This was your 3.7 million dollars- and mine.

by David Esrati on May 9, 2008

in Dayton Government, Economic Development in Dayton OH, End corporate welfare, Our Broken political system, Steps backward in Dayton

It’s nice to know that the city of Dayton is no longer giving BGH Studios $125K, but only $50k if these numbers are correct (maybe it’s an additional $50K- hard to tell). And, it’s also good to know that they now have 19 employees- can I see the city income tax filings?

You see, BGH is a “competitor” to my firm. And, my tax dollars just helped give my competition my hard earned money. And if they never actually create those 30 jobs, the city won’t go get my money back. Neither will you.

Last year I spent $15K upgrading our video shooting and editing capabilities at The Next Wave so we could produce High Definition (HD) video. Did I ask for a handout? Of course not.

In the mean time, the city has cut back on recreation programming for kids, cut back on police and fire budgets, raised my water and trash bills, raised my property taxes and can’t pass a school levy. What would 3.7 million do to help in any of those areas?

Would schools with arts programs bring more residents to our city?

Would more police on the street make us feel safer?

Why not hire police just to write traffic tickets and slow people down like Oakwood- and make us feel like we have police everywhere? We’d generate revenue, and maybe not have a perception as a place where the police are slow to respond.

City OKs $3.7 million to boost business

CompanyAscending Private Investment City of Dayton Investment Jobs Retained Jobs Created Public Investment Per Job
Allied Supply $700,000 $35,000 33 5 $921
Assembly & Test Worldwide $2,100,000 $125,000 137 113 $500
BGH Studios $650,000 $50,000 19 30 $1,020
Brower Insurance $796,400 $100,000 111 15 $794
Cannell Graphics $350,000 $0 0 4 $0
IDCast $100,000 $85,000 0 64 $1,328
Ken’s Kars $710,000 $0 5 2 $0
Liteflex $1,700,000 $75,000 0 30 $2,500
Litehouse Green Design $5,000,000 $162,000 0 0 $0
Morning Pride $870,000 $50,000 350 125 $105
Mutual Tool $2,100,000 $100,000 100 65 $606
Nanotek $150,000 $25,000 7 77 $298
Oregon Parking Amenity $0 $850,000 0 0 $0
Paradigm Industrial $262,785 $50,000 18 10 $1,786
Rapid Reaction Center $726,000 $150,000 0 62 $2,419
Real Wire $3,000,000 $250,000 28 15 $5,814
RFID Incubator $0 $1,400,000 0 100 $14,000
Stevens Aviation $1,950,000 $0 65 41 $0
Tax Centers of America $950,000 $100,000 159 40 $503
Webster Station Dev Group $120,000 $85,000 10 6 $5,313

Between Jan. 1 and Wednesday, May 7, the city has approved just under $3.7 million in development grants or offered technical assistance to 19 companies also willing to invest significant funds into their own businesses in order to grow.

All told, the companies agreed to invest about $22 million into their businesses, retaining more than 1,000 jobs in Dayton and creating just over 800 new ones.

“We’ve had a great deal of activity these first two quarters,” Shelley Dickstein, Dayton’s assistant city manager for strategic development said…

Dickstein said she expects the city will continue retention and expansion efforts throughout the year, but that approval of grants may slow down in the fourth-quarter, when the construction season ends.

Instead, the City is helping my competition get a leg up.

I’m also wondering if we aren’t seeing some political favoritism going on. A few of these companies may have political ties.

Does it make you want to stick your hand out too? Or does it make you wonder if we haven’t totally gone off our rocker?

What could you think of doing with 3.7 million that could change our city?

Sportsplex downtown? An ice rink with 2 sheets for tournaments and teaching Dayton kids to ice skate and play hockey? More cops? Turning almost vacant blocks into mini farms?

Share your thoughts.

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{ 7 comments… read them below or add one }

Joel May 9, 2008 at 7:24 am

Come on David! These companies have brought tens of jobs to Dayton! Nevermind that they are all probably living in the suburbs and don’t spend money in the city!

I’m glad I don’t live in Dayton, because if my taxes were going to fund some of these upstarts I’d literally hemmorage internally every time I would think about it.

And yes, as you mentioned, it’s good to have friends in the right places. Just be glad that your town isn’t still looking at the installation of a Wal-Mart as “economic progress” like the morons in my city.

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Bruce Kettelle May 9, 2008 at 5:58 pm

I agree and disagree. It is unlikely that all Ohio cities (and beyond Ohio for that matter) will abandon this form of economic development initiative. If the city doesn’t act in this environment it would be easy to see other cities picking off the more desirable assets, luring them away with incentives.

