Can regionalism solve Northwest Ohio's economic woes?

by Steve Steel
Toledo City Paper
July 6, 2005

Northwest Ohio boasts world class rail, air, truck, and waterway transportation facilities. It is home to several major institutions of higher learning with strong programs in emerging technologies and engineering. It has clusters of industries in growing sectors of the economy like information technology and alternative energies. And it has geographic advantages as well, being in close proximity to the majority of the populations of the US and Canada.

Could this region be ready to land the economic development of the future?

"We have tremendous sustainable competitive advantages for economic development right here in Toledo and the surrounding areas," says Jerry Jakes, director of the Lake Erie West partnership. "What we need is a perception of that region and a corresponding effort to market it."

Lake Erie West, a way to promote the region without referring to jurisdictional boundaries, is also the name of a partnership attempting to market the area for attracting investment. It is defined as the region within a one-hour drive of the intersection of I-75 and I-80 and I-90, which Jakes refers to as "the crossroads of the two most heavily traveled roads in North America."

"Toledo is right in the heartbeat of where things can happen," adds Pat Nicholson, former director of the Toledo-Lucas County Port Authority. "We have strong labor, business community and university leadership. And we are getting the right economic development structures in place."

In order to take advantage of the area’s capabilities, those "structures" are currently undergoing massive scrutiny and revision in the emerging movement toward regionalism.

Ready, team?

"Teamwork can’t be overemphasized in the effort to retain and attract jobs to the Toledo region," said Toledo City Councilman Frank Szollosi. One outgrowth of teamwork is the ongoing merger of the City of Toledo and Lucas County offices of economic development into the Lucas County Improvement Corporation (LCIC).

The importance of such a merger was first discussed by Toledo Mayor Jack Ford in his Jan. 2003 State of the City address and was later emphasized in a study entitled "Toledo-Lucas County Economic Development and Innovation Plan," submitted to the Toledo-Lucas County Port Authority by consultants Hammer-Siler-George Associates in February 2004. The study evaluated options for filling "important gaps in the Toledo economic development structure," and the group proposed that the LCIC become "a countywide development corporation" with combined city and county functions.

Lucas County Commissioner Pete Gerken has been instrumental in the merger process. "The LCIC already has a Code of Regulations which allows it to purchase land, grant loans, issue bonds and other financial instruments and enter into contracts … all the things we need a County development agency to do," he says. "The problem is they have (had) a cumbersome 30-member board, no executive director, no real staff and little money."

Gerken has worked with Mayor Jack Ford and other city and county officials to activate the LCIC. At a meeting on July 1, the Board of Directors was reconstituted and an Executive Committee of seven members was created from both the public and private sectors. Members of the Committee include Mayor Ford, Commissioner Gerken, Oregon Mayor Marge Brown (representing county municipalities), and Swanton Township Trustee Dennis Tippie (representing county townships, all of which are now full members with representation on the board of the LCIC). Private sector members include local businesspeople Tom Uhler, John Henry Livingston, Jerry Jones and Jeanie Hylant (who is the chair of the committee) and local attorney Opie Rollison. Gerken said that Hylant was chosen from among the private sector representatives with the goal to "take politics out of economic development as much as possible." The next step is to appoint an executive director of the group.

According to Gerken, "The staff comes from the existing City of Toledo and Lucas County staff of the offices of economic development, building permits and regulations, Plan Commission, sewers and other infrastructure, etc." Drawing the LCIC staff from such a diversity of offices is intended to make its operation a "one-stop-shop," says Gerken. "A prospective investor can look at an inventory of available sites, get information on permits and regulations, see maps of infrastructure, and explore the available workforce, all in one place."

The Toledo-Lucas County Plan Commission produced the "Vacant Industrial Land Use Report" of potentially developable land in the City of Toledo in January 2005. The report "analyzes the availability, location and infrastructure associated with vacant industrially zoned land" within the city with affiliated "impediments to development of particular parcels."

The City-County merger has drawn glowing praise from development professionals like Jim Hartung, director of the Toledo-Lucas County Port Authority. "It creates an economy of scale to better market our region’s development opportunities and resources," he says. "It will serve to make the development process well-defined and predictable as well as accountable. Businesses like those traits."

Bill Carroll, Toledo’s director of Economic and Community Development, says the "one-stop-shop" aspect of the LCIC should help attract development by giving interested investors "quick answers about building codes, design standards, zoning and engineering," which vary in different jurisdictions across the County. But more important is the merger process itself. "It’s exciting to bring together a synergistic group with power in the development realm," Carroll said.

