logo
Cultural Facility Projects Guide

Table of Contents

Back to Publications

INTRODUCTION FROM THE EXECUTIVE DIRECTOR

This Project Sponsor Resource Guide is designed to assist you, as the project sponsor, through the typical process to release and reimburse to you the state-appropriated funds for your capital improvement project. Since the state is investing money in your project, the Commission becomes a partner in your project. Our goal is to provide expertise and oversight to help you produce a top-quality cultural facility that will benefit the people in your community and in the state. We will review your project's plans and funding to understand your project's path to success.

Complying with the state's standards identified in this guide — some statutory, some procedural from the state's bond issuer and from the Commission — will help ensure a timely "green light" from the Commission for the reimbursement of state funds on your project's construction costs. This guide explains the state's standards for your project and, with the guidance of the Commission's project managers, leads you through the process.

The Commission has expertise in advising project sponsors on their project planning and financing, and has compiled that information in our Project Planning and Assessment Guide. A wealth of information on community capital projects and healthy nonprofit organizations is available from many sources, including the resources listed in Appendix J of this guide, and in our Project Planning and Assessment Guide. I highly recommend that you take time to become familiar with these and other available resources.

Ohio is fortunate to be home to many world-class cultural facilities. Public investment in such community projects is important because they help to bolster community development. Cultural facilities provide economic stimulus by:

  • creating jobs;
  • encouraging consumer spending;
  • serving as tourist attractions;
  • providing children with creative learning experiences that greatly benefit the educational process; and
  • contributing to a higher quality of life for Ohioans.

A recent study released by Americans for the Arts reports that the nonprofit arts and culture industry in Greater Cincinnati generates more than $279 million in economic impact, and that the Greater Columbus arts and culture scene fuels its local economy with more than $330 million in economic activity. A similar study conducted at Bowling Green State University found that arts and culture industries in the 27-county northwest quadrant of Ohio makes an annual economic impact of $1.5 billion in direct economic activity.

The study by Americans for the Arts - the most comprehensive economic impact study of the nonprofit arts and culture industry ever conducted in the United States - reports that on a national level, the arts generate $166.2 billion in economic activity annually, and generates revenues of $30 billion to local, state and federal governments. This demonstrates an impressive 7:1 return on investment in the arts made by the three levels of government on an annual basis.

By working with us, you help establish a pattern of success that will encourage other community leaders, legislators and the Governor to continue to invest in cultural facilities throughout Ohio. Each of the Commission's projects is unique. If you have specific questions that are not answered in this guide, they can be answered by calling your Commission project manager. Welcome to the Commission's project family.

Sincerely,

Kathleen M. Fox, FASLA
Executive Director

Back to top

Section I: About the Commission
The Ohio Cultural Facilities Commission
Partnership with the State
Standards for Bond-Funded Cultural Facilities

THE OHIO CULTURAL FACILITIES COMMISSION

Overview

As the state's agent for overseeing capital funds for cultural, sports and historical facilities projects, the Commission plays two roles. One is to protect the state's financial investment, and the other is to provide expertise to help your project succeed. A Commission project management team, consisting of a project manager and project analyst, will be assigned to your project to provide assistance in project analysis and contract oversight. If you have any questions about your project, please call your Commission project manager.

Roles

The Commission does not have a pool of funds from which to award grants. Instead, all the Commission's projects are assigned by the Governor and Legislature in the biennial capital improvements budget bill, with a specific funding amount designated for each assigned project. The Commission's role is to establish and implement operational policies and oversight mechanisms to ensure that public funds entrusted to our care are spent properly. We protect state interests by verifying that each project has significant community support and a solid management plan. We are aware of the risks that cultural organizations take when committing to capital improvements, and we review plans and financial materials to make sure that adequate support is in place to cover both construction and operating costs. Careful planning and supervision by the Commission will maximize the impact of the state's investment over time and help ensure that projects, once completed, will operate successfully.

For more information on the Commission, its projects and processes, please visit www.culture.ohio.gov.

Commission Members

The Commission consists of 12 members, nine voting and three non-voting. The Governor appoints the nine voting members and, in accordance with statute, these members are selected from various geographic areas of the state. The Commission also includes three non-voting, ex-officio members, including the director of the Ohio Arts Council plus two legislative members, one each appointed by the Senate President and House Speaker. To view the current roster of Commission members, please visit our Web site, www.culture.ohio.gov.

Commission Staff

The Commission operates with a small team of specialists who provide the most efficient oversight possible for the diverse and complex project assignments. To view the current Commission staff roster, please visit our Web site, www.culture.ohio.gov.

