AIA Bulletin

Union contracts for school construction projects dominated Thursday’s Ohio School Facilities Commission (OSFC) meeting, with the commission’s director defending his actions on two particular projects and an association representing contractors calling for him to resign.

Two months after being chosen by Gov. Ted Strickland to lead the Ohio School Facilities Commission, Richard Murray attended the school board meeting in the small Ohio River district of New Boston.

The message he delivered: Your building project has problems, but if you use union labor, they will go away, according to New Boston Superintendent Mike Staggs.

“If you sign the PLA, we’ll make it work,” Murray told the packed room about a “project labor agreement,” according to Staggs’ detailed notes of the meeting that included union officials.

Now, Ohio Inspector General Thomas P. Charles is digging into the case to determine whether Murray has crossed any lines by pushing for districts to use union labor through project labor agreements, according to several people interviewed by state investigators. Charles declined to comment.

Since its inception in 1997, the commission has distributed more than $8.3 billion for school construction and renovation, resulting in 760 new and renovated schools for about 423,000 children.

“We would categorically deny any quid pro quo for anything,” said commission spokesman Rick Savors. Murray was in meetings Friday and was not available for comment, Savors said.

Staggs said Murray attended a Nov. 19 meeting and discussed projected cost overruns as well as the need for a costly retaining wall at New Boston’s site for an $18.5million school for its 467 students.

The school board was considering whether to enter a project labor agreement that would require the use of union labor.

“Our board was under the impression that if we signed a PLA, we wouldn’t have to worry about excess cost or the retaining wall,” Staggs said.

He thinks the commission delayed state approvals because the school board backed out of the PLA after union bids in a nearby district came back 22 percent over budget. The commission then objected to the New Boston building site, using what Staggs considered bogus reasons, and proposed another site without consulting school officials, he said.

“It’s unethical … unbelievable,” Staggs said. The original site ultimately was approved by the state about a month ago.

Strickland spokeswoman Amanda Wurst said the governor is awaiting Charles’ report and will carefully review his analysis and recommendations.

“The governor knows Rich Murray to be a man of high integrity with a dedication to making decisions in the best interest of the people and schoolchildren of Ohio,” Wurst said.

Murray formerly was the head of Ohio LECET, a group that assists union workers and the firms employing them in winning construction contracts. Strickland recommended him for the facilities commission post, and the commission agreed, hiring him Sept. 3.

Two of the commission’s three voting members report directly to the governor. Strickland, a Democrat, is seeking re-election this year with unions’ backing.

Last month, Murray unilaterally decided that union workers will rebuild the Ohio deaf and blind schools in Columbus’ Beechwold neighborhood, saying a project labor agreement there will help to ensure safety.

Murray replaced Michael Shoemaker, a Democratic former state lawmaker and school teacher who also had been a Strickland pick. Shoemaker said he was under intense pressure from union officials to oust non-union firms from jobs.

For the first 10 years of the commission’s operations, under Republican governors, it prohibited PLAs or the payment of prevailing union wages, which effectively locked unions out of the work, Shoemaker said. When Strickland took over, unions were demanding payback, Shoemaker said.

“This is still a fight in the civil war over prevailing wage that started in 1997,” Shoemaker said Friday.

“To be fair, I could have probably still been there if I had thrown out the non-union guys. I think the construction managers have been told: ‘You find something wrong with these non-union contracts.’ I think that’s the method to the madness.”

Tony Mantell, superintendent of the small Clay school district near Portsmouth, said he has been interviewed by investigators amid the district’s work on a building project.

“I fear that everybody’s motives are not pure right now” at the school facilities commission, Mantell said. “I don’t feel it should be a union, non-union issue.”

Elaine Barnes quit her job as green schools program manager this year partly because of what she described as Murray’s unwritten rules to help unions.

“I think it’s just borderline criminal what’s going on,” Barnes said.

“The last thing I’m going to do is spend my energy on projects where the rug is constantly being pulled on people. It was really decimating the morale of the design-construction team,” she said. “Everybody knew what was going on, but nobody spoke about it. It felt nefarious. … The entire executive staff was running around like scared chickens.”

Staggs wrote Strickland about his concerns Feb. 17 and complained to commission members at their Feb. 25 meeting. Murray said there was no connection between the PLA, or lack of one, and the approval of the district’s building site.

Chairman J. Pari Sabety, also the state budget director, said at that meeting that there had been no change in policy permitting school districts to choose between union labor or the hiring of non-union companies.

Kathleen Somers, president of the Ohio Valley chapter of the non-union Associated Builders and Contractors, said school districts have been steered toward more-expensive union labor since Murray took over the commission.

