Legislative News

Regulations detailing new options for public construction projects cleared their final hurdle this week, but not without some concerns over how smaller Ohio contractors will be affected.

Last year, the biennial budget (HB 153 ) lifted 135-year old restrictions on how public entities must carry out construction projects and final rules detailing the new methods recently cleared the Joint Committee on Agency Rule Review, but not without misgivings from some Democrats, who questioned whether work for local builders and designers will dry up.

The rules, which are set to take effect Feb. 2, flesh out procedures for state and local entities that want to construct facilities using single-prime contractors. Previously, the law permitted only multiple-prime, which generally requires the owner to contract separately for each specialized trade.

Department of Administrative Services spokesman Dan Kaman said the new options allow for an expedited construction timetable. Project completion for design-build is on average 23-33% faster than multiple-prime design-bid-build, and the construction manager-at-risk method is 13-15% faster, he said.

“Coordination is better because there’s a single point of responsibility with these two methods… it allows more flexibility and more incentives to cooperate between subs and the prime,” he said in an interview.

 “And obviously, with construction, time is money,” he said. By comparing the industry standards, the agency estimates the new procedures will save between 5-15% on building costs, he added.

  (D-Columbus) said he’s discussed the new rules with several construction and engineering firms that complained they would put smaller, in-state firms at a disadvantage to the largest construction firms in the country.Rep. John Carney

 Increased bonding requirements are forcing smaller contractors to partner with large out-of-state firms only to get additional bonding capacity, he said, noting that already happened when Ohio State University rebid several contracts after the new provisions in budget were enacted.

 “They’re telling me: we’re being hired by universities all over the country, but we can’t get the ones in our own state to hire us,” he said.

 “A lot of these folks graduated from Ohio State University and Ohio State University won’t hire them,” Rep. Carney said. “When you look at these projects, it’s two of the largest construction firms in the world that are getting a lot of this work and neither of them is based in Ohio.”

 One of the advantages of the multiple-prime approach is that contractors needed only to bond their portion of the work, rather than the entire project, he said.

 Rep. Carney said he didn’t request any specific revisions to the rules, but wants the administration to meet with in-state contractors to see if there were ways to ensure greater in-state participation.

 “Lets make sure we’re having conversations with Ohio-based construction firms, architectural firms, engineering firms, making sure that they’re going to be in a good position to be able to get this work, provided they’re qualified,” he said, adding that some contractors were hesitant to step forward out of fear it would impact their ability to get future contracts.

 Mr. Kaman said DAS already sought public feedback and held seven stakeholder meetings before filing the rules. “We tried to get a lot of these issues out of the way.”

 DAS met with bonding firms to discuss ways to make the requirement more accessible for smaller contractors, but found it was limited to standard industry practices, he said. “We did not write these rules to take on the way bonding is done.”

 One option the agency considered was “gap bonding,” which divides the financial burden between the prime contractor and various subcontractors, he said. “But we realized that that wasn’t feasible after numerous stakeholder meetings.”

 Mr. Kaman said DAS sought to maximize participation by Ohio-based firms by including language in the rule that gives priority during the pre-qualification stage to companies with “knowledge of the local area and working relationships with local subcontractors and suppliers.”

Another concern the administration sought to address was how to ensure participation by minority contractors, Mr. Kaman said. Rather than spelling out the name of every local government’s diversity and inclusion program in the rule, DAS decided to award extra points to companies that previously met those programs’ performance goals, he said

Democratic House and Senate members of the Joint Committee on Agency Rule Review (JCARR) raised concerns about rules submitted by the Ohio Department of Administrative Services (DAS) addressing new requirements for the pre-qualification and pre-design of public improvements.

Sen. Charleta Tavares (D-Columbus) and Rep. Tracy Heard (D-Columbus) asked DAS Assistant Director Randall Howard similar questions about the department’s actions to receive input from minority- and women-owned businesses on the final rule language, and what actions the department will take in its outreach efforts to announce these changes to businesses, particularly, minority and women-owned businesses that are not attached to a trade organization or local entity.

Rep. John Carney (D-Columbus), similarly asked what mechanisms DAS is putting in place to see that Ohio businesses and workers are able to receive these contracts versus an out-of-state company.

Additionally, Tavares asked where parties negatively impacted by these rule changes can address their issues.

Howard stated that the stakeholder meetings, seven in all, were announced to various trade organizations, lobbyists and interested parties, including local government entities via email. 

