State Capital Funding through the Ohio Cultural Facilities Commission
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State agency Ensure wise stewardship of capital improvement dollars Funding for construction, rehabilitation and expansion projects Meet definition of “cultural facilities”
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State Capital Funding through the Ohio Cultural Facilities Commission
Editor's Notes
- The Ohio Cultural Facilities Commission is a state agency. We are charged with overseeing capital improvement dollars appropriated by the General Assembly and Governor for capital projects at cultural facilities around the state, and ensuring that those dollars are well-spent, and result in projects that benefit their communities. Capital improvement dollars from the state can help fund construction, rehabilitation and expansion projects. Our Commission works specifically with capital appropriations made for cultural facilities, which include the following types of projects:
- Visual and performing arts centers (left: Contemporary Arts Center, Cincinnati) (right: Mixon Hall at Cleveland Institute of Music)
- Art museums (left: Toledo Museum of Art’s new Glass Pavilion) (right: Dayton Art Institute)
- Science, technology & transportation museums (left: The Works in Newark: Ohio Center for History, Art & Technology) (right: COSI Columbus: Center for Science and Industry)
- Arts education facilities: (left: Oxford Community Arts Center) (right: Decorative Arts Center of Ohio in Lancaster)
- Local historical facilities: (top left: Smith Orr Homestead, historic home in Orrville operated by the Orrville Historical Society) (top right: Clark Mansion, historic home & museum operated by the Van Wert Historical Society)
- State historical facilities – Capital funds for all OHS sites go through Commission; OHS is not a state agency and not eligible to receive bond funds directly (left: Serpent Mound, Adams County) (right: Fort Recovery, Mercer County)
- Publicly-owned professional sports venues (left: Paul Brown Stadium – Bengals football stadium in Cincinnati) (right: Canal Park, home of the Akron Aeros minor league baseball team)
- All of the Commission’s projects are assigned to us in the biennial capital budget. Since 1988, we have overseen more than $528 million in total appropriations for 300 projects that are spread across 72 of Ohio’s 88 counties. Appropriation amounts for individual projects range from $5,000 to $55.5 million.
- Unlike other state agencies such as the Ohio Arts Council, which has selection programs to determine the distribution of grant dollars, the Commission does not have any discretionary funds, nor control over decisions about which projects receive appropriations in the capital bill, or what amount of funding they receive. To be considered for funding, community leaders and local project sponsors are responsible for approaching their area’s legislators and/or the Governor. Projects that are successful in securing support are appropriated a specific amount of funds in a line item in the capital budget, as determined by the legislature & the Governor. Projects that meet the definition of “cultural facilities” are then assigned to the Commission for oversight.
- You can locate information about your district Representative and Senator by visiting the websites for the Ohio House and Ohio Senate, and typing in your ZIP code. The capital budget is done every two years. The most recent capital budget was passed in June 2008, and the next budget will be done some time in 2010.
- Through over 20 years of working with a wide variety of facilities and many different types and sizes of capital improvements projects, we believe that any organization undertaking a capital project must do thorough and realistic planning. Organizations must think beyond the cost of construction and consider the impact the completed project will have on their budgets, programming and ongoing financial health. Additionally, by demonstrating that your organization has thought through your capital project planning and has a realistic path to success, you will be well-equipped to approach your legislators to request state funding, and may turn them into valuable advocates for your project. Our Commission offers a Project Planning & Assessment Guide to assist organizations through project planning. Among other information and resources, the Guide contains six key questions to answer that can help you create successful projects. You can request a hard copy of the Guide by contacting our office, download a PDF, or read the guide online at our website: www.culture.ohio.gov.
- Nearly all of the projects overseen by the Commission are paid for through tax-exempt bonds, issued by the Treasurer of State. These bonds are financed by the state for a period of approximately 15 years; therefore, the state will have a long-term interest in your facility if state bond funds go into its construction or improvements. This 15-year relationship makes the Commission’s job critical, because we are responsible for protecting the state’s investment in these facilities over the long term, and also for protecting the health of the state’s bond rating.
