As published in the June 1, 2010 Toledo Business Journal
Kevin Boyce
Ohio Treasurer
Ohio Bond Fund supporting development
Toledo Business Journal recently interviewed Kevin Boyce, Ohio Treasurer. He shared the following thoughts.
Toledo Business Journal: Can you discuss the Ohio Enterprise Bond Fund (OEBF) and the involvement of the Ohio Treasurer of State? What is the size of the fund at the present time?
Kevin Boyce: The Ohio Enterprise Bond Fund was created in 1988 in conjunction with the Ohio Department of Development (ODOD) in order to provide a source of low cost borrowing for Ohio businesses. Since that time, OEBF has issued project bonds totaling over $528,760,000.
TBJ: How does the bond fund work?
KB: Once a borrower has been approved by ODOD, we issue OEBF bonds and the bond proceeds are lent to the borrower. Following the bond issuance, the borrower is responsible for repaying principal and interest on their loan.
The OEBF may provide financing up to 90% of the total eligible project costs that are directly related to the fixed-asset purchase. The minimum borrowing amount is $1.5 million and the maximum amount is $10 million.
TBJ: What benefits do borrowers obtain from using the fund?
KB: Borrowers can utilize OEBF’s “AA-” S&P rating to achieve a low cost of funds. They also have access to the national capital markets without providing any further credit enhancement.
Pre-established legal documents and issuance process provides for an efficient and streamlined closing process. And, borrowers may receive favorable loan terms tailored to their needs such as fixed interest rates, longer repayment terms, and fewer financial restrictions and requirements.
TBJ: Can you discuss the requirements to borrow from the fund?
KB: Eligible borrowers include corporations, partnerships, sole proprietorships, limited liability companies, or limited liability partnerships engaged in the creation or retention of jobs in industrial, manufacturing, commerce, research and development, or distribution ventures.
TBJ: What projects are eligible for funding? Any examples of companies or projects in northwest Ohio that have received funding from the program?
KB: Eligible projects include, but are not limited to: purchase of land and existing buildings, new building construction or renovation, purchase of machinery and equipment, long-term leasehold improvements, and public improvement projects that directly benefit business development
Examples include HCR ManorCare (April 2009) and Health Care REIT (August 2009).
TBJ: Can you discuss the program’s impact on economic development in the state?
KB: These funds can purchase land, buildings, and equipment that will create and retain jobs and further promote economic development throughout the state of Ohio.
TBJ: Can you discuss your office’s Bid Ohio program?
KB: Bid Ohio is a competitive "live" auction of interim funds from the Ohio Treasury conducted on a secure website developed for the Treasurer's office. "Interim funds" are State dollars (tax receipts, fee payments, etc.), which have been received by the Ohio Treasury, but which are not needed to meet immediate obligations of State government. As of July 2008, a total of $450 million in interim Treasury funds has been earmarked for Bid Ohio.
The Treasurer's office uses the $50 million to purchase six-month certificates of deposit (CD) from banks making successful bids on the third Tuesday of the month. "Successful bids" are those offering the greatest rate of return on six-month CDs. Funds are awarded from the highest bid to the lowest at the point when the $50 million is exhausted. Like bids are awarded based on time submitted.
TBJ: How does this program benefit Ohioans?
KB: Bid Ohio is about reinvesting in Ohio’s communities. The live online auction process has generated significantly higher interest earnings for Ohio taxpayers than previous processes – netting an additional $3 million in its first year alone.