“I do believe DAS outreach was addressed and totally open for all participation,” the assistant director said. He said the rules include diversity and inclusion programs. “We are leaving it up to local authorities to follow these procedures and contract requirements.”

The rules in question define the contract selection process as a “best value” approach, in which proposals contain both pricing and performance components, and the award is based upon a combination of pricing and performance considerations to determine the offer deemed most advantageous and of the greatest value to the public authority.

It is up to DAS to adopt rules that set forth electronic advertising of construction opportunities for public improvement projects, including all requirements and proposal guidelines. Further rules set forth specific discretionary requirements for state and state institutions of higher education for electronic bidding.

Carney contended that the many Ohio construction firms and institutions he has spoken to are having trouble competing with bigger firms from Chicago and New York on construction projects because of bonding requirements. 

He said some of the larger Ohio firms he has spoken to still take issue with not being able to bid the larger projects because they don’t want to have their company tied up in just one project at a time. They prefer to have several projects to bid on of all sizes, a disadvantage he said these companies routinely have with larger out-of-state firms with greater bonding power. 

Howard answered, “The potential you are speaking of are ‘most valued projects’ worth $100 million — we see these once in a blue moon. I believe in the last 10 years we had two — less than a handful of that dollar amount. The vast majority of projects are much smaller in size.”

“When we have hundreds of projects and a finite amount of money in the capital budget, we would contend that Ohio firms have many more bites at the apple than previously,” Howard said.

Carney shot back. “If you aren’t hearing this, I’m delivering the message. It sounds like you haven’t heard this.”

Chairman Sen. Frank LaRose (R-Fairlawn) clarified that there is no JCARR prong violation and that comments should be kept to the rules.

Heard suggested that further discussion may be needed on these rules. LaRose said that if further legislative action is needed it will be taken up with DAS.

Gov. John Kasich previewed a 2012 agenda December 19 warning local officials not to expect a capital appropriations budget like those in years past, and said he’s asked Ohio State University President Gordon Gee to chair a gathering of university leaders to decide together on a list of capital projects in need of funding, rather than having each institution lobby the administration separately.

“There will be no community projects in that capital bill, and it will be a very skinny capital bill, because we can’t take on the debt service,” he said.

Kasich said he still wants to keep lowering taxes — specifically mentioning the income tax and the way it applies to capital gains — but has no specific proposals in the near term. 

“As we get more revenue, as we have more opportunity to generate more jobs, and as we start running these surpluses … then I think people should get some of their money back,” he said. “Let’s take a deep breath, celebrate what we’ve done, think about the future. But I’m not prepared to make any decisions about that at this point.”

A bill that makes improvements to legislation included in the state’s Budget Bill passed the Senate December 14 and now goes to Governor Kasich for his expected signature. HB 371, revises language which created a state Local Government Innovation Council.  The Council may establish criteria for and make loans and awards to political subdivisions for local government innovation projects including those that are part of a consolidation effort.

One goal is to encourage local governments to consolidate or share services.

The most recent Census report reveals that with 11.5 million people and a stagnant economy Ohio is burdened with 3,702 local governments–more than twice as many as a growing Florida.  And all of them–counties, cities, villages, townships, school districts and “special” districts (park and conservancy districts, port authorities, etc.) have payrolls.

If SB 197 becomes law, architectural jobs will follow.  SB 197 would allow counties to sell public buildings to private developers, who would modernize the buildings to county specifications. The county would lease the space back from the developer and have the option of buying the building back when the developer has made a profit, in no more than 40 years.

Sen. Mark Wagoner (R., Ottawa Hills) introduced SB 197 because he wants counties to have more flexibility in how they maintain public buildings. With deep cuts in state and federal aid, and an economy that continues to slog along at a snail’s pace, counties could benefit from his lease-buyback legislation.

Gov. John Kasich says local governments should be more creative about how they balance their budgets. When he and the Republican General Assembly pushed a bill to restrict the ability of public unions to collectively bargain, they said it would give local government an important tool to reduce costs. Mr. Wagoner has proposed a creative option and useful tool for counties to upgrade outdated public buildings without incurring long-term debt.

Public universities and regional transit authorities already have this ability, so there are models to demonstrate to lawmakers the benefits and potential pitfalls. Lucas County, for example, has been the concept’s primary promoter, because it would like to use this option to renovate buildings housing county agencies at 3210 Monroe St. and 701-711 Adams St., both in Toledo. The County Commissioners Association of Ohio also supports the legislation.