“They are feeling a lot of pressure to use PLAs. It all seems to boil down to ‘You have to play ball my way, or you’re not going to get your money.’ It just doesn’t seem tax dollars should be manipulated in this matter.”

The Board of Trustees at Ohio State University authorized release of $925 million for design, construction, and construction management contracts related to the OSU Medical Center’s ProjectONE.

The project is one of three in a pilot program the General Assembly authorized to test alternative methods of managing public construction in the state.

The $1 billion medical tower is being financed with money borrowed through university bond sales, and $75 million in development funds.

Trustee action came as Governor Ted Strickland, OSU President Gordon Gee, Columbus Mayor Michael Coleman and others broke ground for the expansion that is expected to result in creation of 10,000 full-time jobs.

Mr. Strickland said the project would provide an immediate economic boost to central Ohio by creating 5,000 new construction jobs while transforming the center into a worldwide leader in innovation.

“But the project will also have a long-term impact on central Ohio’s economy by attracting the best students, doctors and scientists to fill some of the 10,000 permanent jobs that will be created here,” the governor said.

“The result will be faster and greater job-creation, more path-breaking medical research, and better care for patients and their families,” he said.

OSU said 6,000 of the full-time jobs created over the course of the project would be at the medical center. At least 4,000 indirect, full-time jobs would be generated throughout the region from spending by the university, its faculty, staff and visitors.

By 2015, ProjectONE is forecast to pump $4.1 billion annually into the Ohio economy.

Included is construction of a central, single tower that will house a new Arthur G. James Cancer Hospital and Richard J. Solove Research Institute, along with a new critical care building, integrated spaces for research, education and patient care, and upgrades to existing facilities.

Though House and Senate panels moved closer May 12 to having alternative energy tax incentive bills go to their respective chambers for a vote, those backing the two bills have very different visions of what the legislation should look like. 

A day after Gov. Ted Strickland called for legislators to move before summer recess legislation on, among other things, renewable energy tax treatments, committees in both chambers planned Wednesday to report the bills out of committee.

The House Ways and Means Committee, however, did not follow through with its plan to offer amendments or vote to advance the bill. Committee Chairman Tom Letson (D-Warren) said in an interview, however, the bill will likely hit the House floor in two weeks.

“There are differences in the substance as to what the bills do,” Mr. Letson said. “One of them is we really see this as an Ohio jobs bill and (there are) more jobs incentives in the House version then there are in the Senate version.”

The House measure would offer tax incentives exclusively to wind and solar energy projects. The Senate version goes beyond those two to include other forms of alternative energy, such as clean coal and cogeneration.

“The others are laudable ideas and may well be dealt with in separate bills at some future date,” Rep. Letson said. “This is really a request from and a desire to put jobs in Ohio and construction over the next two years.

“Quite frankly the inclusion of those other types of energy generation either are not possible to even get started in the time frame that the federal government and the state are looking at or they are already things that receive tax breaks, such as current base line coal production,” he said.

Ultimately the chairman thinks the House version is the more substantial of the two.

“I believe that in terms of the origin of the two bills, I believe the Senate version is a skeleton, and I believe we put flesh on the bones as how to actually work it,” Rep. Letson said.

The Senate committee did report its proposal, but didn’t draw unanimous support even from majority Republicans. The Senate Energy and Public Utilities Committee approved its heavily amended version of the legislation with dissenting votes from Sen. Karen Gilmore (R-Tiffin) and Sen. John Husted (R-Kettering).

Additionally, Sen. Steve Buehrer (R-Delta) said although he would vote for reporting the bill, he has concerns about the impact on landowners. Once people see what industrial wind farms look like, officials are going to hear more complaints because the turbines will change the landscape of communities.

Bill Hearings: Senate committee members voted to harmonize the amendments in the bill and waive a fiscal provision. Amendments approved by the Senate committee Wednesday would:

 ·       Extend an amendment added Tuesday to allow county commissioners to not only approve a project but to specify additional requirements the project should meet, including modification of the payment in lieu of taxes amount.

·       Ensure each taxing unit within a project’s affected counties would receive a copy of the application from the Department of Development.

·       Clarify that projects started by Jan. 1, 2010, would be eligible for the tax treatment.

·       Clarify that the director would receive a certificate of completion no later than 60 days after the effective date of the bill.

·       Add cogeneration technology as an eligible form of alternative energy for the tax treatment.

·       Clarify eligibility applies to those owners that contract for the sale of power with a rural or municipal power agency.

·       Expand involvement of special improvement districts.

·       Require the Public Utilities Commission to conduct a study of reactive power in the state.

On the last amendment, Sen. Tom Sawyer (D-Akron) said he is concerned that by adding additional generator capacity to the state’s transmission system, the state will not have sufficient reactive power, which could result in a blackout similar to the one in 2003.