Commission Meeting Schedule

The Commission meets quarterly. For an updated list of meeting dates and submission deadlines, please visit our Web site, www.culture.ohio.gov.

Back to top

PARTNERSHIP WITH THE STATE

Overview

The Commission partners with non-profit groups and local governments on community projects that are spread among nearly three-quarters of Ohio counties. All of the projects undertaken through the Commission are assigned in legislation, chosen by the General Assembly and Governor because of their cultural significance to Ohio and, importantly, due to their ability to strengthen the state's economy over the short and long terms. The Commission's oversight objective in all of its projects is to strike the appropriate balance between (a) accountability for proper use of public funds; and (b) support for local organizations' efforts to achieve quality results so that projects are successful.

From the beginning of the partnership you will need to keep your Commission project manager fully informed of funding, construction progress and other issues, including any changes in project budget. The Commission continues to have a relationship with you beyond the construction phase, because the state's funding is financed by long-term bonds.

Typical Process for Funding Bond-Funded Cultural Facilities

Although each project is unique, Commission bond-funded projects for cultural facilities follow this general process:

  • A community or community organization decides it needs to expand or improve its facilities, or build a new facility.
  • The community or community organization approaches its legislators to request funding for the project in the biennial capital improvements bill.
  • The General Assembly and Governor appropriate funding for the community's project in the biennial capital improvements bill and assign it to the Commission for funding administration.
  • A Commission project manager contacts the project sponsor's staff and works with them to complete an online Project Registration Form, which provides the Commission with basic information about the project. Subsequently, the Commission project manager may schedule a site visit with the organization to tour the facility and to discuss key aspects of the project with the project sponsor.
  • When the project sponsor is ready to move forward with the project, an on-line Project Detail Form is completed and other pertinent information listed in the Roadmap Checklist in Appendix A is submitted, including detailed information about the project, the organization's financial statements and business plan, and property deed and title information.
  • Commission staff analyzes submittals on a quarterly basis. This entails preparatory work with the project sponsor representatives and staff analyses to ensure the project meets standards set forth by the Ohio Revised Code, the capital bill, the Commission, and the bond issuer, as well as to determine how the state can best help in contributing to a successful project. This analysis by the Commission staff will often generate a number of questions and issues for the project sponsor to address, by a prescribed deadline, to facilitate the staff's final analysis and recommendations to the Commission. Your Commission project manager will advise you regarding this process, which will likely involve submitting supplemental materials and information about your project, as the project is reviewed by Commission staff from multiple perspectives.
  • The Commission meets on a quarterly basis to review and approve projects. Those projects that have met all submittal deadlines and successfully resolved any outstanding issues at least six to eight weeks prior to the meeting will be considered for placement on an upcoming Commission meeting agenda. Meeting agendas are formally set by the Commission Chairman, in close counsel with Commission staff, several weeks prior to each quarterly Commission meeting.
  • In parallel, the project sponsor works with the Commission project manager to prepare the necessary legal agreements. These agreements are outlined in the Legal Agreements section of this guide.
  • Once all the standards are met, Commission approvals have been obtained, and Commission documents are executed, expenditure of funds may occur in one of two ways:
    • Reimbursement directly to project sponsors on a pro-rated basis for projects that are approved for local construction administration. The Commission's reimbursement is based on the amount of state funds divided by the total construction cost times the dollar amount of completed construction being invoiced.
    • Payment to the vendors/contractors directly for projects that use the State Architect's Office for construction contract administration. For more information on the two different types of construction administration, please refer to the section on Construction Administration Alternatives.
  • The state continues to monitor the facility and the project sponsor's overall financial situation for the duration of the bond funding period, typically 15 years. This entails providing information to the Commission as changes occur, on an annual basis as required in the legal agreements or, as in the case of on-going fundraising, a quarterly basis.

State Recognition Program

The Commission has a program for state recognition that includes mention of the state contribution to your project through appropriate means throughout the project, from before the groundbreaking through project completion.

