack of tax base. Many cities have wrestled with the challenge of maintaining the upkeep of vacant properties, some cities shifting responsibility to mortgage holders entirely.

Ohio’s cities have launched programs to help aid businesses and homeowners. For example, the city of Cleveland started its Vacant Properties Initiative Fund with loans specifically for commercial property ownership. Some cities have requested outside assistance to improve their vacant properties situation, such as Youngstown, Ohio. The National Vacant Properties Campaign provided a report to Youngstown and Mahoning County regarding ways to improve property ownership. Their findings included involving community-based groups, better enforcement of regulations, developing a regional approach to property banking and cultivating community development. The goal of these initiatives is to encourage businesses to remain in communities, keeping jobs available and the economic infrastructure stable.

At Finance Fund, we have been working in these types of situations for more than twenty years. Although many of our programs help reclaim vacant properties, like the Ironton Close to Home III project, we recently developed a program specifically to help nonprofit, community-based organizations gain site control of vacant and abandoned properties. This program, LandLOC, works by providing a flexible line-of-credit to qualifying organizations enabling site control of vacant or abandoned properties. Activities eligible for financing include legal and acquisition costs as well as expenses associated with the safety, security and stabilization of the property. Interested nonprofits should contact me at 614.221.1114 for more information.

The next time you drive past a vacant property in your community, try to look past the eyesore and envision how it could be transformed into new, productive use. This is one important step in how Ohio’s communities will achieve redevelopment and thriving neighborhoods, by envisioning the future together. 

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Breaking Ground on Close to Home III

When our program team met Sharon Hartwig and Charlie Kunkel, co-owners of St. Lawrence O’Toole Gardens, we were inspired by their dream of reclaiming a vacant, historic building for their community.  We’re proud to announce that dream came one step closer to reality last Friday when Lawrence County’s only assisted living center to be called Close to Home III, broke ground on the site of the old St. Lawrence O’Tool Community Center.

Upon completion, Close to Home III will create 30 new jobs.

“Finding a new use for this important historic building is a point of pride for the Ironton community,” Charlie told me. “Lawrence County has needed an assisted living facility for quite some time. We look forward to bringing this new resource to the region.”

The Close to Home III project will rehabilitate the now vacant St. Lawrence O’ Toole Community Center, originally built in 1910 as the St. Lawrence School. Its owners, St. Lawrence O’Toole Gardens, will build a 8,316-square-foot addition and making structural and sidewalk improvements. Of the 30 positions created by the project, 16 will be filled by individuals of low or moderate income.

Finance Fund partnered with the developers at St. Lawrence O’Toole Gardens, LLC by providing $2.7 million in New Markets Tax Credits funding. Also funding this project were the Ohio Department of Development, with a $500,000 grant from the Community Development Block Grant Economic Development Program, and a loan from the Huntington, West Virginia-Ironton, Ohio Empowerment Zone, Inc.

We also thank the Ironton Tribune for their nice story about the event.  You can read it here.

The efficacy of the NMTC has been documented by numerous public and private sources. For example, a 2007 report from the Government Accounting Office (GAO) suggests that NMTC increases financial involvement by investors in low-income communities. The NMTC Coalition’s 2008 Progress Report indicates investment, deployment, and demand are trending upward. A few examples of the efficacy of NMTC and its proven ability to spur economic growth in distressed communities include:
•    88% of investors say that they would not have made the same investments in low income communities without NMTC
•    At the beginning of 2007 with $12 billion in allocation, it has attracted $4.4 billion in investment with investment growth annually in the first 3 years of the program
•    Every $1 of federal tax revenue forgone as a result of the credit induces $8.90  in investments in low-income communities
•    Financed businesses that created or maintained more than 14,000 full-time equivalent jobs
•    Financed the construction or rehabilitation of nearly 27,000 affordable housing units

In addition, the 2007 GAO report showed that the total dollar amount of investments, number of investors participating, and efficiency of the NMTC program are all increasing at a rapid rate. It placed Ohio as third behind California and New York in dollars deployed and first in number of projects.
Emblematic of Ohio’s demand and capacity, with $75 million received, Finance Fund’s NMTC investments have:
•    Helped create 1,249 full-time equivalent jobs
•    Invested in projects creating 1,467 construction jobs
•    Invested in projects creating 536 child care slots
•    Helped to create 431 units of for-sale housing
•    Invested a total of $44,593,153 leveraging $221,159,679 in other funding.
One example of NMTC investment is in Caldwell, Ohio. Before 2005, if you were a parent in Noble County or one of its surrounding counties and were looking for child care, you would face a continual battle. Availability, cost, safety, quality, and accessibility all added to the frustration of finding the right place, the comforting place to care for your children.