“As we add additional generator capacity in the form of particularly wind capacity, I’m concerned that we don’t make sufficient provision for reactive power,” he said.

Sen. Jimmie Stewart (R-Albany) said he decided not to offer an amendment to give every consumer the ability to opt out of utility assessments. He said, however, the matter warrants further study.

Also at the Senate panel’s ninth hearing on the bill, John Warrington, of Crawford County, gave testimony against the bill because of the negative impact wind turbines have on property owners.

Companies say they cannot be profitable without further tax relief. “I say they lie,” he said.

Following him was David Applebaum, director of regulatory affairs for NextEra Energy Resources, who said the measure is a jobs bill.

Sen. Schaffer asked the witness what his company tells homeowners near where a wind turbine will be placed. Mr. Applebaum said the company provides the family with all the information they need.

When asked to clarify, Mr. Applebaum said the company works with homeowners to lease their property and, presumably, there are specific standards in place to deal with setback to ensure there is no impact on homes. Once the turbine is installed, the company will help property owners study and mitigate issues.

The House Ways and Means committee heard the same testimony from NextEra Energy Resources, but from a different witness: John DiDonato, vice president of development.

Rep. Terry Boose (R-Norwalk) asked if Ohio is ready for this construction and will the construction workers come from Ohio. The witness said he thinks Ohio is ready; the construction companies are not headquartered in Ohio, but they would likely hire Ohioans.

Mr. Boose asked from where the parts of the wind turbines would be derived. Mr. DiDonato said the parts will be assembled in the U.S. Ancillary businesses will likely set up in Ohio.

Rep. Terrence Blair (R-Washington Township) asked how many ongoing jobs will be created with each wind turbine. Mr. DiDonato said for about every 10 wind turbines there is one permanent job created. A study has shown, however, statewide 1,600 other jobs were created as the result of a wind farm.

Rep. Winburn asked how load centers impact a wind turbine farm. The witness said wind energy would never be a baseload resource. The megawatts produced by a wind turbine would displace whatever highest cost unit would otherwise be dispatched.

Also in the House Committee, members heard testimony from Hardin County Commissioner Edward Elliott, who said he supports the bill because of the positive impacts wind farms have had in his county.

Milo Schaffner, vice president of the Van Wert County Township Association, testified in opposition to the bill, saying wind energy actually costs more and pollutes more because of the backup generation that must be supplied during intermittent power.

The Supreme Court of Ohio gave legs Thursday to its prevailing wage ruling against the Franklin County Commission, finding the county had committed the same abuse of discretion against the low-bid contractor for the county’s new animal shelter as it had in the widely publicized dispute over Huntington Park baseball stadium.

Gaylor Inc., an interstate electrical contractor, submitted the lowest bid for the county animal shelter but was told by the Department of Public Facilities Management last December that it had violated the county ban on firms out of compliance with prevailing wage laws more than three times in a two-year period within the last 10 years. The stipulation is one of 25 criteria purportedly used to determine whether a “bidder’s bid is the best,” as enumerated in Section 8.2.4 of the county guidelines.

“The county’s determination that Gaylor had violated prevailing-wage law was based on its own review and investigation of Ohio Department of Commerce records, even though the department has never found that Gaylor violated prevailing-wage law,” wrote the 4-2 Court. “All of Gaylor’s alleged violations were unintentional underpayments that it had settled without admitting liability or any administrative or judicial finding of liability.”

The company appealed the finding, submitting further evidence that it had never been classified by the state of Ohio as a prevailing wage violator. After meeting with Gaylor, county facilities management Director James Goodenow affirmed the department’s original determination and denied the protest on Feb. 9.

“The county’s rejection of Gaylor’s bid was based solely on the county’s interpretation of Section 8.2.4.15 despite having no evidence that Gaylor had been found by any administrative or judicial authority to have violated prevailing-wage law; the county did not consider any of the other criteria,” the Court said.

The company filed a complaint with the Supreme Court on Feb. 22 and asked that Franklin County be enjoined from proceeding with the planned construction.

“The next day, Feb. 23, the Franklin County Board of Commissioners awarded the electrical-systems contract for the county animal-shelter project to Jess Howard Electric Inc., for about $100,000 more than Gaylor’s bid, executed the contract, and issued a notice to the company to proceed,” the Court noted.

Despite the county’s charge that work had commenced on the project and that an injunction would be “moot,” the Court stayed further action on the animal shelter until it could issue an expedited ruling.