"That cooperation will remove competitive barriers to progress," adds Commissioner Tina Skeldon-Wozniak, "so that we can be wise with manpower and tools for the economic development of our area." President of the Toledo Area Chamber of Commerce, Mark V’Souske, believes that reducing intraregional competition is important. "Competition (between communities) will always exist to some extent," he says, "but perhaps we can stop chasing development around the region to instead focus on attracting new development into the region."

Big, bad Toledo

Szollosi notes the fear of "unigov" as one potential drawback to the concept of regionalism. He says there "may be some reluctance (in outlying communities) to see their autonomy threatened by ‘big, bad Toledo.’" But, he also says, that would be a misperception. Toledo City Council and Mayor Ford heartily embrace the role of teamwork with other cities in the spirit of boosting the entire region.

Matt Szollosi, Frank’s brother and chair of the Economic Development Committee of Oregon City Council, doesn’t fear Toledo dominating the process. "We recognize that Toledo is the core of this area," he admits. "As Toledo prospers, so the region will prosper." This leads him to "fully support" the current work toward regionalism.

"Conceptually, I couldn’t agree more, that cooperation can make us an economic development machine. The LCIC can present all regional opportunities … properties, infrastructure, financing options and so on … and the increased ability for marketing, will make it more likely that smaller entities, like Oregon, can land more investment."

However, Gerken notes that this countywide cooperation is only a start … an initial "success" to start the regional vision. Lake Erie West ranges beyond Lucas County, crossing political boundaries to encompass counties in Northwest Ohio and Southeastern Michigan. In order to complete a truly regional economic development strategy, other agencies and institutions must be involved, all of which can be part of the problem.

Too many cooks spoil the broth

"Inefficiency and underperformance."

That’s the conclusion of the Hammer-Siler-George study in regards to agencies delivering support for Lake Erie West development. The study notes that there are "an extensive number of agencies and other entities that list economic development as part of their mission and work program (but no) organizational strategy to assign and allocate each economic development function to a lead agency with roles of all participating agencies defined and agreed to."

The study further notes, that "there are many other entities which have direct and/or indirect roles in economic development" for the Toledo region, leading to "gaps, overlaps, and equally important, confusion on the part of business and governmental ‘customers’ as to how to access what they need." The phrase "many other" is an understatement. At least 50 agencies list economic development as a mission. Identifying lead agencies with well-defined roles is essential to an efficient regional development strategy, according to the study.

But, while public agencies like the LCIC "have a supportive role to play, only the private sector can drive economic development at a regional level," says Nicholson. According to Jakes, "the public sector can work to enact regional policies, but politicians will always have specific constituencies to which they owe allegiance. The private sector can think across political boundaries more readily."

Nicholson also notes that the private sector can work in confidence more easily than the public sector. "Getting deals worked out, assembling land, offering incentives, these types of things must be done behind closed doors," he maintains. "That’s the role of the private sector in drawing investment." The Regional Growth Partnership, which was a public-private partnership until June 30, just completed conversion to a 100 percent privately funded agency for regional marketing efforts.

Cruising down Biotech Boulevard

Nicholson spent two weeks traveling to other regions to see how they had adopted the regionalism approach … visiting the Research Triangle (Raleigh-Durham-Chapel Hill, N.C.), Philadelphia, Pa./Wilmington, Del., Lehigh Valley (Bethlehem/Allentown, Pa.) and the Route 128 corridor in Boston.

"The most uplifting place I visited was the Lehigh Valley," he said. "It is comprised of two counties of about 600,000 population, very similar to Lucas County." Like Lucas County, Bethlehem has a university with 6,000 students, and just east of town is 1,800 acres of abandoned steel mill representing 25,000 lost jobs. " But, those two counties are also the current home to 49 industrial parks," said Nicholson. "Their economic recovery has been phenomenal, and they have come back. First, they have built strong collaboration. Individual entities don’t attract capital or grants. Second, they have built on their strengths, what industries were already available, rather than what's 'hot' at the moment."

Closer to home, Cincinnati has developed a strategy for regional marketing and development with its "Cincinnati USA" initiative, the brainchild of the Greater Cincinnati Chamber of Commerce.

"Economic development is regional, not jurisdictional," says Nick Vehr, vice-president of the Greater Cincinnati Chamber of Commerce, whose staff serves as the staff of Cincinnati USA. "The basis of the economy is investors looking for an available labor force and the ability to move products, not boundaries that mean nothing to those capabilities." Vehr admits that there is some tension engendered by the "influences politicians face" to bring development into their own jurisdictions. "Even as representatives of different areas sit around a table in the spirit of regional cooperation," he says, "they are still thinking, ‘I have a better project, and I will attract this investment to my locale.’ But that’s healthy. It’s that desire that will bring more investment to the region."