The lease-buyback option also could help Lucas County officials restore the former Lucas County sheriff’s residence at Jackson Street and Spielbusch Avenue. The three-story Renaissance Revival building is on the National Register of Historic Places, but it has suffered from neglect in recent years.  And the bill would provide Seneca County the means to restore its 1884 courthouse, if the county commissioners could be convinced to give up their stubborn desire to tear down that county’s most historic structure.

Care will need to be taken that private ownership of public spaces doesn’t make officials and visitors less secure, restrict public access to offices and officials, or make government less transparent. If selling the buildings puts them back on the property tax rolls — an open question — so much the better.

Mr. Wagoner’s proposal had been included in the state budget debated last spring, but it was omitted from the budget bill approved by the General Assembly and signed by Governor Kasich on July 1.

Lawmakers can and should rectify that omission before other pieces of Ohio history are allowed to crumble or be turned into rubble in the name of austerity.

Three construction-reform rules for the Department of Administrative Services cleared the Joint Committee on Agency Rule Review on Monday without opposition.

The rules pertain to single prime contracts and detail the type and amount of surety bonds; subcontractor forms; and documents for construction manager at-risk and design-build contracts.

It was the first group of single prime contractor rules to come before the committee since the practice was authorized in the state biennial budget bill (HB153), JCARR Chairman Rep. Ross McGregor (R-Springfield) said.

“This is the first series of rules that have come through the Joint Committee on Agency Rule Review,” Mr. McGregor said. “There is another package of rules that is currently being worked on through DAS and we’ll anticipate seeing those in early January.”

No written testimony was submitted on the issue, JCARR Executive Director Larry Wolpert said.

Until the budget passed, multiple prime contracts were required for state construction projects. The budget authorizes the state to use other construction delivery methods, such as single prime, which allows a single entity to hold administrative oversight on a project. Proponents say the alternative construction methods will yield significant cost savings.

The Ohio School Facilities Commission (OSFC) Thursday approved nearly $87 million in contracts for school construction

and made changes to its priority list for upcoming projects.

The 63 contracts approved will go toward school construction and renovation work in 17 school districts.

In addition, the OSFC approved revisions to the guidelines for its priority list for school districts that will become eligible for

state money. The changes include basing the equity ranking for schools on the Expedited Local Partnership Program (ELPP)

on when the project is approved, and not the current equity ranking; establishing the priority for lapsed Exceptional Needs

Program (ENP) and Vocational Facilities Assistance Program (VFAP) projects where districts could not match the local share;

clarifying factors affecting the prior order of districts including segmented districts; and adding and removing lapsed

districts in each of the program lists.

The OSFC continued approving funds for districts as part of its energy conservation program. The six districts receiving

funding Thursday were:

– The Ashland County-West Holmes Joint Vocational School District project includes the installation of upgrades to lighting

and some ventilation-related work. The district estimates $13,191 in annual energy and operational savings.

– The Eaton Community City School District project includes the installation of an upgraded air filtration system, new

exterior LED lighting, and an energy management system. The district estimates $24,157 in annual energy and operational

savings.

– The Groveport-Madison Local School District project includes work in 10 buildings. Among the various work to be done will

be the replacement of boilers and hot water heaters in all ten buildings, the installation of automatic flush toilets, and

upgrades to lighting controls. Five of the buildings will also undergo a lighting upgrade. The district estimates $484,597 in

annual energy and operational savings.

– The Marion City School District project will be an expansion of a project started earlier this year. It includes work in nine

buildings with the replacement of HVAC chiller systems and the installation of upgrades to lighting. Also, the district will be

installing an innovative technology system to assist in energy monitoring. The district estimates $162,566 in annual energy

and operational savings.

– The Southeastern Local School District project includes the installation of upgrades to lighting in two buildings and an

exterior LED lighting system at one other building. The district estimates $19,139 in annual energy and operational savings.

– The Williamsburg Local School District project includes the installation of upgrades to lighting and building control

systems, along with the replacement of the HVAC chiller system. The district estimates $47,279 in annual energy and

operational savings.

Members of the panel expressed concern about the Marion County project, which was an increase from an earlier approval,

because the payback time was increased from 8.9 years in the original approval to 14.99 years, just below the 15-year

threshold in state law. They questioned whether the payback would come within that time frame, but ultimately gave

approval to the project.

