Local governments: Source of Cincinnati Partnership’s troubles related to JobsOhio roll out

Area economic development directors are frustrated with the Cincinnati USA Partnership because they aren’t getting the job-generating leads and attention from the agency that they used to before JobsOhio entered the picture, a JournalNews investigation has found.

Cincinnati USA Partnership for Economic Development is a private nonprofit agency responsible for leading the region’s business attraction and retention activities. In Ohio, it coordinates economic development in Brown, Butler, Clermont, Hamilton and Warren counties.

Development directors from those counties complain that communications with the Partnership soured after it became a regional office of JobsOhio in 2011. Officials say that is a major problem when they are trying to attract new businesses and jobs to their jurisdictions.

The concerns have some communities rethinking their financial contributions to the Partnership, which relies on public and private donations to fund operations. This rift comes as the Partnership embarks on a new $10.5 million, three-year fundraising campaign.

Warren County paid $25,000 this year to the Partnership, but Commissioner Dave Young said that money is not a given for 2014. He said there has been a “power vacuum at the top” of the Partnership, and he hasn’t seen the agency promote Warren County.

“I think I am cautioning the long-term viability of the relationship at the level we’re committed to at this point,” Young said. “I don’t think the taxpayers in Warren County have gotten an adequate return for the past couple years on the Partnership investment.”

Clermont and Butler counties have cut contributions in past years due to budget constraints.

“Certainly the performance of the largest (development) organization of the region has been a topic of discussion,” said Andy Kuchta, Clermont County director of community and economic development. “It’s certainly been a big transition from the previous administration to JobsOhio. There’s certainly been some hiccups and bumps along the way.”

JobsOhio Network

Ohio Gov. John Kasich’s administration established the nonprofit JobsOhio in 2011 to lead the state’s job creation efforts.

Cincinnati USA Partnership was named later that year as one of six regional JobsOhio Network partners statewide. As such, it is the go-between for local jurisdictions and JobsOhio officials in Columbus for crafting business deals.

The private JobsOhio replaced economic development activities of the public Ohio Department of Development, since renamed Ohio Development Services Agency.

The Partnership always had the mission of marketing and promoting the Cincinnati region to businesses, Kuchta said. But local governments working to land business projects used to be able to work with regional state representatives to close a deal, in addition to the Partnership.

However, when JobsOhio formed, the state Department of Development’s regional Cincinnati office closed. That role shifted to the Partnership, Kuchta said.

Since then, there has been a lack of clear communication on strategies and how Partnership staff is going to be promoting key industry clusters identified for growth in the Cincinnati market, such as consumer products and brand development, advanced manufacturing and biohealth, Kuchta said.

Core marketing materials promoting Cincinnati are outdated, Kuchta said.

During the transition, there was confusion about who had responsibility for what; how incentives, jobs and investment were to be calculated; and what qualifies companies for tax incentives, Kevin Chesar, Monroe development director, said.

“I think just the JobsOhio roll out overall, and the programs and the state trying to get up to speed, led to some issues with implementation,” Chesar said. “I think there was a communication gap there that the Partnership has really tried to do better with.”

“I think things stagnated, which caused frustration on everyone’s part,” Chesar said.

Partnership staffing

Another key issue has been high turnover of Partnership staff.

The Partnership named Denyse Ferguson executive director in 2012. A staff restructuring followed. At one point last year, Partnership officials said staff count dropped to four people. The agency now has 11 staff members, of which five have worked there less than two years.

The effect was “new people in the region, new people at the state, everything is new and at the same time, we’ve got companies coming in and they want an answer yesterday, and you have to respond to them quickly, so that added to the frustration level,” said David Fehr, Butler County’s development director.

“Any time you bring new people in, they’re not from the region and they are trying to find out where Butler County is, when all they maybe know about Cincinnati is the airport and Skyline Chili,” Fehr said.

Community leaders also feel the new responsibilities under JobsOhio created conflicting interests.

The Partnership is funded by a group of 200 investors that donate money to the organization, including private corporations and local governments.

The agency also received grants of $2,625,000 in fiscal year 2012, and an additional $1,356,110 in 2013, from the Ohio Third Frontier program.

Local governments that can’t afford to give as much money as Fortune 500 company donors, including Duke Energy, Fifth Third Bancorp and AK Steel Holding Corp., were devalued by the Partnership, said Jack Cameron, administrative assistant to the mayor of Evendale.

“It was clear there was not a desire to engage the communities,” Cameron said. “The Partnership is built on people giving them a donation.”

Cincinnati Partnership investors receive access to certain information and are invited to certain events, depending on the level of money donated — investors giving $50,000 receive more access than investors giving $10,000, for example. That’s still the case.

But by replacing Ohio Department of Development functions, Cincinnati USA Partnership now has obligations to work with investors and non-investors alike, Cameron said.

