The Ohio General Assembly is considering a proposal to limit the ability of other states and their local governments to directly finance economic development projects in Ohio. Under Senate Bill 134, so-called “foreign entities” (i.e., governments outside Ohio) would need to seek the approval of an Ohio local government before providing financing for an Ohio project. The bill follows recent efforts by several port authorities to offer bond financing across state lines.
The bill requires a foreign entity seeking to finance a capital improvement project in Ohio to apply to the port authority, municipal corporation or county in which the proposed project will be located. If the local government determines that it cannot or will not provide financing on similar or better terms, it must approve the foreign entity’s application. If the local government denies the application, the foreign entity can appeal to the Ohio Development Services Agency (ODSA).
If a foreign entity finances a capital improvement project without applying for local approval or after its application has been denied, the local government that could have financed the project or the director of the ODSA can obtain a court order halting the financing. The foreign entity also can be required to repay either 75 percent of the fees it received from the financing or 100 percent of the fees that the local government would have generated by financing the project, whichever is greater. An Ohio government agency that works with a foreign entity in violation of the bill will have its actions voided and can be jointly and severally liable for the fee. For more, read these Bloomberg, Wall Street Journal and Bond Buyer stories.
S.B. 134 would limit the ability of local governments in other states to directly finance economic development projects in Ohio