HB 371 which would create a state Local Government Innovation Council that could make loans and awards to political subdivisions for local government innovation projects including those that are part of a consolidation effort, received a sponsor’s hearing November 15 in the House Finance and Appropriations Committee.

The bill’s sponsor, Rep. Amstutz presented testimony on the bill which is being co-sponsored by Rep. Weddington who was unable to

make the day’s hearing.

Amstutz told the committee the bill “proposes to adjust the Local Government Innovation Program” that was

created in the current operating budget. He acknowledged that “the budget process presented limited opportunities

to give a full vetting of this program with the stakeholders … this bill … is a starting point for that discussion.”

He said the recommendations in the bill came from the Office of Budget and Management and Department of

Development.

Amstutz noted that “one of the bigger changes proposed … is recalibrating the population thresholds that assure

some level of distribution amongst local governments of differing sizes. The population sizes which require at least

30 percent of funds be distributed above and below the line are as follows:

– “Smaller and larger population non-county entities to 20,000 population in the 2010 Census from the current

50,000 population.

– “Smaller and larger population counties entities to 235,000 from 130,000.”

An issue not in the bill but one he believes needs extensive discussions relates to the mix and configuration of

loans vs. grants.

Asked by Rep. Sykes his timeline for passing the bill, Amstutz said his aggressive plan would be in three hearings

and getting through the Senate by the end of the year but it would be OK if it went over into January. Since it is a

new program, he believes the sooner the better before the Local Government Innovation Council gets too far along

in its deliberations.

Rep. Hollington asked if this were modeled on a Northeast Ohio program and Amstutz said yes and no — this

program uses public dollars and is statewide. Hollington commented that the “incentive” is the lack of money for

the communities to become innovative with Amstutz responding that sometimes “you have to spend money to save

money,” citing schools and energy savings.

Also testifying was Tom Carroll, city manager of Loveland. He suggested that the program be used to encourage

communities to use “benchmarking” for improving services, efficiencies and cost reduction. “By comparing peer

organizations’ results and cost structures, local governments have a roadmap for reform.”

He said benchmarking helps ensure that change is “thoughtful instead of ad hoc, reasoned instead of reactionary

and successful rather than devastating.”

He suggested setting aside $500,000/year from the $50 million appropriation to be used by local townships,

villages, cities and counties on a first-come, first serve basis to participate in the International City/County

Management Association Center for Performance Measurement (ICMA CPM). Praising the work of the group, he

said this would avoid the need to create a new bureaucracy. He suggested that to get local entities to participate,

the committee should look at creating an incentive but he did not have a suggestion of what that might be.

“Whatever the mechanism, it seems important to me that we use a carrot to make the program successful.”

Rep. Carey suggested the auditor of state already does something like this with Carroll saying that in this process

the local community decides which services to measure but added that it is complementary to performance audits.

Rep. Beck suggested benchmarking can be skewed with Carroll saying the community can decide who they want to

be measured against.

Acknowledging that it can be time consuming for the local community, Carroll said that if his staff went down to

two — which is being considered — he would still do the benchmarking, adding that it is the only way to know what

you’re doing is good/right.

HB 67, which would require the Office of Budget and Management to maintain a web site showing capital project appropriations and re-appropriations and to submit a biennial report to the General Assembly received a Sponsor’s Hearing November 15.  The bill’s Sponsor, Rep. McGregor, said he has come to believe that there is a better way to track capital appropriations because when he was elected he became aware of a project in his district that had been approved during the tenure of his predecessor but it still was not completed. “By managing the re-appropriations process we will be able to make sure that unneeded projects are not occupying monies that could be used for other projects to move forward.”

To obtain this information, McGregor said that every organization overseeing a capital project must submit a list of all the

appropriations and reappropriations a capital project has received. He said they must also provide a list of all

projects that have received an appropriation and at least two reappropriations but for which no money has been

spent.

He told the panel that this answers the question, “How long has it been on the books?”

He said the bill originally proposed requiring these reports be due starting Jan. 31, 2012 but that that date might

need to be modified.

McGregor said the reappropriations decision needs to be a “conscious decision” but legislators now are not given

enough information to do that.

Rep. Lundy asked when “the plug would be pulled?” while Rep. Beck suggested that perhaps after five years a

project would no longer receive funding. McGregor clarified that idea, saying if a “good case” can be made, funding

could be continued.