All project sponsors that receive funding through the Commission are asked to join the Commission's efforts to enhance public awareness. This is because too few people understand the state's involvement in enriching Ohio's communities. By helping to recognize the state's contribution to cultural facilities, sponsor organizations and their facilities will be promoted, a "thank you" will be delivered to the local members of the General Assembly and the Governor who approved the state funding, and the state's important contribution to the betterment of Ohio communities will be recognized. Project sponsors will be asked to comply with the following state recognition program standards:

  • Provide recognition of the state's contribution on construction site signage, if signage is placed at the site (see recommended copy "A" of Appendix G);
  • Invite appropriate members of the Legislature, the Governor or his representative, and executive director of the Ohio Cultural Facilities Commission to your groundbreaking, if an event is planned (see recommended copy "B" of Appendix G);
  • Provide verbal recognition of the state's contribution at your groundbreaking, if an event is planned;
  • Invite appropriate members of the Legislature, the Governor or his representative, and the executive director of the Ohio Cultural Facilities Commission, to grand opening or re-opening events if such events are planned, and in coordination with the Commission, offer a speaking opportunity at such events. (see recommended copy "C" of Appendix G);
  • Provide verbal recognition of the state's contribution at your grand opening or re-opening event, if such an event is planned; and
  • Provide recognition of the state's contribution on any planned printed materials for fundraising annoucements, groundbreaking, milestone, and/or opening events, including programs, banners and easels, if materials will be printed (see recommended copy "D" of Appendix G). The content of such recognition must be approved in advance by the executive director of the Commission;
  • Provide permanent recognition of the state's contribution on a plaque on the facility or within a "donor wall" (see recommended copy "E" of Appendix G). The form of such recognition must be approved in advance by the executive director of the Commission.

Percent for Art Program

The Ohio Legislature enacted the state's Percent for Art program in 1990, recognizing the state's responsibility to foster culture and the arts and to encourage the development of artists and craftspeople. The legislation provides funds for the acquisition, commissioning and installation of works of art for new or renovated public buildings with individual (not cumulative) capital appropriations of $4 million or more. For these projects the law provides that one percent (or less) of the total appropriation may be allocated for the acquisition, commissioning and installation of art work, if designated for the program by the director of the Office of Budget and Management. If your project meets these criteria, a committee including representatives of your project, the Commission, the Ohio Arts Council, and your community will be convened to oversee selection and contracting of the artist, installation, dedication ceremonies, and other activities.

Back to top

STANDARDS FOR BOND-FUNDED CULTURAL FACILITIES

Overview

Your organization has to meet certain criteria to be eligible for state funding through the Commission. One of our responsibilities is to work with you and see that these criteria are met. This section includes a summary of the standards for Commission projects. Subsequent sections of this guide will cover the process to work with the state prior to, during, and after construction. Specific information regarding your project will be captured in document form and formalized in signed legal agreements between your organization and the Commission.

Summary of Standards

By statute, "Ohio cultural facilities" include facilities for the public presentation of visual and performing arts, museums for the presentation of science, technology and transportation, local historical facilities, and facilities for education and training in the arts and design.

After organizations receive appropriations through the biennial capital improvements bill, projects that are assigned to the Commission must satisfy a series of standards set forth by the Ohio Revised Code, the capital bill, the Commission, and the bond issuer's policy and procedures before the appropriated funds can be released. This guide covers only bond-funded cultural facilities. Contact the Commission staff for information on other project and funding types.

While this is not a complete list, the standards for bond-funded cultural facilities projects include the following:

  • The property must be used for the presentation or making available of "culture" to the public, as defined in statute;
  • The project sponsor must be a 501(c)(3) organization incorporated in Ohio or an Ohio governmental entity (usually a city or county government);
  • The cultural facility must present cultural programming to the public for the term of the bonds issued to fund the improvements, normally 15 years;
  • If the project is a local historical facility or if the property is listed, or qualifies to be listed, on the National Register of Historic Places, sponsors submit their plans and specifications to the Ohio Historic Preservation Office for review and comment, and copy the assigned Commission project manager on any correspondence;
  • The owner of the property may not enter into any mortgages or allow any liens to be placed on the property without the Commission's concurrence;
  • Coordination is required when the project sponsor leases the cultural facility from a third-party owner of the property. Although the property owner does not need to be a 501(c)(3) organization or governmental entity, the property owner must acknowledge and enter into legal agreements that allow the Commission to continue to use the facility for the provision of culture to the public, even if the lease between the owner and the project sponsor is terminated. This is typically accomplished through the use of a Non-Disturbance and Estoppel Agreement. The lease must also allow the project sponsor to extend the term of the lease beyond 15 years in case the bonds are refinanced;
  • The project sponsor must demonstrate regional support in the form of local matching resources. At a minimum, the local match must be equal to $1 for every $2 of funding provided by the state. (Typically, the local matches are much higher than the minimum.) Refer to the section titled Financial Information, for information on what qualifies as the local match;
  • The project sponsor must demonstrate, through a project financial review, that it possesses adequate resources to fund the project (or phase of the project, if applicable) in its entirety. A project is "fully funded" when the project sponsor can demonstrate that the funds to pay for all hard and soft costs of a project have been raised. Refer to the section titled The Concept of a Fully Funded Project, for more information on what constitutes a project funded in its entirety and what qualifies as "raised" funds. Refer to the section titled Project Costs and Funding, for descriptions and lists of project costs;
  • The project sponsor must demonstrate that the organization will have an open and operable facility for the duration of the Commission agreements. To do so, a representative of the project will be asked to certify — as accurate to the best of his or her knowledge — a business plan that includes an operating pro forma or equivalent, that projects revenues, expenses and debt service (if applicable) and detailed written explanations of the assumptions used to determine the dollar figures;
  • The project sponsor will enter into legal agreements as outlined in the Legal Agreements section of this guide.