“They had a built-in conflict that they were obligated to deal with everybody,” Cameron said. “They never made a clear distinction between what they did for the investors and what they did for JobsOhio.”

Pulling investments?

The concerns have led some local governments, already faced with budget crunches in the down economy, to cut their contributions to the Partnership.

The city of Mason, a large sponsor with an annual contribution of $50,000, hasn’t paid its bill this year and might not. City Manager Eric Hansen said officials are weighing the city’s return on investment.

“It is premature for us to be making any funding commitments until we know what the program is, what direction the chamber is going to take. Like any sponsorship, you want to know what you’re getting and where you’re heading before you decide where you want to be at in the contribution,” Hansen said.

Blue Ash and West Chester Twp. officials said their governments are continuing their level of contributions.

“I don’t know that we have any real gripes or any real issues with them,” said Mike Juengling, West Chester’s community development director. West Chester gives $10,000 a year to the regional agency.

Blue Ash pays $50,000 a year.

“One successful project can mean much more than that in terms of return,” Blue Ash Assistant City Manager Kelly Harrington said.

The Partnership’s new strategy

Cincinnati USA Partnership is the economic development arm of the Cincinnati USA Regional Chamber. It heads development activities across the 15-county, three-state Cincinnati metropolitan area.

Responsibilities under JobsOhio cover the smaller geographic area of Brown, Clermont and Hamilton counties and half of Butler and Warren counties. The Partnership’s JobsOhio counterpart in the Dayton market, Dayton Development Coalition, represents communities for those purposes north of Ohio 63.

JobsOhio is a portion of what the Cincinnati Partnership does, not all of it, Ellen van der Horst, president and chief executive officer of the Cincinnati regional chamber, said.

In fact, the Partnership was in the process of a “strategic overhaul” before it was named a regional office of JobsOhio, van der Horst said. The new strategy, introduced in 2012, would have been put in place regardless of JobsOhio, she said.

The Partnership hired in 2010 former Convergys CEO David Dougherty as interim director to make recommendations because “the Partnership was no longer as effective as we wanted it to be,” van der Horst said. “We were looking for what was the right strategy for the next decade.”

The result was “a strategy that was grounded in the industry clusters that offer the greatest opportunity for growing jobs and investment in the region, that continued to include a significant element of attraction work, both domestic and international, but added to the mix, a much more robust focus on working with existing businesses to help them maximize their growth opportunities,” she said.

By assuming additional JobsOhio Network responsibilities, the Partnership became the main point of contact for local jurisdictions wanting to offer a tax incentives package, she said.

“We’ve always had a role in speaking with political jurisdictions whether they’re at the local level or the state level about what incentives would be available to a company that’s looking to locate here or expand here,” she said. “We have played that role historically.”

“The difference is that we didn’t have to play that role in the past. Now the way it’s structured, JobsOhio wants all of those conversations to funnel through us,” she said.

The extra JobsOhio responsibilities include maintaining a dialogue with local communities about their sites available for development and what Partnership staff should be on the lookout for in conversations with companies and site selectors, Partnership officials said.

“With all of this, trust is sort of like a foundational requirement, and it’s not at the level it needs to be. So one of Matt’s major priorities is to build that,” van der Horst said. “We think things are better than they were, and they’re not as good as they will be, and they’ll get there very, very quickly.”

Denyse Ferguson was named Partnership executive director following Dougherty.

No formal announcement was made, but Ferguson resigned at the end of August. She could not be reached for comment.

Matt Davis, previously the chamber’s vice president of government affairs, was named interim executive director in her place.

Van der Horst previously announced plans in May to leave when her contract expires in early 2014.

The Partnership has been criticized for underperforming, compared to other JobsOhio regions, on new job and investment creation.

JobsOhio issued a quarterly report May 9, showing performance by region for the previous 12 months. Cincinnati USA ranked third for new job commitments and last for new investment commitments.

“We spent a year and a half sort of staffing, figuring out how to best implement the strategy. Now I think we’re prime to be in the operational phase,” Davis said.

Cincinnati USA Partnership says in 2013, as of September, it has scored 2,547 new job commitments from companies. Thirty-eight business projects have closed with companies committing to make $331 million in new capital investment in the area.

That’s up from 35 projects, 2,801 new jobs and $193 million in investment closed in 2012. Figures include leads the Partnership generates on its own, as well as JobsOhio.

“To the question of what’s the difference between being an investor and not an investor, any community in Ohio has an opportunity to pursue a JobsOhio lead that comes our way,” van der Horst said.

“The leads that we generate ourselves are made available to the communities that invest with us,” she said. “They get more leads if they’re an investor. More than half of the leads that we work, we’re generating ourselves. They’re not coming from JobsOhio.”

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