It wasn’t much better for caregivers. Noble Learning Center had been in business for years — always addressing the space issues of high rent, low quality, no availability, poor fit, and no option to renew lease. Driven from location to location, Noble Learning Center operated out of rented apartments on the second floor of a senior center in rural Ohio. Then came the unfortunate news that they would not be able to renew their lease.

Unsure about the future of the Center at all, Center director LaShona
DeVolld made the call to Finance Fund that turned her dreams into reality. Her passion to provide for the community’s children and Finance Fund’s commitment to help them succeed by providing necessary access to capital, allowed the children of this very rural area to have a quality facility to plant the seeds of learning that will help them grow and develop into successful individuals.

LaShona discovered an old abandoned National Guard Armory with an open floor plan and a solid brick structure. She thought she had found her new home. After much patience and perseverance, LaShona purchased the former armory building and began major renovations. Funds received from multiple investors, including Finance Fund’s New Market Tax Credit Program, were used for these renovations, as well as furniture, equipment and supplies. Thanks to this program the center can continue its legacy of being the only licensed child care center in a four-county region and providing opportunity not only for children to learn and grow but for parents to gain peace of mind and economic flexibility.

The resulting child care center not only provides service for 135 children, it supported 20 construction jobs, 15 full time jobs, the productive reuse of an abandoned 14,880 square foot building and has become an economic engine in the local economy.

It is proposed that the State of Ohio create an Ohio NMTC program modeled after the federal program. Ohio has felt the backlash of a faltering economy perhaps even more so than the majority of other states in the nation. According to the Bureau of Labor Statistics, in February 2009, the Ohio unemployment rate was up to 9.4% compared to the national average of 8.1%. According to ODJFS, Ohio’s nonfarm wage and salary employment dropped 7,600 over the month, from 5,208,000 in January to 5,200,400 in February, with manufacturing and construction industries seeing a significant effect. Finally, Ohio’s 29 Appalachian Counties have been hit particularly hard, with a poverty rate of approximately 20% as compared to the rest of the state’s rate of 13%. This program would add targeted value to the Ohio economy by stimulating investments in Ohio’s low-income communities. The demand for the federal NMTC is extremely strong and has been since its inception in 2000; i.e. $11 in request for each $1 in allocation authority. A state NMTC program will supplement the federal program by incenting investment, attracting additional investors, and provide more opportunities for Ohioans. The economic impact of an Ohio NMTC program would assume an annual tax credit allocation of $25.6 million for a seven-year program. It would include the following:
•    Annual costs $10 million  in public funding or $70 million over 7 years
•    Leverages $25.6 million in direct investment annually or $179 million over 7 years
•    Leverages an additional $164 million annually ($6.40/credit financing $1)  or $1.1 billion over 7 years
•    $190 million  in projects annually or $1.3 billion over 7 years
•    Increases tax revenue through business, property, income, and other tax structures
•    In times of economic stress investors tend to be more conservative creating gaps in traditional financing as well as NMTC projects. If a state program mirrors the federal model it would easily fill that gap by adding additional  incentive to invest or invest more
•    Create jobs for Ohioans

The Ohio NMTC would be one of just a handful of its kind in the nation—placing Ohio on the map as a leader in this cutting edge initiative. Other successful programs include:
•    In 2007 Louisiana enacted a 35%, 3-year tax credit that supplements the federal program
•    Also in 2007 Missouri approved a $15 million tax credit program for investments in projects in distressed municipalities
•    In 2007 Mississippi enacted the Credit for Equity investments in Community Development entities
•    Texas enacted a state insurance premium tax credit for investment of certified capital in a certified capital company (also based off of the NMTC model) that began in the 2008 tax year
•    Connecticut created a $500 million tax credit program for investments in projects in distressed communities
•    The Michigan legislature is currently considering a state NMTC as well