If you have questions about the eligibility standards stated here, please contact your Commission project manager for a discussion of your specific project.

Back to top

Section II: Assessing Your Project
Submitting Materials for Review
Eligibility
Organizational Sustainability
Capital Project Planning
Property Information
Insurance

SUBMITTING MATERIALS FOR REVIEW

Overview

During the course of your project there are a number of standards mandated by state law or state policy. The standards fall into the following general categories: (1) state-mandated standards, including eligibility, organizational sustainability, property information, and insurance; (2) capital project planning including standards related to construction administration for the project; and (3) standards relating to the construction phase. They are listed together here to give you an overview of the information and decisions you will have to make to include the state as a partner in your project.

This section covers in detail the assessment of your organization's ability to meet these standards and the materials needed from you in order for Commission staff to perform that assessment. This assessment must be completed prior to releasing any state funds to reimburse you for construction costs on your project. You will find information relating to construction administration in the Construction Administration Alternatives section of this guide and information on the construction phase in Project Construction Standards.

Although the list of required information may seem lengthy, many items are simply verification of information you should have readily available. Some items, however, will entail work by your staff and your board, or by your consultants. As always, your Commission project manager will be your best resource to answer your questions or assist you in resolving any issues along the way.

Potential Costs

Typically, information and materials that you have already prepared for other funding organizations, or plan to prepare, are sufficient for the Commission's review. Some costs, however, may be incurred and are not reimbursable. These may include:

  • Attorney fees to coordinate title work and to review the legal documents we will be entering into with you;
  • Fees for any environmental reports, boundary and easement surveys, and/or title work and commitment or policy;
  • Policy premiums on insurance required by the legal documents, such as property/casualty insurance, commercial general liability insurance, builder's risk insurance (during construction) and professional liability insurance;
  • Fundraising costs;
  • Project sponsor employee time.

Please refer to the list of project costs found in Appendix C for additional reimbursable and non-reimbursable costs.

Project Registration and Detail Forms

One of the initial sources of information about your project is the information you provide on the Project Registration Form. As you move farther along in your project planning, you will provide additional information regarding your project on the Project Detail Form. These online electronic forms are available on the Commission Web site: www.culture.ohio.gov/extranet. These forms are used by the Commission members and staff to understand your project prior to approval. Your Project Registration and Detail forms will consolidate the information the Commission will need into a single source; however, it is important that you provide additional supporting information in a timely manner as it is requested.

Project Registration Form

All project sponsors must complete and submit a Project Registration Form electronically and provide supporting documentation prior to the start of any evaluation of your project. Your Commission project manager will provide instructions on how to complete this form electronically. Our goal is to obtain basic information about your organization as soon as possible. Early completion of this form is strongly recommended, as it will help us understand your organization, and your current situation. We request that you submit several items along with the Project Registration Form, including an annual report, promotional materials, and several current, high-resolution digital images or photographs of your facility for our Web site and publications. (See Appendix A for a list of additional materials to be submitted with this form).

Project Detail Form

After we have received a completed Project Registration Form, we will need you to complete a Project Detail Form. The Project Detail Form is required in order for our Commission members and staff to fully understand the scope of your project. It also provides essential information for the financial and project reviews conducted by Commission staff. Your Commission project manager will assist you with instructions on how to complete the online Project Detail Form. Since the form covers a range of specific information about your project, it can take some time to prepare.

The Commission staff will review the Project Detail Form and supporting materials in order to complete an analysis of your project and make recommendations. This review often generates a number of questions and issues for the project sponsor to address, by a prescribed deadline, to facilitate the staff's final analysis and recommendations to the Commission. Your Commission project manager will advise you regarding this process, which will likely involve submitting supplemental materials and information about your project, as your project will be reviewed by Commission staff from multiple perspectives. Your ability to resolve these oustanding questions and provide the requested supplemental information will determine the date your project is recommended for a Commission meeting agenda. Those projects that have met all submittal deadlines and successfully resolved any oustanding issues at least six to eight weeks prior to the meeting will be considered for placement on an upcoming Commission meeting agenda. Meeting agendas are formally set by the Chairman, in close counsel with Commission staff, several weeks prior to each quarterly Commission meeting.

