Ohio Rural Industrial Park Program on the Chopping Block in State Operating Budget

David Robinson
Montrose Group LLC

Governor Mike DeWine’s Ohio Development Services Agency (DSA) operating budget proposal has clear winners and losers.  Fueled by a planned influx of federal funding and additional Ohio General Revenue Fund (GRF) funding, Governor DeWine’s proposed DSA operating budget proposes a 37% decrease from all funding sources for a total FY 2022 budget of $1.7B and dropping to $1.4B in FY 2023.  The big fiscal winners in the DeWine DSA budget are primarily focused on the Governor’s Investing in Ohio agenda focused on small business, broadband and small to mid-sized community infrastructure projects.

Rural markets are in need of state government support to capture global industry growth opportunities.  Rural markets across the globe have been suffering from a depopulation for a century.  In fact, Ohio’s rural counties actually lost population over the last decade.  While Ohio’s rural economy has grown faster than counterparts in Michigan, Missouri and North Carolina driven by the discovery of shale oil and natural gas, rural Ohio’s economy is not growing nearly has fast as successful metro markets such as Ohio.  However, Ohio’s rural markets have a larger share of the state’s manufacturing jobs than urban centers driven by low land and worker wage cost.  This industrial market is hot driven by a growth in logistics and the prospect of bringing back the manufacturing supply chain from Asia due to COVID 19 concerns.  In fact, CBRE estimates that new industrial completions are forecast to jump by 29% next year. Given strong preleasing of speculative projects, 38% as of Q3, demand is expected to keep pace with new supply, especially as occupiers flock to modern warehouse space.  Ohio’s rural market is primed for industrial growth but in many cases that lack adequate industrial sites prepared for the competitive corporate site location process that more lucrative urban centers have.

Preparing those rural sites for industrial development and bringing those jobs to Ohio is the job of the Ohio Rural Industrial Park program The Ohio DSA Rural Industrial Loan Program (RIPL) provides low-interest loans to assist eligible applicants with financing the development and improvement of industrial parks and related off-site public infrastructure improvements.  At least 50 percent of the outstanding loan balance will be forgiven upon successful completion of the project.  If the RIPL funds represent less than 50 percent of the total project costs, the percentage of loan forgiveness will be increased to an amount equal to 100 percent less the percentage of the project being funded by RIPL.  Eligible applicants include counties, municipalities, townships, non-profit organizations, port authorities, community improvement corporations, private developers, and other eligible applicants willing to develop eligible rural industrial park projects to improve the economic welfare of the people in the State of Ohio.  Eligible projects include the development and improvement of industrial parks in rural areas designed to attract and retain businesses related to manufacturing, distribution and warehousing, research and development, high technology, industry and commerce.  For this program, “industrial park” is defined as a site of 25 acres or more, zoned for or containing commercial or industrial users that is or will be adequately served by utilities and infrastructure.  Ohio companies may not relocate existing Ohio business operations to the industrial park without prior approval of the Development Director.

The proposed DeWine DSA budget suggests a substantial reduction in RIPL spending with a recommended 45% reduction.  The Montrose Group has successful developed and advocated for several RIPL applications to support the development of rural industrial parks across Ohio.  In fact, demand is high for funding for this program.  Members of the Ohio General Assembly need to be reminded of the critical need for industrial sites in rural Ohio.  The RIPL program has a strong performance track record and opposition to the proposed cuts in the General Assembly is to be expected.

If you have questions about the proposed DSA agency budget, please email drobinson@montrosegroupllc.com.