“This case is not moot,” the Court said. “Gaylor filed this action challenging the county’s rejection of its low bid on the electrical-systems contract for the county animal-shelter project and sought a stay of respondents’ actions on Feb. 22, which was before the board awarded the contract to another contractor. And although the board did, in fact, award the electrical-systems contract to another bidder on Feb. 23, which preceded our March 12 stay, respondents have introduced no evidence that the other contractor commenced construction pursuant to the awarded contract before we issued the stay.”

The high court reviewed the case record and determined, as it had in State ex rel. Associated Builders & Contrs. of Cent. Ohio v. Franklin Cty. Bd. of Commrs.(see The Hannah Report, 3/26/10), that Franklin County was once again guilty of an over-reliance on a flawed interpretation of fair labor standards.

“Notwithstanding the language in the county’s invitation to bid, the county treats the prevailing-wage violations of Section 8.2.4.15 as dispositive and it ignores other factors once it determines that a bidder has violated prevailing-wage laws more than three times in a two-year period in the last ten years….” the Court determined.

The Court denied, however, the company’s request that Franklin County commissioners be compelled outright to grant Gaylor the electrical contract.

“It is not entitled to this relief because it did not timely amend its complaint to include a request for it and it is ultimately the board’s determination under R.C. 307.90(A) whether Gaylor is the lowest and best bidder,” the Court said.

 The late Chief Justice Tom Moyer had led the majority in the Associated Builders decision but did not participate in the Gaylor opinion. Justice Judith Ann Lanzinger once again joined acting Chief Justice Paul Pfeifer in dissent, citing the minority opinion in Associated Builders.

If the General Election in November is anything like the May 4 primary election, then Ohio voters are in for a wild ride. Many of the top races were expected to be settled by now, but voter discontent and last minute switches have added new elements to the statewide races. Voters will also have two statewide issues in front of them that may be familiar.

The first, Issue 1, asks approval for bonds to fund the Third Frontier program. It has bipartisan endorsements and support along with no organized opposition. But times are tight, and voters may not want to approve more borrowing by the state. Other criticisms of the program include that it allows the state to pick winners and losers, something that should be decided by the free market.

Issue 2, which relocates the Columbus casino, also has no organized opposition that have previously worked to defeat earlier casino issues. An added benefit to the issue is the support of many in Franklin County who had opposed the casino issue last November. But the issue needs approval statewide, and voters sick of gambling issues or confused by why they are being asked to decide a Columbus issue … it’s in the state constitution, so it needs state approval … might throw the “No” switch.

Secretary of State

In early 2009, it appeared that the fierce primary battle for secretary of state would be on the Democratic side, with Rep. Jennifer Garrison (D-Marietta) battling Franklin County Commissioner Marilyn Brown over who would succeed Jennifer Brunner.

On the Republican side, Sen. Jon Husted (R-Kettering) had built himself a sizeable war chest and looked to cruise into the 2010 General Election. But then Brown dropped out, and Garrison was pushed aside by state Democrats in favor of Maryellen O’Shaughnessy, and 2006 spoiler Sandra O’Brien, the former Ashtabula County auditor, entered the Republican primary.

Much of the race has focused on the wild card potential of Ohio Tea Party groups. Husted has been traveling the state speaking to Republicans touting his conservative credentials in commercials, but some groups have concerns with Husted stemming from when he was House speaker, and O’Brien pulled the surprise before when she upset Treasurer Jennette Bradley in the 2006 Republican Primary. The race could be a gauge of the influence and power of the Tea Party movement and how dissatisfied voters are with any current officeholder.

Auditor

This has become another race that has sparked primary excitement when none was expected early on.

That excitement came after Auditor Mary Taylor decided not to run for re-election and instead joined Republican gubernatorial candidate John Kasich as his lieutenant governor running mate.

Delaware County Prosecutor Dave Yost is the Ohio Republican Party Executive Committee-backed candidate, having received the endorsement after he agreed to switch from the attorney general’s race to the auditor’s race. He is facing Rep. Seth Morgan (R-Huber Heights), who has Tea Party support and has tried to paint Yost as the establishment and “liberal media” backed candidate.

This race is another test of the influence the Tea Party has gained within the Republican Party’s grassroots.

The Ohio Liberty Council, a coalition of Tea Party groups, has endorsed Morgan, a freshman legislator, with many of its members saying they weren’t happy with Yost when he chose to switch to the auditor’s race instead of challenging former U.S. Sen. Mike DeWine in the attorney general’s race.

U.S. Senate

While Lt. Gov. Lee Fisher has more money and a lead in the polls over his primary opponent Secretary of State Jennifer Brunner, there are a number of undecided voters still in the race. In a Quinnipiac Poll released on Wednesday, 34 percent of likely Democratic primary voters surveyed said they did not know who they would vote for, and 51 percent of those who chose a candidate said they may change their mind.