Regulations detailing new options for public construction projects cleared their final hurdle this week, but not without some concerns over how smaller Ohio contractors will be affected.

Last year, the biennial budget (HB 153 ) lifted 135-year old restrictions on how public entities must carry out construction projects and final rules detailing the new methods recently cleared the Joint Committee on Agency Rule Review, but not without misgivings from some Democrats, who questioned whether work for local builders and designers will dry up.

The rules, which are set to take effect Feb. 2, flesh out procedures for state and local entities that want to construct facilities using single-prime contractors. Previously, the law permitted only multiple-prime, which generally requires the owner to contract separately for each specialized trade.

Department of Administrative Services spokesman Dan Kaman said the new options allow for an expedited construction timetable. Project completion for design-build is on average 23-33% faster than multiple-prime design-bid-build, and the construction manager-at-risk method is 13-15% faster, he said.

“Coordination is better because there’s a single point of responsibility with these two methods… it allows more flexibility and more incentives to cooperate between subs and the prime,” he said in an interview.

 “And obviously, with construction, time is money,” he said. By comparing the industry standards, the agency estimates the new procedures will save between 5-15% on building costs, he added.

  (D-Columbus) said he’s discussed the new rules with several construction and engineering firms that complained they would put smaller, in-state firms at a disadvantage to the largest construction firms in the country.Rep. John Carney

 Increased bonding requirements are forcing smaller contractors to partner with large out-of-state firms only to get additional bonding capacity, he said, noting that already happened when Ohio State University rebid several contracts after the new provisions in budget were enacted.

 “They’re telling me: we’re being hired by universities all over the country, but we can’t get the ones in our own state to hire us,” he said.

 “A lot of these folks graduated from Ohio State University and Ohio State University won’t hire them,” Rep. Carney said. “When you look at these projects, it’s two of the largest construction firms in the world that are getting a lot of this work and neither of them is based in Ohio.”

 One of the advantages of the multiple-prime approach is that contractors needed only to bond their portion of the work, rather than the entire project, he said.

 Rep. Carney said he didn’t request any specific revisions to the rules, but wants the administration to meet with in-state contractors to see if there were ways to ensure greater in-state participation.

 “Lets make sure we’re having conversations with Ohio-based construction firms, architectural firms, engineering firms, making sure that they’re going to be in a good position to be able to get this work, provided they’re qualified,” he said, adding that some contractors were hesitant to step forward out of fear it would impact their ability to get future contracts.

 Mr. Kaman said DAS already sought public feedback and held seven stakeholder meetings before filing the rules. “We tried to get a lot of these issues out of the way.”

 DAS met with bonding firms to discuss ways to make the requirement more accessible for smaller contractors, but found it was limited to standard industry practices, he said. “We did not write these rules to take on the way bonding is done.”

 One option the agency considered was “gap bonding,” which divides the financial burden between the prime contractor and various subcontractors, he said. “But we realized that that wasn’t feasible after numerous stakeholder meetings.”

 Mr. Kaman said DAS sought to maximize participation by Ohio-based firms by including language in the rule that gives priority during the pre-qualification stage to companies with “knowledge of the local area and working relationships with local subcontractors and suppliers.”

Another concern the administration sought to address was how to ensure participation by minority contractors, Mr. Kaman said. Rather than spelling out the name of every local government’s diversity and inclusion program in the rule, DAS decided to award extra points to companies that previously met those programs’ performance goals, he said

Democratic House and Senate members of the Joint Committee on Agency Rule Review (JCARR) raised concerns about rules submitted by the Ohio Department of Administrative Services (DAS) addressing new requirements for the pre-qualification and pre-design of public improvements.

Sen. Charleta Tavares (D-Columbus) and Rep. Tracy Heard (D-Columbus) asked DAS Assistant Director Randall Howard similar questions about the department’s actions to receive input from minority- and women-owned businesses on the final rule language, and what actions the department will take in its outreach efforts to announce these changes to businesses, particularly, minority and women-owned businesses that are not attached to a trade organization or local entity.

Rep. John Carney (D-Columbus), similarly asked what mechanisms DAS is putting in place to see that Ohio businesses and workers are able to receive these contracts versus an out-of-state company.

Additionally, Tavares asked where parties negatively impacted by these rule changes can address their issues.

Howard stated that the stakeholder meetings, seven in all, were announced to various trade organizations, lobbyists and interested parties, including local government entities via email. 

