The Changing Role of Port Authorities in Ohio Economic Development. OEDA Annual Summit October 23, 2014

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1 The Changing Role of Port Authorities in Ohio Economic Development OEDA Annual Summit October 23, 2014

2 Panel Jean Carter Ryan President, Columbus Franklin County Finance Authority Susan Thomas Vice President Public Finance, Port of Greater Cincinnati Development Authority Mark Rantala Executive Director, Lake County Ohio Port and Economic Development Authority 2

3 Port Authorities: No two are alike Public Private Partnerships Infrastructure 3

4 What is a Port Authority? Quasi governmental organization Port authorities were created to conduct maritime, airport, and now economic development activities Activities that enhance, foster, aid, provide or promote: Transportation Economic development Housing Recreation Education Government operations Culture Research 4

5 Port Authority Powers The broad powers of a port authority make it a useful tool for economic development. Own, Lease, Sell and Construct Improvements to Real Property Issue Revenue Bonds Receive State and Federal Grants and Loans Exercise Powers on Behalf of Another Subdivision Establish Bond Funds May Maintain Confidentiality of Private Businesses Receive Federal and State Tax Exemptions 5

6 Port Authorities: A Unique Approach Private Sector Practices Risk Tolerance Market Focus Sense of Urgency Public Sector Tools Resources Credibility Long term perspective Value Creation Jobs Property Values Residents 6

7 PORT/FINANCE AUTHORITY PROGRAMS Bond Fund Program $1.5-$6 million loan size Fixed rate 90% financing or 100% Financing TIF & Governmental projects Columbus-Franklin County Finance Authority

8 Bond Fund Program Access to national capital markets 10% debt service reserve required Can participate with other public programs around state Columbus-Franklin County Finance Authority

9 Harrison West TIF/Bond Fund Fund park on former brownfield (AC Humko) $3,080,000 bond proceeds Structure allowed for bond prepayment and additional money for projects costs Business Loan program eliminated need for developer equity/loc Columbus-Franklin County Finance Authority

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11 Capital Lease Finance building or improvements Finance Authority holds title to building Enters into long-term lease (min 7 years) Construction materials exempt from state & local sales tax (Franklin County 7.5%) Columbus-Franklin County Finance Authority

12 Capital Lease Structure Capital lease 20 year term/7 year call Ground lease land is an option All benefits of ownership accrue to client depreciation, etc. Taxes/operating cost paid by client Columbus-Franklin County Finance Authority

13 Sales Tax Exemption MSC Industrial Direct: $35 million construction cost $17.5 million construction material cost $17.5mm x 6.75% = $1,190,000 $1,190,000 x 80% = $960,000 savings Columbus-Franklin County Finance Authority

14 Energy Financing Features: Transaction size $100,000 to $5,000,000 Up to 100% financing of project costs Fixed rates up to 15 years Energy savings should range from 15%- 20% (need energy audit) Columbus-Franklin County Finance Authority

15 Energy Financing Features: May be paid for by special assessment on property Energy savings pay for the investment Financing decision based on: credit worthiness of borrower & energy improvement Columbus-Franklin County Finance Authority

16 Energy Eligible Projects: Office Buildings K-12, University Retail Government Manufacturing Non-profits Healthcare Columbus-Franklin County Finance Authority

17 Energy Eligible Improvements: Energy efficiency retrofits to existing buildings including: Lighting Energy management systems and controls High efficiency HVAC Columbus-Franklin County Finance Authority

18 Energy Eligible Improvements: Water conservation or reduced flow Energy projects and distribution technologies including: Waste energy recovery, power generation, absorption chillers, process reviews Fuel cells Renewable power generation Columbus-Franklin County Finance Authority

19 EB-5 Background EB-5 is a US Citizenship and Immigration Service (USCIS) program to stimulate foreign investment and job creation EB-5 immigrant investors help finance development projects to create US jobs Immigrant investors earn US residency when jobs are created Columbus-Franklin County Finance Authority

20 EB-5 Background EB-5 investors are motivated by Green Card, not necessarily ROI, so developers receive financing at competitive rates $500,000 minimum investment when project is in a rural area or Targeted Employment Area (150% above national average). $1 million USD required if outside rural or TEA EB-5 investments may be Direct or through EB-5 Regional Center Columbus-Franklin County Finance Authority