The poll also showed Fisher leading Brunner by 17 percentage points. Fisher went on the air last week with advertisements aimed at swaying those undecided voters.

Brunner has played the underdog throughout the campaign, and is running a grassroots campaign. If elected, she would be the first woman to serve in the U.S. Senate from Ohio.

Whoever emerges from the race will face a formidable foe in former U.S. Rep. Rob Portman, who has built a $7.6 million war chest as he is unopposed in the primary.

April issue of SAO eNews is now available at the State Architect’s Office website at http://www.ohio.gov/sao (click on SAO eNews – April 2010).

The House Ways and Means Committee took conflicting testimony April 20 on HB 464 which would exempt qualifying wind and solar energy facilities from property taxation for up to 20 years and  require payments in lieu of taxes on the basis of each megawatt if production capacity of such facilities.

House committee members heard from various representatives of wind developers and Ohio-based businesses. The meeting ended with a lone opponent to the legislation calling the bill, “unwarranted.”

Tom Stacy, an engineer, said he has studied wind energy versus other types of energy sources full-time for the past two years. During his testimony he challenged the information given to committee members about this issue, specifically calling out the American Wind Energy Association (AWEA).

“While a renewable energy mandate is in place in Ohio, it was constructed without proper consideration of net environmental impact, net job impact, land use or a perspective on the economics involved in the renewable business,” Stacy said.

He asserted that it has been a long standing tactic of the wind energy industry to point out that “neighboring states are more generous.” He asked rhetorically whether the members have the will to vote against an unneeded tax giveaway to an industry who threatens to leave the state unless their requirements are met.

He said because the wind energy cannot be stored, it should actually be devalued. Stacy added that he has challenged the Ohio Air Quality Development Authority (OAQDA) to evaluate the implications of wind on net energy emissions. He has not received a formal response.

“Energy storage is not scalable or affordable, and timely production is vital for electricity – which is an infinitely perishable commodity,” Stacy said.

He challenged the members to consider energy a commodity with the leverage of a value added tax. “Electricity is used in every step of manufacturing of everything, and its price accumulates in end products – often accounting for half or more of the total cost content – of everything. Manufacturing competitiveness is important to Ohio and our nation, and expensive, low value energy will hurt us. If we must have it, any tax revenue from its deployment is justified,” Stacy said.

On the other side of the issue was Terrence O’Donnell, representing Horizon Wind Energy, which plans to develop a large wind farm in Paulding County.

O’Donnell said that the OAQDA bonding program for wind projects does cause some challenges with regard to personal property tax and real property tax, however they do agree with the steady 2 percent escalator.

Another issue he pointed out was the timeline set out in the bill to have an Ohio Power Siting Board (OPSB) certification completed. He urged members to modify the deadline for certification by the end of 2010 to “be filed by the end of the year.”

Rep. Huffman asked about prevailing wage requirements for Horizon project workers. O’Donnell said the company pays wages at or above prevailing wage and doesn’t oppose it. He said the company would also support using as much of its supply chain from within Ohio as possible.

Jim Bowser, superintendent of Upper Scioto Wind/Energy Academy and assistant superintendent of Upper Scioto Valley Schools in Hardin County, has been a proponent of this issue and has testified in both the Senate and the House on this issue.

Bowser said he is looking at these wind projects as not only an energy cost saver, but an educational and career tool for area students.

Rep. Boose asked if his school would be looking into tax deductions for energy from solar or waste. Bowser said they would apply for tax incentives for both solar and waste energy.

Also testifying in support of HB464 were Greg Noetlich, COO for Elyria Foundry; Larry Viterna, president and CEO of Nautica Windpower LLC; and Jason Clark, representing the Ohio Vicinity Regional Council of Carpenters, Millwright Local 1066.

The Ohio Manufacturers Association, the Ohio Environmental Council, and director of Invenergy, LLC, all submitted written testimony.

The Ohio Department of Transportation’s plan to offer $1 million stipends to unsuccessful bidders for its I-90 inner belt bridge project in Cleveland came under scrutiny Friday from Inspector General Thomas Charles, whose office released a report that found ODOT lacks clear authority to pay stipends and failed to show evidence backing its argument that the loss of stipends could hamper bidding.

The department has selected three teams to submit design-build proposals for the $450 million project.  Without the stipends, ODOT argues, firms might be less likely to spend the time and money to develop proposals for such a large, complicated project. Unsuccessful bidders would be entitled to the stipends if their proposals score at least 70 out of 100 points. The department says it is following federal transportation guidelines in offering the stipends, which are subject to Controlling Board approval.

