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Ohio begins selling off its assets to raise cash

Budget allows prisons, liquor sales, parking meters to go private.

Gov. Kasich wants to explore leasing or selling the 241-mile Ohio Turnpike (pictured in Strongsville) across the northern part of the state to a private vendor.

TONY DEJAK/AP Gov. Kasich wants to explore leasing or selling the 241-mile Ohio Turnpike (pictured in Strongsville) across the northern part of the state to a private vendor.

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Under the state budget bill Gov. John Kasich signed into law, control of city-owned parking garages and meters could be shifted to private control. Elizabeth Gainous of Dayton puts coins in a meter in downtown Dayton on Friday.

Chris Stewart/Chris Stewart Under the state budget bill Gov. John Kasich signed into law, control of city-owned parking garages and meters could be shifted to private control. Elizabeth Gainous of Dayton puts coins in a meter in downtown Dayton on Friday.

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By Laura A. Bischoff, Columbus Bureau Updated 9:35 PM Friday, July 1, 2011

COLUMBUS — Six prisons, a 241-mile highway, dozens of college dorms, a liquor monopoly and thousands of city parking meters are all eligible to shift from government control to private operation under the budget bill signed into law by Gov. John Kasich.

The first-term Republican governor, who spent 18 years in Congress and nearly 10 years on Wall Street, wants to shrink government and sees privatization as a solution.

On Friday, Kasich touted privatization as a way to leverage government assets.

“This has nothing to do with unions or pensions. It has nothing to do with that. It has to do with getting the best out of what you have,” Kasich said.

Before he even signed the budget bill, Kasich put the “for sale” sign up at five state prisons: Lake Erie Correctional in Conneaut, North Coast Correctional and Grafton Correctional in Grafton, North Central Correctional and Marion Juvenile in Marion. Legislative leaders add a sixth by saying any youth facility closed by Jan. 1, 2012 can be sold rather than just shuttered.

Three companies are vying to purchase and operate the five properties that house 6,100 inmates and employ 1,200 Ohioans. Corrections Corporation of America of Nashville, Tenn., GEO Group, Inc. of Boca Raton, Fla., and Management & Training Corp. of Centerville, Utah, each submitted proposals to the state on Friday.

M&TC already operates, but doesn’t own, Lake Erie and North Coast prisons.

State officials will analyze the proposals, negotiate terms and sign a contract by Sept. 1 and turn over control by Dec. 31, said Department of Rehabilitation and Correction spokesman Carlo LoParo. The properties will be sold in three packages based on geography: Marion, Grafton and Conneaut. Separate contracts will be for property ownership, leasing and operations so that the state has the flexibility to switch operators if a vendor doesn’t meet expectations.

“I look forward to a combination of public and private prisons where we can get best practices from both, and I’m glad that the Legislature has given us the ability to move forward on that,” Kasich said.

Prisons aren’t the only area that the Kasich administration is pushing to privatize.

Ohio is shifting ownership of its liquor sales business to JobsOhio, the newly created nonprofit organization dedicated to economic development and job creation projects.

The state sells liquor through 455 contract agencies and clears an annual profit of about $229 million. JobsOhio will gain control of the annual profits for 25 years for an upfront payment of about $1.2 billion, which will be generated through a bond issuance. The cash will be used, in part, to pay off existing bonds.

The governor also wants to explore leasing or selling the 241-mile Ohio Turnpike across the northern part of the state to a private vendor. The General Assembly will have to approve any request for proposals for the turnpike deal.

The budget contains provisions to let public college and universities sell and lease-back dormitories and other buildings such as athletic facilities, to let counties sell and lease-back buildings and parking decks, and to allow cities to lease out their parking meters and garages.

The parking and building deals would give local governments and colleges the flexibility to offload assets for cash now and relieve them of the duty to operate and maintain the facilities.

“That concept is not necessarily appealing to us at first blush because our challenge is, really, meeting annual budgets,” said Montgomery County Commissioner Dan Foley, a Democrat. “So, we’re not necessarily looking at one-time cash infusions as a solution to our ongoing fiscal health.”

And the city of Dayton isn’t anxious to sell off its 1,000-plus parking meters.

“It’s nice to have that flexibility, but that’s not something that we are looking at,” said Deputy City Manager Stanley Earley.

In late 2008, Chicago leased its 36,000 meters for 75 years to a group of foreign investors assembled by Morgan Stanley for $1.1 billion, according to news reports. The Chicago Parking Meters LLC ended parking holidays and increased rates.

“I think (the city of Chicago) gave up too much control and the pricing of the meters is so high that they’re getting a lot of push back,” Earley said.

Wright State University, which owns dozens of buildings, already relies on private firms to run food service, the campus bookstore and about two dozen dormitories. “To some extent, it appears these new law changes provide a different vehicle to accomplish things we have already done,” said Wright State spokesman Jim Hannah.

The state transportation budget bill, adopted earlier this year, includes authorization to use public-private partnerships to build, maintain and operate highways and bridges across the state, said Ohio Department of Transportation Director Jerry Wray. The state may turn to private businesses to build and finance large, complex projects and then Ohio would lease the new road, lane or bridge from the private vendor or the vendor would charge tolls, he said. Another scenario would involve turning over operation of maintenance or facilities such as rest areas to a private business, he said.

Wray said with people driving less and driving more fuel-efficient cars, Ohio’s gas tax revenues have been flat while the cost of road projects has increased.

Kasich said he would also consider subleasing the Ohio Academic Resources Network to private businesses. OARnet, established in 1987 and upgraded in 2004, is 1,850 miles of fiber-optics connecting colleges, schools, medical centers and research organizations.

“So, that’s the philosophy. If it’ll work better in the private sector, you do it,” Kasich said. “But everything shouldn’t be privatized, but we’re going to look at everything as to how to bring better improvement.”

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