Corporate welfare in Dayton Ohio

Those who don’t learn from history are bound to repeat it. While making cuts to essential safety services- our local government has time and money to hand out “Economic Development” money to hand-picked corporate entities to “encourage business growth and retention.” This just days after UltraCell, a prior recipient of these types of funds closed up shop and went home.

Here is the press release as reprinted in the Dayton Daily News:

DAYTON — The cities of Dayton, Vandalia, Riverside and Miami Twp. will share $575,000 in Opportunity Reserve Funds from the Montgomery County Economic Development/Government Equity Program to encourage business growth and retention.

The Montgomery County Commission, on Tuesday, Aug. 24, approved two grants for Vandalia totaling $175,000; Dayton got $50,000; Riverside $150,000; and Miami Twp., $200,000. Several of the businesses are looking at multiple locations. If a company locates outside of Montgomery County, it doesn’t get the award.

• The city of Vandalia got awards of $125,000 for Project Crossroads and $50,000 for Projects Unlimited. Project Crossroads is working with property owners to occupy a vacant building at 707 Crossroads Court. The property owner, Construction Managers of Ohio, proposes spending $775,357 to upgrade electric service and install a new transformer to increase electric power to accommodate equipment used by a potential tenant, auto parts manufacturer Inteva Products.

Projects Unlimited, 6300 Sand Lake Road, wants to establish a cable and harnessing division within the company’s aerospace business. The project includes additions to an existing building at a cost of $1.26 million.

• Dayton’s $50,000 award would go to home builder NVR Inc., 2094 Northwest Parkway. The company’s $3.5 million project involves development of a new truss factory in Dayton creating 60 jobs over three years with an annual payroll of $1.74 million.

• Riverside will get $150,000 to assist InfoCision Marketing Corporation. The building InfoCision leases at 101 Woodman Drive is under foreclosure and the company wants to purchase and renovate it at a cost of $3 million. InfoCision will retain a minimum of 250 jobs for the next three years with estimated annual payroll of $4 million.

• The largest award, $200,000, goes to Miami Twp. for VRI, 9111 Springboro Pike, Miamisburg. VRI’s corporate headquarters, call center and customer support center are in West Carrollton, but the company needs to move to a larger facility.

The company expects to increase its 100 employees to nearly 300 within five years. ED/GE funds will go toward design, building and leasehold improvements.

via Cities get money to stimulate business.

The first warning sign post on Esrati.com about UltraCell was on Dec. 12, 2008, look to a post within 2 years of one of these companies falling apart- or not delivering what was promised.

If our politicians would work on consolidating government, thereby reducing the tax overhead required, we would be able to attract a lot more business to the area. Ohio has too many taxing jurisdictions and one of the highest costs of government in the country. Let’s spend our money eliminating duplication of services- starting with unifying our police forces into one department with one well paid chief who is accountable for reducing crime and shortening response times.

There- that wasn’t too hard to re-direct tax dollars to their intended purpose.

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12 Responses

  1. Civil Servants Are People Too August 26, 2010 / 12:58 am
    So the Rolly Pollies went out of business because they didn’t get enough help, and the Ultracell went out of business because they got too much help?    Okay, sure.  



    Although I agree that we need regional government, I’ll post this again:

    The Spotlight fallacy is committed when a person uncritically assumes that all members or cases of a certain class or type are like those that receive the most attention or coverage in the media. This line of “reasoning” has the following form:

    Xs with quality Q receive a great deal of attention or coverage in the media.
    Therefore all Xs have quality Q.

    This line of reasoning is fallacious since the mere fact that someone or something attracts the most attention or coverage in the media does not mean that it automatically represents the whole population.

    I’m still waiting for the logic behind your desire to eliminate local programs to help businesses.    Any public service ultimately subsidizes businesses, whether it is paving the street or putting officers on the beat.   It’s a policy choice.   Why should your City choose to be less competitive at the bargaining table?


    PS. What do you mean by hand-picked ?   Like, out of a big hat?    Awesome!


    PPS. I can’t seem to turn off the italics without re-typing the whole thing.  Sorry.

  2. Shannon August 26, 2010 / 7:47 am
    “Let’s spend our money eliminating duplication of services- starting with unifying our police forces into one department with one well paid chief who is accountable for reducing crime and shortening response times.”

     I also agree that we need a regional government.
    But, let’s take it one step further. 
    Regionalize our water.  Dayton owns the majority of the infrastructure and has been providing great water for Dayton and Montgomery County without fail for years!

  3. joe_mamma August 26, 2010 / 8:48 am
    “Any public service ultimately subsidizes businesses, whether it is paving the street or putting officers on the beat.   It’s a policy choice.   Why should your City choose to be less competitive at the bargaining table?” CSPT.
     
    That’s nonsense.  A service like police, fire, roads etc…service the entire community and generally are not targeted toward an individual, group or industry.  A subsidy is directed toward a specific target whether it’s a company or an industry.  It’s picking winners or trying to pick winners plain and simple.  It is also a wealth transfer from the citizens to select individuals/businesses not based on the value they deliver to the citizens but for no other reason than a technocrat/politician thinks there is a “reason”. 
  4. Civil Servants Are People, Too August 27, 2010 / 1:45 am
    @  A service like police, fire, roads etc…service the entire community and generally are not targeted toward an individual, group or industry.

