One of its main purposes is in providing loans to those who want to expand or open a business.
C.B. Herrmann serves as the SOGP chairman.
“It's a collective umbrella organization that was created to unify private-sector economic development efforts for the community,” he said. “Over time, the makeup of the organization has evolved as needed.”
But has the group become too secretive as critics say?
The current SOGP structure was formed in 1991 after a meeting between directors and members of the Portsmouth Area Chamber of Commerce and leaders of the Scioto Economic Development Corporation and the Greater Portsmouth Growth Corp.
The first SOGP directors were Michael Brenan, Robert Dever, Gerald Jenkins, Clayton Johnson, Harry Papay and Clive Veri, according to documents supplied by Johnson.
But the SOGP's origins go back to the mid-1960s when business leaders convinced the state to build the Southern Ohio Correctional Facility in Lucasville.
“The community leaders worked behind the scenes to foster the premise that if we could bring jobs to the area, it would help the local economy,” Herrmann said. “I think the results speak well.”
Herrmann said it's doubtful a Honda or Toyota plant will come to the area. Therefore, SOGP concentrates on attracting smaller businesses.
The SOGP has 24 board members and three public officials.
SOGP also acts as an economic development agent for the city.
Portsmouth City Councilman Bob Mollette wants the SOGP to report its progress to the city on a regular basis.
He has questioned the private entity status of SOGP if it is considered an authorized agency to represent the city.
“I believe City Council and the SOGP should come together for the benefit of all parties involved,” he wrote in a letter to his fellow City Council members and solicitor David Kuhn. “I believe the relationship with the SOGP, if considered an authorized agency that represents our city, must be accountable and transparent.”
SOGP members, which include the heads of various local companies, Mayor Jim Kalb, Shawnee State University President Rita Rice Morris and others, say they must maintain secrecy at times because of the nature of business they conduct.
Board member Andy Glockner said SOGP may have erred in not publicizing its efforts more.
“We don't want that,” he said. “We just want to be recognized as the back office that's here for economic development to support the chamber, the murals and any other entity in a way to create the financing or be the front person.”
SOGP had declined in the past when the Daily Times asked to examine its financial records.
But it did provide the Daily Times with its 2005 financial report filed with the Ohio auditor's office for this story.
According to figures supplied by the SOGP, it listed $5,565,948 in total liabilities and net assets.
It listed $1,082,182 in total assets before $3,155,012 from long-term loans was figured in.
Total liabilities, including those from the loan program, was $3,467,782.
SOGP reports are available on the state auditor's Web site. The organization also is subject to audits on both the state and federal levels.
SOGP members also must sign a confidentiality agreement promising not to discuss SOGP business.
“We are dealing with people in a banking relationship,” Herrmann said. “When you go to a bank and apply for a loan, you are asked personal financial questions. You don't want that discussed at the grocery store.”
SOGP member Bill Warnock said another reason for confidentiality is that investors come to the city looking to acquire property and want to keep it private.
“If we'd share that in our boardroom, then we would be no different than a public entity like a board of commissioners or a city council,” he said.
Much of that business consists of loaning money to those looking to create new or expand existing businesses.
Funding for the loan program comes from the United States Department of Agriculture.
“No salaries and no operating funds come out of those loan funds,” said Bob Huff, SOGP president. “We borrow those monies from USDA and relend those monies to businesses within the community or businesses that desire to come into the community.”
He said USDA has lent SOGP about $4 million for the intermediary relending program.
“We don't get those monies until a loan is made,” Huff said. “Then there is an electronic transfer for the amount of that loan. So if we made a loan to XYZ company for $100,000, we send that application to USDA after we've approved it. They must concur and give their approval.”
He said SOGP always works with a local bank when lending and has granted 72 loans.
“And we have to pay that money back, regardless of whether one of our loan clients defaults and goes bankrupt,” Huff said.
Mollette also is concerned over a water deal between the city and SOGP.
“I believe the SOGP has received public monies in the form of grants and (is) currently receiving benefits from a 20-year water contract established by Ordinance 80-2003,” Mollette wrote.
Under the ordinance Mollette referred to and which he wants repealed, the city sells water to SOGP, which sells it to Southern Ohio Correctional Facility in Lucasville.
The city also sells water to several county municipalities at double the rate it sells water in the city. It sells water to the SOGP at the city rate and the SOGP then sells it to its clients at double that amount.
City Council President Howard Baughman said the arrangement helps keep down water rates in the city.
The city, though, has raised water rates several times in the last few years.
“These places (detention centers and others developments) wouldn't be here without the potable water we sell to the SOGP,” Baughman said.
He said the city didn't have the money to run the water lines when SOGP started selling water. But he said the city does have the money to now.
So why does the city need the SOGP to sell its water?
“Because we'd have to sell it at the same rates we're selling it to SOGP,” Baughman said. “And if this enables us to fund another economic development engine, it's worth the money.”
Besides the detention centers, Baughman said the SOGP is responsible for bringing Phillips Supply, CG Biscuit, UPS and other businesses to the area.
“Everybody talks about working together as a community,” he said. “This is maybe the primary example of how we can work together in a unified voice to go and attract development to our area.”
The city has been losing population and businesses for the past several years. So does the SOGP business model work?
“I think absolutely, yes,” Herrmann said. “You look at a lot of other areas that have gone through the loss of major industrial components like the shoe industry and the steel industry, and you see major brownfields. You see a lot of unemployment and despair.”
Doesn't the city have unemployment and despair?
“Yes,” Herrmann said. “But we also have a community that rallies and passes the levy that builds all new schools. We've had more construction permits in this past two-year period than we've had in the past 10 or 15.
“So I think there's a lot of efforts going on and a lot of things pending that could make this even brighter. But without the efforts of SOGP and the community, we would have been in a lot more harsh times than we've been in.”
JEFF BARRON can be reached at (740) 353-3101, ext. 236.
Post a Comment
