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Bloomberg...
Ohio
to Get
$1.4 Billion From Development Agency’s Bond Sale
By Mark
Niquette
Jan 23,
2012
A nonprofit
organization created to keep and attract jobs will lease Ohio
(STOOH1)’s
liquor-distribution enterprise using $1.4 billion from long-term bonds
backed
by its profits, said Tim Keen, the state budget director.
The state
is transferring its wholesale liquor enterprise for 25 years to
JobsOhio, a
private, nonprofit entity the Legislature brought into being last year
at the
behest of Republican Governor John Kasich. Ohio doesn’t have
government- run
liquor stores; it buys and distributes alcohol to retailers.
“This model
that we are creating in the state of Ohio is one that’s going to be
studied
across the country,” Kasich said during a conference call with
reporters today.
“If we do it right, it will be one that will be envied.”
Liquor
profits averaged $221.9 million annually from fiscal 2008 to 2010, the
Ohio
Department of Commerce has said. The state projects about $100 million
will be
available each year for job creation and retention after debt service
on new
bonds, said Mark Kvamme, JobsOhio’s interim chief investment officer.
That
would be larger than similar arrangements in Michigan, Kentucky and
California,
and would be one of the biggest such dedicated funding sources in the
U.S., the
International Economic Development Council in Washington said last year.
Bond Sale
Coming
JobsOhio
will pay the state $500 million for the transfer plus an estimated $750
million
to pay off existing debt backed by the liquor money and $150 million
for
economic revitalization projects, Keen told reporters in a conference
call
today.
The agency
will make additional deferred payments equal to 75 percent of all
annual
liquor-profit growth above 3 percent, as well as $43 million per year
to fund
economic revitalization projects, according to a fact sheet from
Kasich’s
office.
The agency
expects to issue revenue bonds during the first quarter, said Kvamme, a
former
Silicon Valley venture capitalist. He said a final amount of the
issuance is
being determined.
JobsOhio
will contract with the Ohio Department of Commerce to continue
overseeing
liquor distribution and with the state’s existing development
department to
provide job-creation work, Kvamme said.
Seeking
Transparency
The new
entity will have a dedicated funding source for development projects
not
subject to variations in state funding from year to year, and it and
will be
able to complete deals more quickly and creatively than a state agency
could,
Kvamme has said.
Critics of
the arrangement, including Good Jobs First, a Washington-based center
that
tracks economic-development deals, have said private entities that seek
jobs on
government’s behalf lack accountability and transparency.
JobsOhio is
led by a nine-director board appointed by Kasich, including Bob
McDonald,
president and chief executive of Cincinnati-based Procter &
Gamble Co.;
Gary R. Heminger, president and chief executive of Marathon Petroleum
Corp.
(MPC), based in Findlay, Ohio; and Steven A. Davis, chief executive
officer of
Bob Evans Farms Inc. (BOBE) in Columbus.
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