I don’t care for this type of economic development either, but so far I don’t see an effective way to stop it. I too would rather see these monies invested in amenities that would make the region more attractive to employers and employees but that so far is the road less travelled.

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Fake Name May 10, 2008 at 12:40 am

If I could invest $3 and get $22 in return, that would be a good investment. So isn’t it just as good if the City puts in $3 million and gets $22 million in private investment? That sounds like a good deal to me.

That’s not counting the income tax. Let’s say $35,000 for an average job at 2.25% tax, times 1800 jobs. That is almost $1.5 million dollars per year in taxes. So that $3 million from the City is paid back in two years.

Plus, SBA financing usually requires 10% equity. So in theory, your $15,000 in video equipment could be financed with $1,500 down. But a $1.5 million dollar investment in new machinery would require $150,000 down. Do most small businesses have that kind of cash floating around? I doubt it, especially in this economy.

So if you look at it that way, a little cash from the City goes a long way and starts to make sense. Plus, Dayton doesn’t have to always beg the County for money to get things done, unlike most other cities around here.

Besides, have you seen what’s been happening in Huber Heights and Moraine lately? Dayton is a bastion of good management compared to those towns. It’s about time that development started to be a priority for the City. $3 million is peanuts in the big scheme of things.

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David Esrati May 10, 2008 at 12:58 am

Dear Fake Name,
So, the fact that they may be contributing to the loss of jobs at my business because they have now tilted the playing field gets ignored?
Or, that there are no true guarantees that the “22 million” in private investment actually happens?
What we’re talking about is band-aids on bullet wounds- while we’re ignoring the basic service functions that we’re failing at daily.
This type of corporate welfare needs to be banned nationwide- from buying BGH a HD edit suite to supporting companies like Mead and Reynolds and Reynolds with tax abatements- to luring a car plant to build in a cornfield instead of somewhere practical like Detroit- where there is already a workforce.
Next thing you are going to tell me is that we should be giving tax breaks to the CEO’s because then they can have more money to spend in high priced restaurants to create jobs.
Go back and take econ 101, and maybe a marketing class (I mean, seriously, if “Fake name” the best you could come up with?)

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Lynn May 10, 2008 at 12:24 pm

See Dave, this has been my question all along. Why doesnt the city of Dayton utilize more officers to write traffic tickets. I agree that its a good way to increase the city’s revenue since revenue continues to be a problem. I also think that it would work two fold in that pulling over a person for speeding, expired tags, etc,; they would most likely find more offenses and who knows maybe some wanted criminals. I also agree that this police visibility would also deter the freaks that just come walking or driving down the street to ask me if I am really picking up trash in my neighborhood. Yes I am picking up trash, as hard as it is to believe and no Im not a hooker.

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Creative Fake Name May 10, 2008 at 2:15 pm

I certainly do not support tax breaks for CEOs. I agree that multi-nationals should not get incentives to move from one town to another. I do however support assistance for small businesses (like yours) that may need a “hand up” when they are growing rapidly in their hometown.

If you invested in new equipment to keep up with the competition, the City benefits from that too. Now there’s two talented companies in Dayton (at least) with high end equipment, when perhaps yesterday there was none. More bang for the City’s buck, as they say. That helps Dayton compete with other regions.

By thw way, most government grants are usually reimbursement-based, so they have to spend the money to get it back in the form of a grant. It’s pretty hard, even for the city, to miss a new building being constructed in this town.

The “cornfield” issue is certainly important. A cornfield is far easier to build on than a contaminated, abandoned factory, which encourages urban sprawl. I agree we should have more programs to re-use those old sites in our cities, like Detroit and Dayton. But the market isn’t generally demanding it… yet.

Here’s another thought… At roughly $100,000 per officer (salary, benefits, training, equipment), $3 million puts 30 officers on the street. Even if they work 12-hour shifts 7 days a week, that’s 15 extra officers in the entire City at any one time. That’s not much, and certainly will have less impact than 1800 jobs.

The rising tide lifts all boats and helping small businesses still makes sense to me. David, you say the money could be better spent, but you could make that argument about anything the City does, if you wanted to. It seems we are looking at one particular line item ($3 million) and ignoring the big picture.

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bogus flaming name May 12, 2008 at 9:23 am

,…enough with the “rising tide, if we build it they will come, any criticism is bad criticism” mantra already!!! It’s starting to sound like “Why do you hate America?” Sometimes a rising tide is just another flood and drowns everybody, and if you build it, they may not care,…so metaphor that!

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