This is the true story of how John Kasich and JobsOhio got one of its own inaugural board members fired and left Ohio taxpayers with giving the company an $8 million subsidy to boast the stock price to benefit a Swedish billionaire.

In 2011, first term Governor John Kasich was desperate to change the subject.  In the first year of his term, Kasich already had approval ratings in the mid-30s after picking a fight he couldn’t win against working families with SB 5, a bill that would have essentially eliminated the right of police officers, firefighters, teachers, and government workers to effectively engage in collective bargaining.  With data showing that Ohio’s economic recovery in 2010 was taking root and continuing, Kasich needed to do something that would allow him to claim he had anything to do with Ohio’s improving economy.  With widespread bipartisan criticism in the General Assembly and nearly universal criticism by Ohio’s newspapers of the lack of transparency proposed in his new privatized JobsOhio economic development agency, Kasich also needed evidence that his new model for job creation was working “at the speed of business.”

So over the span of a few months, Kasich held press conferences in which he boldly claimed that his Administration had “saved” American Greetings, Diebold and Bob Evans from leaving Ohio…. and all it took was the State and local authorities to basically cover the costs of building a brand new corporate headquarter campus at no expense to the companies (Bob Evans only got a partial subsidy of its costs, but American Greetings and Diebold would incur no expense).  Ohio laws shielding such deals from public records requests had not yet gone into effect as JobsOhio was still being constructed.  As a result, newspapers will able to show that in each case the threat of the companies leaving were overstated to actually nonexistent.

BobEvansCommute_thumb.pngIn Bob Evans case, the then-called Ohio Department of Development admitted that Bob Evans had no offer of incentives from any other state to relocate.   Columbus Mayor Mike Coleman publicly said that company officials had told him that they no intention of leaving the state.  Regardless,  Governor Kasich gave Bob Evans $8 million ($400,000 per mile) to move its corporate headquarters to New Albany and to save its then CEO some commute time in a deal in which Bob Evans was not legally committed to create a single new job.  Even worse, we uncovered that the construction of the new headquarters was already well under way when Kasich announced the deal.  So basically, Ohio was subsidizing a project that was already happening.

At the time, Bob Evans CEO Steven Davis couldn’t have been happier with Governor Kasich and JobsOhio.  Not only did Davis be happy to be used as a photo op for Governor Kasich and his maxed out donor/head of economic development Marc Kvamme (who was able to leave JobsOhio after obtaining a questionable $50 million investment by OSU for his new venture capital firm), Davis donated $10,000 to Kasich campaign in the first term and was on the inaugural Board of Directors for JobsOhio.

Heck, Davis even appeared in a promotional video praising JobsOhio and Governor Kasich’s willingness to be so helpful in building his company’s new headquarters closer to his house:

But then American Greetings back out of the deal and decided to lay off workers and give its CEO a raise before going back to a private company.  Diebold’s deal allowed them to lay off 20% of its workforce at the location, but it still had back out of the deal because it laid off more than 20% of its employees there within the first year.  But hey, at least that Bob Evans deal worked out right?

Well, [spoiler alert] no.

Yesterday, Bob Evans announced it was looking to sell its brand new headquarters in the hopes of leasing the property back from its new owners.  Now, why would you be willing to sell the house you own with no mortgage on it in order to rent it back?  Well, the only reason you would do that is if you were looking to generate some fast cash.  And that’s exactly what Bob Evans wants to do.  As the Columbus Dispatch explains:

The properties would be leased back to the company, which would use the proceeds of any transaction to fund $150 million worth of stock buybacks, including $50 million scheduled for Monday.

The headquarters cost $46.5 million to build. The sleek prairie-style building sits on 40 acres along Smith’s Mill Road. Activist shareholder Thomas Sandell, who won four seats on the company’s board last year, criticized former CEO Steven Davis for the lavishness of the headquarters.

Sandell, a Swedish billionaire who lives in New York, used the new headquarters and the company’s ownership of a jet to discredit Davis’ decision-making. The CEO was dismissed in December.

Bob Evans sold the jet, at a loss, last year.

You read that correctly, a Swedish billionaire stockholder was so upset over the new corporate headquarters he used his shares to leverage four seats on the Board of Directors to force Davis out as CEO of Bob Evans and force them to sell their plane at a loss and agree to lease back its own headquarters simply so the company would have the capital to buy back its stock, raising its price.  Davis had resisted the billionaire’s move to force the company to lease back its own headquarters simply to buy back its stock at a premium as far back as 2013.

Oh, and the company is doing this at the same time it’s closing twenty restaurants causing those employees to lose, as Governor Kasich put it once, what “shabby benefits” they had.

We don’t know whether the Bob Evans deal contained any clawback terms that would allow the State to recoup the $8 million in incentives it gave in the event that it would turn around and use its new buildings as a way to raise capital to benefit a Swedish billionaire or not.  But we know this, John Kasich’s used $8 million in taxpayer money to subsidize what has amounted to nothing more than a convoluted path of causing employees at 20 restaurants to lose their jobs while increase the value of a Swedish billionaire stockholders shares in Bob Evans.  Oh, and he got one of his inaugural JobsOhio board members/campaign donors fired.

And this guy wants to be President?

[UPDATE:]  At a press conference about today’s announcement about Amazon building a cloud data center in central Ohio, Governor Kasich was asked about the Bob Evans deal as you can see from this video from Marc Kovac of Dix Newspapers.  Kasich claims his is the first Administration to do clawbacks in economic development deals.  That’s not true.  The Ohio Attorney General’s Office notices that Governor Strickland signed into law legislation in 2008 that allows the Attorney General to pursue clawbacks when businesses fail to deliver on economic development incentive deals.  (See, pg. 3)  Second, note that Kasich does not say with any real certainty that a clawback provision does apply.  He simply vows that if it does, they will pursue it.  So, again, we still don’t know whether $8 million in state taxpayer dollars are going to essentially subsidize this Swedish billionaire’s stock buyback demands or not.

 
  • dmoore2222

    Of, course. How would you know if there is claw back? It’s kept from us under the guise of trade secret. It’s beyond me how the state legislature could ever approve an arrangement like this where huge sums of public money magically becomes private money, and is used in deals like this that have no benefit to the public and no transparency. Corruption blooms in the dark and I doubt this chump will make it for another term without this blowing up in his face. What is even more troubling is the public’s apathy about this trickery which seems to correlate to the last two election results. But in the end, you deserve the government you elect.

  • Modern Esquire

    FWIW, I updated the story with Kasich’s statement at a press conference today about it. But amazingly, I get the sense that they don’t exactly know whether they have a legal claim to claw back the money or not.

  • dmoore2222

    It’s dumbfounding that this kind of arrangement, for want of a better word, could ever be seen as a good thing. This just shows how career politicians like him come to think of public money as theirs to do with as they please. There are so many examples of things like this ending in scandal and disgrace because when people think nobody is, or can be, watching, they almost always cheat.

  • Red Rover

    I haven’t been to a Bob Evans since this whole thing started. I know they like to promote themselves as farm fresh, but this kind of feeding at the trough is deplorable.

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