Unclear what Ohio spent to lure Intel

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COLUMBUS — It will cost Ohio taxpayers to attract Intel and the billions of dollars company officials say they plan to invest here.

But exactly how much, Gov. Mike DeWine has yet to say. The governor’s office on Thursday announced a briefing for the media scheduled for 1 p.m. Friday “to discuss state incentives involved in Intel’s commitment to bring two chip manufacturing facilities to Ohio.”

So far, Lt. Gov. Jon Husted has been the most specific about what Ohio is on the hook for, saying last week that the state has pledged to spend $1.2 billion on infrastructure for the Columbus-area megaproject, which Intel officials say will cost $20 billion and employ 3,000 people when it’s complete in 2025. That will include widening Ohio 161, a state route connecting Columbus with New Albany, a city about 20 miles from where the plant is expected to be built later this year.

But while the project almost will certainly receive additional incentives like income and property tax breaks, low-interest loans and other subsidies, the governor’s office has not yet offered even a ballpark figure on what the total price tag could be.

Senate President Matt Huffman, a Lima Republican, said Wednesday that the governor’s office has asked lawmakers to pass legislation related to the project sometime before recessing in June.

“I can’t give specifics. For one, I don’t know exactly what they are,” Huffman said. “And I don’t think at the moment that I have the freedom to talk about all that.”

In the meantime, the lack of specificity has allowed the governor to bask in the good news of a historically significant economic development project as he heads into an election year while avoiding the controversy that extensive subsidies might raise.

Dan Tierney, a DeWine spokesman, said the governor has delayed releasing details on the incentives – or even providing a ballpark — because some of those details are not finalized.

“If people came away from the announcement last week that incentives were complete – signed, sealed, delivered – and there was no work to do moving forward to complete the project, that simply is not the case,” Tierney said. “These incentives will be a work in progress — they are a work in progress — and we look forward to transparently sharing them with the news media and the public in the very near future.”

“When people look back at this years from now, in the grand scheme of the timeline from the announcement to its completion years from now, the incentive information will have been provided very shortly after the announcement,” he added.

Zach Schiller, a researcher with Policy Matters Ohio, a liberal think tank, said the details of the incentives would help taxpayers evaluate how state officials negotiated for the project and how many resources will be available for competing priorities in the future.

Some of the project is a moving target, he said, like pronouncements from Intel officials that the project could grow to as many as 10,000 employees and $100 billion in construction in the coming years if Congress approves federal legislation subsidizing the U.S. semiconductor industry.

That makes it challenging to develop a cost-per-job figure, for example, he said.

“I think that we really need to know more to understand how good a deal it is,” Schiller said. “We know obviously it is a big deal for Ohio to get this kind of factory. But we also want to know and legitimately have a right to know what will be paid to attract it. It has effects on Ohio’s budget, and it affects what resources will be available in the future.”

Intel officials have refused to say how much of a role the incentives played in picking Ohio. But they’ve praised Ohio’s history of manufacturing and said the presence of Ohio State University, which has a well-regarded engineering school, is a key factor.

“We are looking at many factors, and really categorized into three key areas: Is it a key regulatory environment? Things like talent. And infrastructure, for us to run a facility like this,” said Keyvan Esfarjani, Intel’s senior vice president and general manager of Manufacturing, Supply Chain and Operations.

One of the things state officials have credited with luring Intel is a law change tucked into last year’s state budget bill that, for qualifying “megaprojects,” expanded the scope of state tax breaks the projects could get.

As a result of that law change, state officials can exempt companies from paying state income taxes for projects involving $1 billion in investment or creating at least $75 million in Ohio payroll.

It similarly doubled from 15 to 30 years the maximum life of enterprise zones and community reinvestment areas, which government officials can designate in certain qualifying areas to make projects there exempt from property taxes.

The “megaproject” incentive also allows for companies to sell goods tax-free to their in-state suppliers.

Larry Obhof, a former Ohio Senate president, said the provision dates back to around 2016 when John Kasich was still governor and Ohio was competing for a major project from a Chinese manufacturer.

The company, FoxConn, ended up going to Wisconsin, where the project has fallen dramatically short of expectations and become a sore political subject.

But with lobbying from JobsOhio, the state developed a proposed law change that would offer a set of boilerplate incentives available for projects that commit to spending billions of dollars and hiring workers with a certain amount of payroll.

“Instead of getting caught up in a race with 10 other states, where it’s ‘What’s this state going to give?’ and ‘What’s that state going to give?’ let’s just say projects above a certain size have a certain impact are beneficial, and here’s what the law says about that,” Obhof said.

Sen. Bob Peterson, a Fayette County Republican, introduced the megaproject language as a standalone bill, passing it several times in the Senate, but it failed to make it all the way through the legislature. State officials have said as they courted the Intel project over the summer, they convinced state lawmakers to add the language to the state budget bill.

Also playing a role in subsidizing the project will be JobsOhio, the state’s private economic-development arm that’s funded through profits it gets running the state’s liquor monopoly. The organization typically gives out grants and low-interest loans, coordinating with state officials who have the authority to grant tax incentives.

Even though JobsOhio is set up as a private entity, it is funded through a public asset, Schiller said. And the money that it gives to one project isn’t available for others.

“I think the point is those are still scarce resources that are available for economic development purposes,” he said.

Schiller said there are other perks Ohio officials could grant to Intel. In 2018, the Public Utilities Commission of Ohio OK’d an electricity discount from American Electric Power to Amazon Web Services, the computer-server subsidiary of the well-known retailer, when the company built a data center in New Albany, close to where the new Intel plant will be.

By Andrew J. Tobias

cleveland.com (TNS)

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