- Projects assigned to our Commission must meet some basic standards before the Commission can release state appropriations to them. These basic standards are set forth by the Ohio Revised Code, the capital bill, the Commission, and requirements of the bond documents themselves. The standards tie back to our role to protect and maximize the state’s investment in cultural facilities projects. The Commission must determine a “need” for the project in the community, even though the state has already made an appropriation for your project. We do this by reviewing your business plan and 5-year projections on operating income & expenses. This information assists us in determining that the projects are well-planned and operationally viable. The Commission must also determine that there is “substantial regional support” for your project through a review of your fundraising plan. Finally, we must ensure that upon completion of the project you will have a facility that is open & operating for the benefit of your community.
- Our Commission has a variety of other eligibility requirements and determinations to make prior to approving projects, and I will cover these in a bit more detail – BRIEFLY: Your facility must present culture to the public. We are required to work with a 501(c)(3) or local government. You must provide a local match to the state’s investment, of not less than $1 in non-state resources for every $2 of state resources. You must demonstrate that you have all the funds necessary to complete your construction project, and that it will result in an open & operating facility.
- The Commission is required by statute to work with 501(c)(3) organizations or a local governmental entity. If the owner of the facility is not a 501(c)(3) organization or a local government, there may still be a way for us to work with your project. If your non-profit leases the building from a third party, we can enter into legal agreements with the owner, in which case he or she would agree that the facility will be used to present culture to the public for a period of at least 15 years, while the state bonds remain outstanding.
- Another requirement, which is also specified in the Ohio Revised Code, is the local match of $1 of non-state resources for every $2 of state resources. The local match can be funds obtained from grants, written pledge commitments from donors, or cash on hand. Other ways to meet the local match include using the value of the real property, or funds in an operating endowment. Typically, the local match is much higher than this minimum requirement, because, for the most part, the state will be a “minority partner” in the facility through its capital appropriations.
- Having a fully funded project means that you have all the funds committed that will enable you to complete the project and have an open & operating facility. You will be required to demonstrate that you have funds for all hard and soft costs. This includes hard costs like construction labor & materials, and furniture, fixtures & equipment. Soft costs include things like construction management fees, permit fees, legal fees, fundraising and start-up costs. You will need proper documentation to demonstrate that your project is fully funded – that is to say, written commitments from credit-worthy entities for all the necessary funds to complete your project. Specifics on these types of documentation can be found in the list of Project Standards at the back of your handouts. Lines of credit, local bonding or bridge financing or other cash-flow mechanisms are acceptable only if backed by written pledges or guarantees.
- Upon Commission approval of your project to receive the state appropriation, your organization will also need to enter into legal agreements with the Commission. The first of these is a Cooperative Use Agreement. Through the agreement, the state’s interest in presenting cultural programs to the public is ensured for the 15-year period that the state bonds remain outstanding. The agreement provides for the local organization to maintain control over the facility and its daily operations.
- Another typical agreement for bond-funded projects is the Construction Administration & Funding Agreement. The Commission's statute allows qualified project sponsors to serve as construction administrators. Local administration provides additional flexibility for the project sponsors because it allows for local control, simplifies the process, and reduces administrative costs and project delays . When an organization can successfully demonstrate its capabilities to the Commission, it will receive approval for local administration. A Construction Administration & Funding Agreement is then entered into with the Commission. The agreement includes details regarding construction services and the local sponsor's responsibilities. If local construction administration is not requested or not granted, construction administration is handled by the State Architect’s Office. However, nearly all of our projects opt to manage their own construction projects.
- Although our Commission is not in a position to help you secure funding for your projects, we can offer our assistance in other ways. There is a variety of information available on our website, including online versions of our publications, such as the Project Planning & Assessment Guide mentioned earlier. Our project managers can schedule a phonecall or meeting with you to evaluate your construction, rehabilitation or expansion plans. They can advise you as to whether or not your project is fundable under the State’s requirements. We can provide you with examples of the documents that may be helpful in your planning, such as sample feasibility studies and operational plans. We can offer an objective, third-party view in the selection of professional consultants such as architects, engineers and exhibit designers.
- You are welcome to visit our website or contact our office any time with questions about working with the Commission. Thanks again for inviting me to share information with you about state funding for capital improvements projects. I would be happy to answer any questions you may have.