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Dayton Daily News...
More than half of firms fail to meet job creation promises
January 8, 2012 

More than half of the companies that accepted state tax incentives to bring new jobs to the Dayton area or keep existing ones here failed to follow through on their end of the deal, according to the Ohio Attorney General’s Office. 

As part of a first-of-its-kind review, the AG’s office looked at nearly 3,000 Ohio Department of Development tax incentive agreements statewide with 2010 deadlines. That included 50 awards worth $21.2 million in state money given to companies in Montgomery County and surrounding counties. 

But only 38 percent of companies in the Dayton region delivered fully on the promised number of new jobs or training. The statewide average was 52 percent. 

The state has not yet sought to recover any of the money from most companies. 

In some instances, the state extended its deadline. 

In one case, Computer Sciences Corporation in Beavercreek, the state reduced the company’s 15-year tax credit from 65 percent to 55 percent after it failed to retain or create the required 350 jobs and retain 200 more. The amount by which the company missed the mark was not available. 

Eight companies have still not turned in their final reports, due in 2010. That makes it impossible for government officials to determine whether or not they held up the deal. 

The state plans to use the attorney general’s report as a benchmark for improvement, said David Zak, chief of the Ohio Department of Development’s business services division. “We’re not happy about the percentage (of compliance),” Zak said. 

He said a new process, which includes JobsOhio, the nonprofit corporation created to lead Ohio economic development initiatives, should improve the quality of economic incentive deals. 

“As we move forward, we’re going to get better and more efficient,” he said. 

The new administration will also have the benefit of foresight. All the Dayton-area deals the AG’s office reviewed were struck before or in the early stages of the recession. 

Companies are struggling to meet the pre-recession employment numbers; they are instead hiring temporary employees to save money, said Timothy Downs, Dayton’s assistant director of economic development. 

For instance, Dayton in 2007 gave Gem City Metal Technologies a $150,000 grant to create 15 jobs and retain 55 more by the end of 2011. Gem City was also the recipient of a $600,000 state loan near the same time to create  25 jobs and secure 23 more at-risk jobs by the end of 2010. The company has yet to submit a final report. A message left with the company for comment was not returned. 

When Downs checked in on Gem City last September, he found the company had hired 17 temporary employees and retained 50 full-time employees. The company’s deadline has expired. If nothing has changed, Dayton could technically try to recoup its money. But the city is hesitant to drop the hammer on financially struggling companies, Downs said. 

“We don’t want to try to squeeze $50,000 if that is going to cause them to lay people off. It’s sort of a balancing you have to do,” Downs said. 

The risk of economic incentives not panning out is worth the reward, said Joe Tuss, assistant Montgomery County administrator. County incentives have overall helped bring jobs to the area and kept them here. In 2007, the county gave Caterpillar $750,000 to create 500 jobs. Tuss expects the result to be closer to 600 jobs. 

“It’s one of those situations where you have to look at what is in the best interest overall in terms of preserving the tax base growing the tax base” while protecting taxpayers, Tuss said. 

Read this and other articles at the Dayton Daily News




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