21 Regional Centers/EB-5 Regional Centers focus on job creating projects in the following industries: Mixed use real estate developments Hospitals, medical offices and laboratories Hotels, restaurants and retail Advanced technology and energy Manufacturing, distribution, logistics facilities Public buildings and infrastructure Columbus-Franklin County Finance Authority

22 Regional Centers/EB-5 Job creation is counted by accepted USCIS methodologies (direct workers, construction spend, incremental revenue projections, other output metrics) Columbus-Franklin County Finance Authority

23 EB-5 Financing Structure 5-year interest-only loan with bullet and identifiable exit strategy will be preferred structure $5 million minimum loan in $500,000 increments EB-5 loan may be approximately 50% LTV of total project Columbus-Franklin County Finance Authority

24 EB-5 Financing Structure Project must create 10 jobs within 2 years for every $500,000 loaned Competitive lending rates Defined security for loan (i.e. first mortgage, corporate, personal guarantee) Public sector funding or incentives should be included in project Columbus-Franklin County Finance Authority

25 EB-5 & Ports Many ports have established relationships with EB-5 Centers Toledo/Columbus/Zanesville/Jefferson MAG Cincinnati/Cleveland/Summit CIF Columbus-Franklin County Finance Authority

26 Port of Greater Cincinnati Development Authority Susan E. Thomas Vice President, Public Finance October 23, 2014

27 Real Estate Development Port Authority powers make them good public sector real estate developers: Own, Construct, Sell and Lease Improvements to Real Property Ability to buy and sell not at fair market value Issue Revenue Bonds (including tax exempt debt) May be exempt from property tax Three Case Studies: Zanesville Muskingum County Port Authority Heath Licking Newark County Port Authority Port of Greater Cincinnati Development Authority 27

28 Zanesville-Muskingum County Port Authority Three Port Authority Business Parks NorthPointe Business Park Airport Industrial Park EastPointe Business Park

29 NorthPointe Mixed Use Business Park Kellogg s Anchor Glass Container Flow Liner Time Warner Kensington Village Primrose Autumn Healthcare and several smaller businesses Remaining parcels primarily zoned for Office use

30 Airport Industrial Park 2 mi. to I 70 Plaskolite New Bakery 5Bs White Castle Bob Sumerel Tire, Cardinal Health SEOIL USA New Wayne Mfg.

31 Halliburton

32 Heath-Newark-Licking County Port Authority Banks industrial property and land Own 935,000 sqft 98% Leased Aerial of campus 32

33 Heath-Newark-Licking County Port Authority Exterior view, UTC Aerospace Systems Spec Space Interior 33

34 Port of Greater Cincinnati Development Authority Development Challenges of Cincinnati and Hamilton County: Urban sites within the I 275 beltway none large enough for major relocations. Sites require assemblages; remediation; demolition. Port Authority de risks the sites and partners with private developers 34

35 Neighborhood 35

36 Before: Jordan Crossing 36

37 MidPointe Crossing Reading & Seymour, Bond Hill 37

38 From Seymour Plaza to 1 st PACE project in Hamilton County 38

39 Hamilton County Land Reutilization Corporation Economic development Blight abatement/ nuisance remediation Neighborhood stabilization/ revitalization Strategic parcel assembly Historic preservation 39

40 Ohio Economic Development Association Summit October 23, 2014

41 Powers of Ohio Port Authorities The Port Authority is authorized by State Law to enhance, foster, aid, provide or promote: Transportation Lost Nation Airport Economic Development County Economic Development Department Website Housing Bond Financing Recreation Lake County Coastal Development Plan Governmental Operations support 23 Cities, Townships and Villages Culture or Research

42 LCOPEDA Mission The Lake County Ohio Port and Economic Development Authority was created in February 2007 to promote projects that will provide for the: creation of jobs and employment opportunities improve the economic welfare of the people residing in Lake County

43 Small Business Programs Small Business Development Center SBDC SBA 504 Loan Program Host SCORE office MEP Program

44 Other Programs Brownfields (Coe property clean up) Energy Programs (PACE Bonds at Great Lakes Mall)

45 Case Study South Shore Controls / Lake County / Village of North Perry Business needed new location but wanted to remain in village County looking to divest maintenance garage Port Authority had bonding capacity and ability to sell property without going through bid process Bond purchase gave higher return to Village while lowering cost of financing for Company

46 Thank you. Questions? Contact Us. Jean Carter Ryan Columbus Franklin County Finance Authority Susan Thomas Port of Greater Cincinnati Development Authority Mark Rantala Lake County Ohio Port and Economic Development Authority