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Transparency at issue when it comes to funding of nonprofits

Troy group doesn’t detail how public money is spent on development efforts.

What local economic development nonprofits spend

Contributed photo Patrick Titterington, Troy service and safety director, 2009

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handout Chuck Cochran, retiring president of the Troy Chamber of Commerce/Troy Development Council

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By Ben Sutherly, Staff Writer Updated 11:31 PM Saturday, July 3, 2010

TROY — Since 1990, the Troy City Council has approved $2.34 million to help fund the economic development efforts of the Troy Development Council, a publicly and privately funded nonprofit that has helped the Miami County city of 22,000 people land international corporations such as Honda.

But the Development Council has never provided the city with documentation showing how that public money has been spent — even after sensitive business negotiations have been completed.

Chuck Cochran, in an interview prior to his retirement in June after 10 years as Development Council president, said city officials have never requested such documentation.

“It’s called trust,” said Cochran, who was paid about $120,000 in 2009. “They look at the results and several thousand jobs being created, and they’re fairly comfortable the money is being spent effectively.”

Cities throughout Ohio and the United States now farm out some, if not most, of their economic development efforts to nonprofits, many of them relying at least partly on public money. City officials say those nonprofits often provide significant expertise — the Dayton Development Coalition, for example, has developed strong ties with congressional representatives. And a Dayton Daily News examination of four area counties — Montgomery, Miami, Greene and northern Warren — found private economic development nonprofits were entrusted with nearly $5.8 million in public funding in 2009.

But the organizations aren’t always obligated to report how that money is spent. That can create the potential for waste and misuse of taxpayer dollars, government watchdogs say.

“Transparency is critical as to determining whether or not these programs are effective,” said Matt Mayer, president of the Buckeye Institute, a conservative think tank.

Patrick Titterington, who serves as Troy’s top administrator in his role as public service and safety director, said he’s comfortable with the Development Council’s stewardship of public funds.

“It’s not as if we just write the Troy Development Council a check and have no more involvement,” he said, noting both he and the city’s development director, Jim Dando, sit on the Development Council’s board. “It’s not accurate to say that the city just gives them that money and doesn’t hold them accountable.”

The Dayton Development Coalition maintains separate documents detailing how public and private funds are spent. It received $741,500 in 2008, for example, from local cities and counties as annual membership pledges that funded regional business recruitment activities.

Although the development coalition provides audits, on request, to local government members who want to see how public money was spent, it does not make those audits available to the public, a spokeswoman said.

Montgomery County provides $250,000 to the coalition each year, and requests audits of how that money is spent annually, said Joe Tuss, county assistant administrator.

County Commissioner Dan Foley said there’s no doubt it’s money well spent and said he’s satisfied with the level of transparency.

The public has more opportunity to review such spending in Xenia, where the city council approves the budget of the Xenia Economic Growth Corp. The city provides Xenia Economic Growth with $174,500 annually, the vast majority of its funding.

“They’re watching our budget on an ongoing basis,” said Steve Brodsky, executive director of Xenia Economic Growth.

In Troy, officials have long lauded the success of the 26-year-old partnership between the city’s public and private sectors.

The Troy Development Council claims to have been the lead organization in attracting eight new companies and 11 major industrial expansions since 2003. It has lost some businesses, however, including a plant that manufactured Panasonic picture tubes for television sets in 2006. Just last month, Motoman Inc. confirmed it was consolidating its Troy operations, which employs about 65, and its 200-person West Carrollton location near the new Austin Boulevard I-75 interchange in southern Montgomery County.

Still, in 2008, Japanese companies employed about 1,200 people in Troy, providing about one in nine Troy jobs.

Troy Mayor Mike Beamish said he’d be asking questions if he didn’t think the city was getting enough bang for its buck.

“I don’t look at the dollars and cents,” he said. “I look at results.”

Transparency, he added, “is when you go down the street and see that business and that business and that business located in Troy.”

Martha “Marty” Baker, council president, said Troy tries to be wise in spending on economic development, noting that the city in recent years has scaled back the number of people who take part in trade missions in Japan.

“I think they’ve proven with the number of foreign companies we have in Troy that those (missions) do pay off,” she said.

Cities that rely on private entities for economic development should get more than a press release when efforts to recruit or retain jobs are successful, said Zach Schiller, research director of Policy Matters Ohio, a liberal-leaning research group based in Cleveland.

And, said Schiller, they also need to know when something didn’t work.

“That’s how you refine your effort and get better.”

Contact this reporter at (937) 225-7457 or bsutherly@Dayton DailyNews.com.

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