     
    Okay, let’s take that to the logical conclusion.   We pick winners every day.   A sidewalk subsidizes those who walk.   A road subsidizes those who choose to drive.    A bike path subsidizes people with bicycles.     A fire truck subsidizes those who own buildings.     Medicare subsidizes people who lack private health care.      Education subsidizes those who want children to learn.     City Planning benefits those who want to shape the look of their community.  Street lights benefit those who go out in the evening.
     
    Now show me one of those things that apply to every single person in the community.   No?  Shall I continue?    All are policy choices.    So therefore, the criteria should be – does the program accomplish the intended goals, or not?     Does it work in a cost effective manner, or not?    Is the program desired by the community, or not?
     
    Does the Firefighter put out the fire?
    Does medicare provide access to health care?
    Does a grant to companies attract jobs?
    Does the street provide effective means of transport?
    That’s how policy should be created and evaluated.
    If companies didn’t want grants, they would stop asking for them.
     

  5. joe_mamma August 27, 2010 / 8:51 am
    Like a poor marksman you keep missing the target. 
     
    “We pick winners every day.” – Yes we do.  However, we do it WITH OUR OWN MONEY .  It is earned.  It is a mutually agree upon transaction that the parties think they will benefit from.   Government picks winners WITH OTHER PEOPLE’S MONEY.   There’s a HUGE difference.  If you don’t think so then give me $200 and I will do your grocery shopping for you next week.  Don’t bother providing a list…I’ll do the choosing.  I’m being altruistic…you can trust me.
     
     
    “A sidewalk subsidizes those who walk.  A road subsidizes those who choose to drive.    A bike path subsidizes people with bicycles.     A fire truck subsidizes those who own buildings.     Medicare subsidizes people who lack private health care.      Education subsidizes those who want children to learn.     City Planning benefits those who want to shape the look of their community.  Street lights benefit those who go out in the evening.”
     
    Again this is a nonsensical bureacratism.  Generally most of those things you listed WE ALL PAY FOR and can utilize.   If David Esrati decides that he wants to walk on a sidewalk it doesn’t give him an advantage over me…because I can use it to if I want and I don’t need to hobnob with an official to get permission.
     
    “If companies didn’t want grants, they would stop asking for them.”  
     
    Of course they want grants.  It’s an advantage over their competition.  Why do you think large corporations in particular are so active in government policy?  They know they can manipulate rules and regulations to create advantages and stifle competition.  It’s government job to resist and to just provide a level playing field for the private sector.  We’ll do the rest. 
  6. Conspiracy August 27, 2010 / 9:04 am
    I am baffled by the total disregard for the facts. Do you know how the ED/GE program works? Here is the intro summary from the counties website.

    ED/GE Program
    Enables participating jurisdictions to apply for grants each year (ED) and provides each participating jurisdiction with the opportunity to profit from economic growth in the county regardless of where the growth occurs (GE).

    In order to spur economic growth, as well as create regional cooperation between its jurisdictions, the Montgomery County Commissioners set aside dollars every year from sales tax revenue for economic development projects within the county.”

    The rest can be found here

    http://www.mcohio.org/services/ed/edge.html

    Now, your basic argument is that this is corporate welfare right? That the powers that be just pick and choose who gets what? What about the application process? What about the committee of business leaders and reps from the local jurisdictions that has to recommend projects to the Commissioners? Ohhhh, that’s right; the idea of a closed door meeting where the elite of the Region are sitting around a table picking and choosing who is going to be successful (think Stonecutters from the Simpsons) fits into your paradigm of conspiracy rather than the reality of the situation. The idea where companies apply for grants, a review board looks at the application and recommend who gets what based on the jobs that the proposed project will create is too easy therefore must not be true. Tell me if you read the situation described below ANYWHERE else you wouldn’t be supportive of it…

    Company A has 60 employees. They would like to expand their operation and have applied for a $50k grant from a local jurisdiction to help with the expansion of their existing facility. In the proposed expansion they would DOUBLE their employee count to 120 in 3 years. The taxable revenue from this growth would be around $1.74 million. Basically the jurisdiction is INVESTING $833 per job. (Btw that equals around 30k annual pay per job)

    Please explain to me where ANY of this is BAD business.

  7. Hall August 27, 2010 / 9:54 am
    @Conspiracy: Your paragraph starting with “Company A has…” is where the issue lies. Too often, it would seem — I hope David has proof or numbers vs ignoring the successes related to ED/GE and only pointing out the failures — companies request money based on expansion, hiring of add’l employees, etc, etc and then that doesn’t happen. Of course, if you don’t say you’ll hire more people, expand your facilities, etc, etc you probably won’t get any money ! So they have to be, ummm, “optimistic” (exaggerate ?).
  8. David Esrati August 27, 2010 / 10:23 am

    @conspiracy and CSAPT-

    By the same token- we could reduce taxes and bureaucratic overhead on all businesses in the region and make it easier for EVERY business to grow. Having so many taxing districts makes payroll a PITA- having so many filing deadlines- on different dates- takes time and money. Plus, if the tax dollars were spent on public resources- like parks and rec, public transit, etc- more people might want to live here and start their business.