Charles’ report said his office decided to investigate the matter after learning about the intent to pay stipends in a Feb. 1 Columbus Dispatch story.

“ODOT failed to present any concrete data or evidence showing that design-build teams will shy away from competing for the $450 million project without a stipend,” the report states. “Indeed, ODOT officials could not cite a single example of a past project that suffered because a stipend was not offered. Given the economic climate in the nation and the state of Ohio, we believe that firms should be expected to assume both the risk and potential reward of bidding on the Inner Belt Bridge.”

The report also raises doubts about ODOT’s legal authority to pay stipends.

“ODOT believes that it can pay the stipends because the statute does not expressly prohibit it from doing so; however, there is no legal foundation for this belief. While the absence of clear statutory or rule authority to pay the stipends is not necessarily dispositive, we believe that it highlights the need to closely scrutinize ODOT’s actions,” the report states.

Additionally, Charles’ report says, the department hasn’t provided justification for the amount of the stipends, noting that during the investigation, “ODOT conceded that it did not make any effort to determine whether a lesser amount would achieve the same or similar results as a $1 million stipend. Because it did not do so, ODOT cannot convincingly argue that the payment of $1 million stipends to unsuccessful biddings is necessary, or even advisable.”

The report recommends that if ODOT wants to pay stipends, it should lobby for express legal authority to do so; require documentation of unsuccessful bidders’ actual costs; and evaluate the usefulness of the unsuccessful bidders’ designs.

Scott Varner, ODOT’s communications director, responded by saying the department already had a process in place to evaluate the unsuccessful proposals, “but with the recommendations of the inspector general, we will now clarify how those teams will document their actual costs and expenses, and make sure that they provide that information to the department before we authorize any payment.”

But he said the efficacy of design-build and stipend payments is already well known.

“The process that we have in place is based on national standards, federal regulations and the best practices of other states across the country, where this process is typical,” he said. “The concept of payment for preliminary engineering and project approach has been successfully administered in many other states.”

He said Charles’ investigation and the changes made as a result are not expected to delay construction, which is to begin next year and finish in 2014.

Asked about Charles’ suggestions that ODOT seek explicit legal authority to pay stipends and limit them to no more than a bidder’s actual expenses, Varner said the department “continues to review the inspector general’s recommendations.”

The Ohio Housing Finance Agency recently awarded $6.7 million in funding for the construction or rehabilitation of four affordable apartment communities in Allen, Scioto, Licking and Clinton counties as part of the Tax Credit Exchange and Tax Credit Assistance Programs, created in the American Recovery and Reinvestment Act.

Each of the rental properties, originally funded through the Housing Tax Credit program, provides affordable units to residents who are unable to afford comparable living arrangements at market rents.

Through comprehensive renovation and modernization, Melford Village, Boston Commons and Concord Apartments will improve resident quality of life and allow the properties to develop a competitive advantage in the marketplace by offering amenities, services and overall living arrangements that fulfill the needs of low-income families.

The funding will provide necessary capital improvements and is intended to extend the economic and physical life of the buildings into the foreseeable future.

Blanchester Senior Apartments is a new construction housing credit development designed for seniors in Clinton County. It will be developed by LDC Housing Corporation and managed by the Clinton County Community Action Program.

Limited Brands, Porter Wright Morris & Arthur LLP and Anshen + Allen were recognized by Columbus Mayor Michael B. Coleman with GreenSpotLight Awards. Each business took steps throughout 2009 to reduce their impact on the environment as part of the mayor’s GreenSpot program.

“GreenSpot provides a framework for businesses to take practical steps toward lessening their environmental impact,” Coleman said. “I am proud of the three businesses and hope others will follow the example they set in their commitment to get green.”

A sample of accomplishments by the award winners included the following:

– Limited Brands hosted their first ever Earth Day event spanning an entire week; reduced waste by more than 30,000 pounds; and reduced water usage by 15,902 CCF.

– Porter Wright Morris & Arthur LLP offers employees the opportunity to buy pre-tax bus passes; reduced energy needs by consolidating more than 40 physical servers into five, reducing energy consumption used to run the servers and to cool the data center; and reduced waste by 30 tons of paper and 1,700 pounds of aluminum and plastic.  

– Anshen + Allen was awarded LEED Silver Certification from the U.S. Green Building Council; performed an energy audit; and installed bike racks in a secure location for employees.

According to the release, Coleman launched GreenSpot in July 2008 as part of his Get Green Columbus initiative. Developed to inspire, educate and recognize those in the community who are taking steps to protect the environment, the web-based program now has more than 1,600 members.

