KMK Law Real Estate Blog

The Ohio House of Representatives are considering a new law to create an economic tool to assist on Ohio economic development projects. Ohio House Bill 740, introduced in October and referred to the State and Local Government Committee in November (where it received its third hearing in December), seeks to create a state bond bank called the Economic Development Bond Bank (the “Bond Bank”). The Bond Bank is intended to reduce the cost of financing for local economic development agencies by consolidating borrowing and pooling resources. The Bond Bank would be administered by the state Treasurer and be available to select Port Authorities (both “new” and “old”), certain Community Improvement Corporations, and certain Community Development Corporations (“Development Agencies”). The Bond Bank would issue special obligation bonds for purchase by third parties (at public sale or by private placement) and use the proceeds of those sales to purchase bonds issued by the various eligible local Development Agencies. By acting as an intermediary and consolidator, the state could reduce the cost of financing for local Development Agencies who, if acting alone, would pay a higher rate on their obligations, receive less favorable borrowing terms, or incur higher cost of issuance. The Bond Bank’s funds would be divided between the Improvements Account (for the purchase of Development Agency obligations), the Reserve Account and the Bond Service Account.