“I do believe DAS outreach was addressed and totally open for all participation,” the assistant director said. He said the rules include diversity and inclusion programs. “We are leaving it up to local authorities to follow these procedures and contract requirements.”

The rules in question define the contract selection process as a “best value” approach, in which proposals contain both pricing and performance components, and the award is based upon a combination of pricing and performance considerations to determine the offer deemed most advantageous and of the greatest value to the public authority.

It is up to DAS to adopt rules that set forth electronic advertising of construction opportunities for public improvement projects, including all requirements and proposal guidelines. Further rules set forth specific discretionary requirements for state and state institutions of higher education for electronic bidding.

Carney contended that the many Ohio construction firms and institutions he has spoken to are having trouble competing with bigger firms from Chicago and New York on construction projects because of bonding requirements. 

He said some of the larger Ohio firms he has spoken to still take issue with not being able to bid the larger projects because they don’t want to have their company tied up in just one project at a time. They prefer to have several projects to bid on of all sizes, a disadvantage he said these companies routinely have with larger out-of-state firms with greater bonding power. 

Howard answered, “The potential you are speaking of are ‘most valued projects’ worth $100 million — we see these once in a blue moon. I believe in the last 10 years we had two — less than a handful of that dollar amount. The vast majority of projects are much smaller in size.”

“When we have hundreds of projects and a finite amount of money in the capital budget, we would contend that Ohio firms have many more bites at the apple than previously,” Howard said.

Carney shot back. “If you aren’t hearing this, I’m delivering the message. It sounds like you haven’t heard this.”

Chairman Sen. Frank LaRose (R-Fairlawn) clarified that there is no JCARR prong violation and that comments should be kept to the rules.

Heard suggested that further discussion may be needed on these rules. LaRose said that if further legislative action is needed it will be taken up with DAS.

Gov. John Kasich previewed a 2012 agenda December 19 warning local officials not to expect a capital appropriations budget like those in years past, and said he’s asked Ohio State University President Gordon Gee to chair a gathering of university leaders to decide together on a list of capital projects in need of funding, rather than having each institution lobby the administration separately.

“There will be no community projects in that capital bill, and it will be a very skinny capital bill, because we can’t take on the debt service,” he said.

Kasich said he still wants to keep lowering taxes — specifically mentioning the income tax and the way it applies to capital gains — but has no specific proposals in the near term. 

“As we get more revenue, as we have more opportunity to generate more jobs, and as we start running these surpluses … then I think people should get some of their money back,” he said. “Let’s take a deep breath, celebrate what we’ve done, think about the future. But I’m not prepared to make any decisions about that at this point.”

A bill that makes improvements to legislation included in the state’s Budget Bill passed the Senate December 14 and now goes to Governor Kasich for his expected signature. HB 371, revises language which created a state Local Government Innovation Council.  The Council may establish criteria for and make loans and awards to political subdivisions for local government innovation projects including those that are part of a consolidation effort.

One goal is to encourage local governments to consolidate or share services.

The most recent Census report reveals that with 11.5 million people and a stagnant economy Ohio is burdened with 3,702 local governments–more than twice as many as a growing Florida.  And all of them–counties, cities, villages, townships, school districts and “special” districts (park and conservancy districts, port authorities, etc.) have payrolls.

If SB 197 becomes law, architectural jobs will follow.  SB 197 would allow counties to sell public buildings to private developers, who would modernize the buildings to county specifications. The county would lease the space back from the developer and have the option of buying the building back when the developer has made a profit, in no more than 40 years.

Sen. Mark Wagoner (R., Ottawa Hills) introduced SB 197 because he wants counties to have more flexibility in how they maintain public buildings. With deep cuts in state and federal aid, and an economy that continues to slog along at a snail’s pace, counties could benefit from his lease-buyback legislation.

Gov. John Kasich says local governments should be more creative about how they balance their budgets. When he and the Republican General Assembly pushed a bill to restrict the ability of public unions to collectively bargain, they said it would give local government an important tool to reduce costs. Mr. Wagoner has proposed a creative option and useful tool for counties to upgrade outdated public buildings without incurring long-term debt.

Public universities and regional transit authorities already have this ability, so there are models to demonstrate to lawmakers the benefits and potential pitfalls. Lucas County, for example, has been the concept’s primary promoter, because it would like to use this option to renovate buildings housing county agencies at 3210 Monroe St. and 701-711 Adams St., both in Toledo. The County Commissioners Association of Ohio also supports the legislation.