The House Ways and Means Committee took additional testimony Wednesday regarding HB 464, which would exempt qualifying wind and solar energy facilities from property taxation for up to 20 years and to require payments in lieu of taxes on the basis of each megawatt if production capacity of such facilities.

Members heard a mix of proponent and interested party testimony, both oral and written.

Speaking as an interested party, Alan R. Rosenfield of the League of Women Voters of Ohio said the group supports both education funding and alternative energy, the latter creating a somewhat unique situation for entities dependent on local revenue.

“The loss of school property taxes from typical abatements, such as for office buildings, can be offset by income taxes generated by the employees in that building,” he said. “Renewable energy facilities apparently do not provide sufficient city income tax revenues to make up for the lost property taxes.”

Rosenfield said it could also be the case that “abatements resulting from HB464 would be used to erode the concept of making the schools whole.”

He noted, however, that as shown in White County, Indiana, wind and solar facilities can be used for educational enrichment of nearby schools.

“We believe both arguments have merit,” Rosenfield said. “Because of the potential educational benefits of renewable energy, some reduction in the estimated $40,000 unabated property tax seems reasonable.”

He said the league urged the adoption of an amendment setting an abatement level that would yield a lower reduction in school property taxes while supporting the development of wind energy in Ohio.

Dayna Baird presented proponent testimony on behalf of the American Wind Energy Association (AWEA). She said the bill mirrors the efforts of “nearly every other state” – 28, to be exact – to address wind energy taxation following passage of renewable energy standards, and that to meet the 2025 target under 127-SB221, “renewable energy developers will need to acquire project financing in the most efficient manner.”

Baird said Ohio was ranked 20^th of all states in March for “good wind,” in addition to serviceable transmission lines, strong manufacturing, and a centralized licensing process through the Ohio Power Siting Board.

“However, one significant obstacle still remains for wind development,” she said. “By definition, in the Ohio Revised Code, wind projects are ‘public utilities’ despite the fact that we look very little like the traditional public utilities contemplated by the tax code when originally enacted.”

Because statute currently places most of the tax burden on capital costs rather than fuel – a major part of traditional utilities’ costs – wind energy facilities are disproportionately affected, said Baird.

“Additionally, the production capacity of traditional utilities is three times that of wind projects, providing further basis for a different renewable energy tax structure,” she said. “Simply, Ohio’s tax structure did not contemplate the ‘new world’ of renewable energy resources.”

Baird said tax attorneys retained by AWEA found the projected tax burden in Ohio to be $40,000 per megawatt, compared to $10,000 in Illinois – currently considered the highest in the region – to $4,500 in Pennsylvania, considered the lowest.

“That puts the tax burden for wind energy projects in Ohio anywhere between three and 10 times our neighboring states.”

She said although Ohio will become the first state to require tax abated-wind projects to meet specific job creation targets, developers are “confident” of their projections.

“JEDI modeling for the six projects currently pending at the Power Siting Board translates to over 700 construction and operations and management jobs, and thousands more induced and indirect jobs.”

On a final note, Baird asked the committee to reconsider the deadlines imposed by HB464, including final certification by the Ohio Power Siting Board as of Dec. 31, 2010.

“Many years of work and tens of thousands of dollars in engineering and environmental studies precede OPSB application,” she said, indicating many projects would not meet the year-end date. She instead proposed that the siting board accept applications through Dec. 31, 2010 and issue certifications through Dec. 31, 2011, for a one-year extension.

Chairman Letson asked how many of the wind farm projects before the Ohio Power Siting Board had been approved; she said three out of a total of six.

He asked how much of the projected workforce development would be temporary construction jobs or permanent operations. She pointed to an attached chart showing 637 direct jobs in the construction phase and 71 direct jobs in the operations and maintenance stage. Indirect and “induced” jobs for each stage were 574 and 291 positions, respectively.

Rep. Winburn, one of the bill’s primary sponsors, asked about Baird’s use of the word “definitive” in describing the statutory standard for employment targets.

“Wouldn’t the model give you an approximate number of jobs?” he asked rhetorically. She responded that the numbers provided are AWEA’s best effort to meet the statutory requirement for what could only be understood as a projection.

Baird was followed in proponent testimony by Peter Endres, director of project development for juwi, based in Worrstadt, Germany, which is the parent company of JW Great Lakes Wind LLC, based in Cleveland. He said its 50 megawatt project on 3,400 acres in Hardin County is expected to create 270 jobs through all stages of construction and 14 full-time, permanent jobs, generating strong support locally.

“We believe the per-megawatt fee proposed in HB464 will not only allow us to determine our tax liability, but will provide that same transparency and consistency to our local governments and schools.”

Endres offered one caveat. “We would, however, caution that adding real property taxes to the per-megawatt fee of $6,000–8,000 in HB464 may well approach that point at which Ohio remains uncompetitive with its surrounding states.”