In conclusion, the Federal NMTC program is proven to be one of the most effective tools in improving low-income communities. An Ohio NMTC program mirroring federal credits would effectively raise private capital, offer flexible financing products not otherwise available, increase Ohio’s competitiveness for investment dollars, invest in businesses and development projects in Ohio’s distressed communities creating jobs and building wealth for low income people, and enhance tax revenue. This program could be a life line for Ohio’s poorest communities. I want to thank you for the opportunity to address the Committee and for your time and attention on this matter. At this time I will be happy to answer any questions you might have.

Sources:
1.    Miara, Jim, The New Markets Tax Credit Program, A CDOs for Cities Briefing Paper: How This New Incentive Can Strengthen America’s Cities, CEOs for Cities, Boston MA, 2004
2.    The New Markets Tax Credit, Progress Report 2008, A Report by the New Markets Tax Credit Coalition, May 2008
3.    United States Government Accounting Office, Report to Congressional Committees, Tax Policy, January 2007
4.    National and State Corporate Income Tax Rates, U.S. States and OECD Countries, 2008, Tax Foundation, 2009, http://www.taxfoundation.org/taxdata/show/23034.html
5.    State Individual Income Tax Rates, 2000-2009, Tax Foundation, 2009, http://www.taxfoundation.org/taxdata/show/228.html
6.    Community Development Finance Institution Fund, New Markets Tax Credit, Compliance and Monitoring Frequently Asked Question, November 2006
7.    Promoting Investment in Distressed Communities: The New Markets Tax Credit Program, Community Development Finance Institution Fund, U.S. Department of the Treasury, October 2008
8.    Ohio Department of Job and Family Services News Release, March 2009
9.    Economy at a Glance, US Bureau of Labor, http://stats.bls.gov/eag/eag.OH.htm

William Graves, ODOD Community Development, Lt. Governor Lee Fisher, Jim Klein

For our first blog entry on our new web site, we’re thrilled to share the news of an initiative in partnership with the Ohio Department of Development.  No need to re-write the already written story about it -  I’ve included the traditional media materials below (including a podcast from Lt. Gov Fisher and myself).  I will editorialize to say that this unique partnership is a demonstration of our longstanding relationship with the Ohio Department of Development.  It delights us that we can help them be more creative in the delivery of solutions for Ohioans in need.

- JRK

New Initiative Provides Auto Financing for Work and Education

COLUMBUS, OHIO (February 3, 2009) – The Ohio Department of Development’s Office of Community Services along with the statewide organization Finance Fund are introducing the “Cars for Jobs and Diplomas” program. This new initiative is an effort to provide affordable used car financing and consumer assistance to approximately 60 low-income participants statewide. The Ohio Community Action Network will administer the program.

“Inadequate transportation is a major obstacle to finding and keeping a good job,” said Lieutenant Governor Lee Fisher, who also serves as Director of the Ohio Department of Development. “We believe that the Cars for Jobs and Diplomas program will serve as a helping hand in giving Ohioans the opportunity to save for a car, access quality education, and travel to and from work.”

The purpose of the Cars for Jobs and Diplomas Program is to provide qualifying participants an opportunity to purchase a vehicle enabling individuals to obtain or retain employment and/or education. The program serves as a financing component of local case management programs offered by agencies designated by the Ohio Department of Development’s Community Development Division, Office of Community Services.

The structure of this program will operate on a matching rate of 2:1. This means for every dollar saved in the participant’s qualified savings account, it will be matched with two dollars into a reserve account. Eligibility for this program will be determined by the local case management agency.

“We were honored that the Ohio Department of Development reached out to us once again to assist in the development and administration of the Cars for Jobs and Diplomas program,” said James R. Klein, CEO of Finance Fund. “This program will help families in distress take advantage of opportunities that will help move their lives forward.”

Podcast Quotes can be accessed through these links:
Lt. Governor Lee Fisher

James R. Klein, CEO of Finance Fund