Jakes has a similar vision for Lake Erie West and is convinced that it currently exists, just too often under the radar. "ProMedica Health, MCO, and Mercy Health Partners have investment across the Ohio-Michigan border. There is a virtual ‘Biotech Boulevard’ along US 23 between Toledo and Ann Arbor that should be marketed." Jakes compares that to "Automotive Alley" up I-75 between Toledo and Detroit. "And there is a major Photochemical Sciences program at BGSU, that is useful in both biotech and the automotive industry," he adds. "We have important science corridors in this region that could be used to draw further investment and industry." This includes ongoing work at local universities, including the University of Toledo, to cooperatively develop a science and technology corridor with the participation of Frank Szollosi and Mayor Ford. Jakes compares the Lake Erie West region to the Research Triangle. "The Research Triangle is a loose strategic alliance of three cities with strong university participation," he says. "And yet their overall resources pale in comparison to ours."

Let’s go to JEDZ

Regionalism is partly a result of vision. But, there are also current tools for making the regional vision a reality.

"JEDZ (Joint Economic Development Zones) are codified in state law as a vehicle for intraregional cooperation," according to Matt Szollosi. Ohio Revised Code (ORC) Section 715.69 provides for municipalities to enter into contractual JEDZ in order to share the costs of economic development projects, while typically sharing tax revenues generated.

Toledo City Council, the City of Maumee and Monclova Township, entered into a JEDZ agreement in the summer of 2002. At the time, Mayor Ford noted the JEDZ as a "demonstration that we can cooperate as a region" and that "our area can benefit financially long term from that cooperation without sacrificing the interests of our neighbors."

Another regional strategy tool for economic development is the ongoing Toledo Regional Industry Cluster Strategy Project, a partnership under the auspices of the UAC. This tool has been explored nominally for a decade, said Sue Wuest, assistant director of the University of Toledo’s Urban Affairs Center (UAC). It recently has been taken more seriously, especially since the use of an industrial cluster strategy was recommended in the Hammer-Siler-George study.

A Project report defines clusters as "geographic concentrations of interconnected companies who work closely with each other, local suppliers, infrastructure providers, educational institutions, and other relevant agencies." The goal is to identify current underdeveloped and potential clusters based on the region’s resources, then target expansion of existing and attraction of new investment. This was accomplished in the Lehigh Valley, according to Nicholson. As stated by the Project report, the cluster strategy should "help Northwest Ohio expand the number of high-paying jobs [and] increase the rate of new business formation" in "long-term, sustained economic growth."

Clusters currently identified include "information technology, advanced engineering, transportation logistics, alternative energies, automotive, plastics, glass, and specialized agriculture." The Project report says these represent a "good cross-section" of current regional industries with "both large-scale and small-scale industries" included, as well as historically significant industries like glass and "emerging industries like alternative energies." Wuest says, "These are industries that represent real wealth coming into and growing the economy, the industries of the future that can define our region." Potential new clusters, according to the Project report, "will be identified over time."

Nicholson fleshes out some of the details of Lake Erie West’s industrial clusters. "We are leaders in agriculture and agricultural products, in automotive industry, in automation technology. But let’s use alternative energies as an example," he continues. "We have 12 companies working on alternative energies in the region. We have Solar Cells, Inc. doing research and development of solar cells, and BP, which is the largest investor in solar technology. The BP refinery [in Oregon] is also providing petroleum coke for the Bay Shore (Toledo Edison) electric plant, and is the No. 1 of its type in the world. We have Andersons, Cargill and Archer Daniels Midland all working on biofuels in our region. We have Ford, Chrysler and GM investing $7 billion in research and development, much of it on alternatively fueled automobiles. This is part of who we are and what we are capable of" in the region, he says.

Matt Szollosi sees the industrial cluster strategy as one more tool for development for the entire region, or what he calls the "domino effect of investment.

As the region attracts investors into a specific cluster, more will follow. And Oregon has properties ready for some of that investment." It’s the best part of regionalism, he says. "We can’t let municipal lines be walls … a regional approach helps us all."

C’mon ...get happy!

The ultimate success of all these initiatives will depend on one simple strategy, says Nicholson. "We must all pull together and stop being our own worst critics," he says. "When your self-image is good you attract others to join you. We know the impediments to drawing investment to our region … high energy costs, high medical costs, environmental issues like ozone, but we can work on them. A bigger problem is one of perception, that we have high labor costs, that we are a dying city. The reality is that we have responsible labor leaders and a high quality of life.

Jakes has the same goal for Lake Erie West as a total region. "We must develop a perception of our region that draws investment, a positive perception we can be proud to share with the world."