Rep. Stautberg asked about the large number of acres required for each of the 21 wind turbines in Hardin County.

“Why do you need so many acres for a permit, and are they taken out of production if they are in a farming area?”

Endres responded that each permit corresponds to 50-80 acres, though only slightly more than 20 acres of agricultural land are taken out of production for each permit.

He acknowledged to Rep. Boose that, to date, most of the wind turbine development and manufacturing has emerged outside of the U.S., though many companies like juwi now have full operations in the states. He added that Ohio institutions of higher learning are now developing training programs for wind engineers and technicians.

Karl Gebhardt of Paul Werth Associates followed with supporting comments on behalf of EverPower Wind Holdings Inc., which he described as the first company to apply to the Ohio Power Siting Board for a utility-scale wind energy project. He said the Champaign County project had been approved only this month and will affect six townships and four school districts.

Gebhardt noted the governor had recognized the tax difficulties faced by Ohio wind farms in this year’s State of the State address.

He said EverPower currently has three sites planned for Ohio, of which the Champaign County project will benefit its communities with $300 million in capital investment and 150 construction jobs, with all revenues divided between local governments and schools.

“This does not take into account the jobs creation component in HB464 and the fact that projects built into Ohio mean manufacturers and supply chain firms will continue to look to Ohio to site new facilities and to expand existing facilities already in Ohio,” Gebhardt said.

Members had no questions for the witness.

Barb Shaner next offered interested party testimony for the Buckeye Association of School Administrators (BASA), Ohio Association of School Business Officials, Ohio School Boards Association, Ohio Education Association, and the Ohio Federation of Teachers.

She said these groups support many provisions in the bill and the larger goal of economic development at the state and local level, with a few qualifications.

“Because HB464 will have an impact on property tax revenues for local governments and schools, we want to make sure that the local tax dollars invested will result in a good return for Ohio and for the local communities affected,” she said, noting her organizations had asked consultants from the Education Tax Policy Institute (ETPI), Bill Driscoll and Howard Fleeter of Driscoll & Fleeter, to prepare an analysis of the bill’s fiscal impact.

Their conclusions show the proposed elimination of the Utility Personal Property Tax on a per-megawatt basis under HB464 would require $17,024 of Payments in Lieu of Taxes (PILOT) to rank Ohio third among surrounding states, Shaner said, with the amount of taxes exempted less-PILOT projected at $11,977,358.00, rather than the much more substantial $36,446,669 projected in energy overhaul SB221.

“The Power Siting Board application also includes projections about indirect or induced benefits, but the ETPI analysis points out that there is no way to tie those additional returns on the tax exemption investment to those communities where the wind farms are actually located,” she said.

As a consequence, Shaner said her organizations had concluded that the proposed maximum $8,000-per-megawatt PILOT for all local governments is too low, and should instead be raised to $15,000 divided among all impacted government units. She said the groups would agree to a ceiling on such payments to ensure they did not exceed actual taxes that would be owed in a particular year.

Interested party testimony concluded with Kerinia Cusick, Ohio region lead for The Solar Alliance and director of government affairs for SunEdison.

“The solar industry is willing to meet the 80 percent local job requirement for construction and maintenance phase, and supports the $7,000/megawatt PILOT,” she said. “However, from the solar industry’s perspective, there have been two barriers to industry growth and job creation: property taxes and contracts for solar renewable energy credits.”

Cusick said the bill is “silent” on the issue of solar credits, limiting the development of projects to the 10 percent that would purportedly not require commercial financing.

She also offered two observations on the tax implications of HB464. “By applying almost all of the same requirements to the solar industry as were defined for the wind industry, the legislation is precluding the solar industry from contributing as many jobs as it could; and long-term, this legislation will largely encourage solar development just where electricity rates are the most expensive, specifically a small portion of First Energy’s territory which we believe may be centered around Toledo.”

Cusick said the bill includes two deadlines that purportedly would preclude 95 percent of potential solar jobs. He asked that the project approval deadline of September 2010 and the groundbreaking deadline of Jan. 2011 be extended to mid-2011.

She also asked that many other requirements, including emergency responder equipment and road repairs, be limited to projects of at least 2 megawatts.

Finally, Cusick asked that the minimum permanent exemption be increased from 250 kilowatts.

“If the permanent exemption was increased to 1 megawatt, the industry would be able to build projects all over the state, even where rates are lower, and the entire state would be able to benefit from solar jobs.”

The committee also accepted written interested party testimony from Lincolnview Local Schools, Crestview Local School District, and Vantage Career Center, which echoed the concerns of BASA and its peers.