The lease-buyback option also could help Lucas County officials restore the former Lucas County sheriff’s residence at Jackson Street and Spielbusch Avenue. The three-story Renaissance Revival building is on the National Register of Historic Places, but it has suffered from neglect in recent years.  And the bill would provide Seneca County the means to restore its 1884 courthouse, if the county commissioners could be convinced to give up their stubborn desire to tear down that county’s most historic structure.

Care will need to be taken that private ownership of public spaces doesn’t make officials and visitors less secure, restrict public access to offices and officials, or make government less transparent. If selling the buildings puts them back on the property tax rolls — an open question — so much the better.

Mr. Wagoner’s proposal had been included in the state budget debated last spring, but it was omitted from the budget bill approved by the General Assembly and signed by Governor Kasich on July 1.

Lawmakers can and should rectify that omission before other pieces of Ohio history are allowed to crumble or be turned into rubble in the name of austerity.

Three construction-reform rules for the Department of Administrative Services cleared the Joint Committee on Agency Rule Review on Monday without opposition.

The rules pertain to single prime contracts and detail the type and amount of surety bonds; subcontractor forms; and documents for construction manager at-risk and design-build contracts.

It was the first group of single prime contractor rules to come before the committee since the practice was authorized in the state biennial budget bill (HB153), JCARR Chairman Rep. Ross McGregor (R-Springfield) said.

“This is the first series of rules that have come through the Joint Committee on Agency Rule Review,” Mr. McGregor said. “There is another package of rules that is currently being worked on through DAS and we’ll anticipate seeing those in early January.”

No written testimony was submitted on the issue, JCARR Executive Director Larry Wolpert said.

Until the budget passed, multiple prime contracts were required for state construction projects. The budget authorizes the state to use other construction delivery methods, such as single prime, which allows a single entity to hold administrative oversight on a project. Proponents say the alternative construction methods will yield significant cost savings.

The Ohio School Facilities Commission (OSFC) Thursday approved nearly $87 million in contracts for school construction

and made changes to its priority list for upcoming projects.

The 63 contracts approved will go toward school construction and renovation work in 17 school districts.

In addition, the OSFC approved revisions to the guidelines for its priority list for school districts that will become eligible for

state money. The changes include basing the equity ranking for schools on the Expedited Local Partnership Program (ELPP)

on when the project is approved, and not the current equity ranking; establishing the priority for lapsed Exceptional Needs

Program (ENP) and Vocational Facilities Assistance Program (VFAP) projects where districts could not match the local share;

clarifying factors affecting the prior order of districts including segmented districts; and adding and removing lapsed

districts in each of the program lists.

The OSFC continued approving funds for districts as part of its energy conservation program. The six districts receiving

funding Thursday were:

– The Ashland County-West Holmes Joint Vocational School District project includes the installation of upgrades to lighting

and some ventilation-related work. The district estimates $13,191 in annual energy and operational savings.

– The Eaton Community City School District project includes the installation of an upgraded air filtration system, new

exterior LED lighting, and an energy management system. The district estimates $24,157 in annual energy and operational

savings.

– The Groveport-Madison Local School District project includes work in 10 buildings. Among the various work to be done will

be the replacement of boilers and hot water heaters in all ten buildings, the installation of automatic flush toilets, and

upgrades to lighting controls. Five of the buildings will also undergo a lighting upgrade. The district estimates $484,597 in

annual energy and operational savings.

– The Marion City School District project will be an expansion of a project started earlier this year. It includes work in nine

buildings with the replacement of HVAC chiller systems and the installation of upgrades to lighting. Also, the district will be

installing an innovative technology system to assist in energy monitoring. The district estimates $162,566 in annual energy

and operational savings.

– The Southeastern Local School District project includes the installation of upgrades to lighting in two buildings and an

exterior LED lighting system at one other building. The district estimates $19,139 in annual energy and operational savings.

– The Williamsburg Local School District project includes the installation of upgrades to lighting and building control

systems, along with the replacement of the HVAC chiller system. The district estimates $47,279 in annual energy and

operational savings.

Members of the panel expressed concern about the Marion County project, which was an increase from an earlier approval,

because the payback time was increased from 8.9 years in the original approval to 14.99 years, just below the 15-year

threshold in state law. They questioned whether the payback would come within that time frame, but ultimately gave

approval to the project.