    Direct quote: “and provides each participating jurisdiction with the opportunity to profit from economic growth in the county regardless of where the growth occurs”

    how can this program still be in existence when there has been practically ZERO growth- except for shell games moving Teradata from one new building to another at taxpayer expense?

    In fact- tax revenues and property values keep dropping- as an indication of the FAILURE of these programs.

    The list of failures of these crony capitalism examples is much longer than the successes.

    Joe Mamma has it right “It’s government job to resist and to just provide a level playing field for the private sector.”

     

  9. joe_mamma August 27, 2010 / 1:17 pm
    @ Hall…  Great point.  Of course they CAN exaggerate because there are few to zero consequences for failure and little legal recourse for the citizenry. 
  10. Conspiracy August 27, 2010 / 3:23 pm
    @Hall – What kind of people do you think do business here in Dayton Region? Let’s be honest, if a company is spending $3.5 MILLION of their own money and are getting $50k from the county do we not think that they could cover the rest of the money if they needed too? Or do you REALLY think they are out to screw the county and US out of 50K of our tax dollars?

    Also, I am sure that at some point they will start to include clawback provisions in this program. (most ED programs have them and it’s a way to cover the investment-they currently don’t have them with the ED/GE program. I’m not a fortune teller so there is no way to know except with time.

    @Esrati – You again are speaking in if’s and confirmable facts that you refuse to confirm for fear of the facts not backing up your arguments. I think Reagan said it best, “Facts are stubborn things”

    1st – “Having so many taxing districts makes…” (How many are there?)
    2nd – having so many filing deadlines (How many?)
    3rd – on different dates (Again, when and how many?)
    4th – takes time and money. (How long and how much?)

    5th – “plus, if the tax dollars were spent on public resources- like parks and rec, public transit, etc- more people might want to live here and start their business.” – These things that you are so hung up on are NON FACTORS when companies look to expand, relocate, or close their doors. Taxes, Workforce, etc. YES, parks and rec, public transit, NO!

    6th – “In fact- tax revenues and property values keep dropping- as an indication of the FAILURE of these programs.” – Last I heard, this was a NATIONAL trend, not just the Region. Good to know that we are the catalyst for a nationwide recession. (Please don’t respond about the national economy or your thoughts on Obama or Conservatives, I don’t care and I don’t want to distract from the discussion.) The point is, you make statements without FACTS to back them up. How do you come to this conclusion? Seriously, we want to know.

    FINALLY – “The list of failures of these crony capitalism examples is much longer than the successes.”

    David Esrati is an elephant. You see, I can make things up as well. SHOW US the data you used that led you to this conclusion. Please show us the list of failures and successes. Until you do, it’s just words that some people choose to believe and some don’t. The problem is, some people think you know what you’re talking about. I, on the other hand know you don’t. AND if in fact I’m wrong, (which I’m willing to bet a large sum of money I’m not) I will apologize. Go back 5 years and get back to me on the results. Until you do, YOU are an elephant who refuses to disclose ALL of his financial statements involving his fundraising efforts. (you thought I forgot didn’t you—I’m still waiting.)

    @joe_mamma – well said, I agree completely…

  11. bobby August 27, 2010 / 5:30 pm
    @Conspiracy, NVR, the parent company of Ryan Homes and recipient of the $ 50K grant,  has a larger market cap than DP&L and free cash flow of $197 million dollars .  You may rest assured that the decision to locate their truss plant in the City of Dayton was not determined by whether or not  they received this money… Ecomomic development funds should be reserved for instances that they become a difference maker, not a boardroom laugh for those that pick the pockets of the economic development bureaucrats. It’s time for government employees to have some skin in the game, or they should be transfered to the Department of Forestry, where they may begin planting money trees.    ….The irony is NVR will be producing roof trusses in the City of Dayton for the houses they are building in the suburbs.  
  12. Atlanta September 29, 2010 / 9:07 pm
    Reading the comments on this site has been interesting.  This topic caught my eye due to the possibility that my family may be relocating to Dayton due to the NVR plant.  Since I have been associated with NVR, I have found the company to be an asset to our community and I feel that Dayton should be happy to have a company such as NVR.  I can tell you as a certainty, NVR was looking in many areas including Indianapolis, Indiana.  One of the deciding factors for Dayton was the government incentive, not solely due to the finacial boon, but also due to fiscal responsibilities.   I have personally gone to the site, which is currently an empty industrial site with no industry at all, and enjoyed the areas, yes suburbs, around Dayton.  Also, as a comment to the “irony” of building the trusses for houses in the suburbs of Dayton, would he rather they be built in Indianapolis instead or maybe NVR should just keep shipping them in from PA like they do now?  At least the people of Dayton will have a chance at the jobs instead of the other areas.

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