HB 371 which would create a state Local Government Innovation Council that could make loans and awards to political subdivisions for local government innovation projects including those that are part of a consolidation effort, received a sponsor’s hearing November 15 in the House Finance and Appropriations Committee.

The bill’s sponsor, Rep. Amstutz presented testimony on the bill which is being co-sponsored by Rep. Weddington who was unable to

make the day’s hearing.

Amstutz told the committee the bill “proposes to adjust the Local Government Innovation Program” that was

created in the current operating budget. He acknowledged that “the budget process presented limited opportunities

to give a full vetting of this program with the stakeholders … this bill … is a starting point for that discussion.”

He said the recommendations in the bill came from the Office of Budget and Management and Department of

Development.

Amstutz noted that “one of the bigger changes proposed … is recalibrating the population thresholds that assure

some level of distribution amongst local governments of differing sizes. The population sizes which require at least

30 percent of funds be distributed above and below the line are as follows:

– “Smaller and larger population non-county entities to 20,000 population in the 2010 Census from the current

50,000 population.

– “Smaller and larger population counties entities to 235,000 from 130,000.”

An issue not in the bill but one he believes needs extensive discussions relates to the mix and configuration of

loans vs. grants.

Asked by Rep. Sykes his timeline for passing the bill, Amstutz said his aggressive plan would be in three hearings

and getting through the Senate by the end of the year but it would be OK if it went over into January. Since it is a

new program, he believes the sooner the better before the Local Government Innovation Council gets too far along

in its deliberations.

Rep. Hollington asked if this were modeled on a Northeast Ohio program and Amstutz said yes and no — this

program uses public dollars and is statewide. Hollington commented that the “incentive” is the lack of money for

the communities to become innovative with Amstutz responding that sometimes “you have to spend money to save

money,” citing schools and energy savings.

Also testifying was Tom Carroll, city manager of Loveland. He suggested that the program be used to encourage

communities to use “benchmarking” for improving services, efficiencies and cost reduction. “By comparing peer

organizations’ results and cost structures, local governments have a roadmap for reform.”

He said benchmarking helps ensure that change is “thoughtful instead of ad hoc, reasoned instead of reactionary

and successful rather than devastating.”

He suggested setting aside $500,000/year from the $50 million appropriation to be used by local townships,

villages, cities and counties on a first-come, first serve basis to participate in the International City/County

Management Association Center for Performance Measurement (ICMA CPM). Praising the work of the group, he

said this would avoid the need to create a new bureaucracy. He suggested that to get local entities to participate,

the committee should look at creating an incentive but he did not have a suggestion of what that might be.

“Whatever the mechanism, it seems important to me that we use a carrot to make the program successful.”

Rep. Carey suggested the auditor of state already does something like this with Carroll saying that in this process

the local community decides which services to measure but added that it is complementary to performance audits.

Rep. Beck suggested benchmarking can be skewed with Carroll saying the community can decide who they want to

be measured against.

Acknowledging that it can be time consuming for the local community, Carroll said that if his staff went down to

two — which is being considered — he would still do the benchmarking, adding that it is the only way to know what

you’re doing is good/right.

HB 67, which would require the Office of Budget and Management to maintain a web site showing capital project appropriations and re-appropriations and to submit a biennial report to the General Assembly received a Sponsor’s Hearing November 15.  The bill’s Sponsor, Rep. McGregor, said he has come to believe that there is a better way to track capital appropriations because when he was elected he became aware of a project in his district that had been approved during the tenure of his predecessor but it still was not completed. “By managing the re-appropriations process we will be able to make sure that unneeded projects are not occupying monies that could be used for other projects to move forward.”

To obtain this information, McGregor said that every organization overseeing a capital project must submit a list of all the

appropriations and reappropriations a capital project has received. He said they must also provide a list of all

projects that have received an appropriation and at least two reappropriations but for which no money has been

spent.

He told the panel that this answers the question, “How long has it been on the books?”

He said the bill originally proposed requiring these reports be due starting Jan. 31, 2012 but that that date might

need to be modified.

McGregor said the reappropriations decision needs to be a “conscious decision” but legislators now are not given

enough information to do that.

Rep. Lundy asked when “the plug would be pulled?” while Rep. Beck suggested that perhaps after five years a

project would no longer receive funding. McGregor clarified that idea, saying if a “good case” can be made, funding

could be continued.