Materials Submittal Deadlines

The Ohio Cultural Facilities Commission meets on a quarterly basis to consider projects for approval. Project sponsors must submit all necessary materials and complete the Project Registration and Detail forms by the published deadline in order to be considered for placement on an upcoming meeting agenda. Submittal deadlines are typically three or more months prior to a quarterly meeting date. A list of Commission meeting dates and the corresponding materials submittal deadlines can be found on the Commission's Web site at www.culture.ohio.gov.

Back to top

ELIGIBILITY

Overview

If the facility is not owned and managed by a local government, the Commission will need to verify your status as an Ohio cultural organization, and that you have no unresolved findings for recovery in the state database. Should any issues about your status arise, you will need to work with your Commission project manager and other appropriate state agencies to resolve them.

The Status of Your Organization

The state is required to verify that your organization is either a governmental agency or an Ohio nonprofit 501(c)(3) corporation and operating in compliance with Ohio law. If you are not a governmental agency, you will be asked to submit the following:

  • A copy of your Internal Revenue Code Section 501(c)(3) final determination letter;
  • Tax Identification Number and Certification from your IRS W-9;
  • Verification from the Ohio Secretary of State of the current status of your corporation and your state registration number;
  • Verification from the Charitable Law Section of the Attorney General's Office regarding your current status as a charitable institution and the date of the last filing of your IRS-990 or other required documentation with the state.

Findings for Recovery

The State Auditor's database contains the following statement:

"Ohio law (ORC General Provisions Section 9.24) prohibits any state agency or political subdivision from awarding a contract for goods, services, or construction to any person against whom a finding for recovery has been issued by the auditor of state, if that finding is unresolved."

Your Commission project manager will have to verify that you do not have an unresolved finding for recovery (for example, money due to the state) against your organization, and you will need to certify this in the legal documents you execute.

Declaration of Material Assistance/Nonassistance

Senate Bill 9 of the 126th General Assembly, Ohio's homeland security and anti-terrorism legislation, is designed to help deter and prosecute acts of terrorism within Ohio. It requires applicants seeking certain state issued licenses, public employment or business contracts and funding to fill out forms indicating that they have not provided financial assistance or support to a terrorist organization.

If your organization is a 501(c)(3), a representative from your organization, as the sponsor of a project that falls within the "business contracts and funding" application of the law, will be required to complete a "Declaration Regarding Material Assistance/ Nonassistance to a Terrorist Organization" (DMA) form. It certifies that your organization has not provided material assistance to any terrorist organization listed on the Terrorist Exclusion List (TEL), which can be reviewed at http://www.homelandsecurity.ohio.gov/dma.asp.

Project sponsors must complete the DMA certification online through the Ohio Business Gateway using the following link: https://ohiobusinessgateway.ohio.gov/hb202/login/login.asp.

Please note, if your organization is a local governmental entity, you are exempt from the DMA requirement.

Back to top

ORGANIZATIONAL SUSTAINABILITY

Overview

The Commission will determine the need for your project in the community, as required by law, and verify that you have the community support necessary in order to sustain your organization over the long term. The Commission staff will ascertain your organization's long-term operational viability, including the impact of your proposed capital project on your organization's bottom line. This may require several discussions with your treasurer or financial officer and submission of past and current financial statements and documentation, as well as financial projections included in your business plan.

In order to ensure that the state's money will result in an operable cultural facility, the Commission also requires that state bond money not be paid out until your project is fully funded. This means, among other items, that all associated project costs (including hard and soft construction costs, endowment needs, start-up and ongoing revenue needs) have been identified and verified against confirmed income sources or assets. For more information regarding the full funding of your project, see The Concept of a Fully Funded Project. You must identify all project costs and funding sources and share this information with the Commission.

Financial Information

The state will need information on your financial situation for two reasons. First, to verify the support of your community through the local match required by law and, second, to determine that your organization is in sound financial condition so that it will be able to complete the cultural project and operate it as an Ohio cultural facility for the foreseeable future.

Your organization will be required to submit a business plan with an operating pro forma that projects a minimum of five years of revenues and expenses. including debt service, if applicable, and any other costs associated with the completion of your project. The operating pro forma must include detailed written explanations of the assumptions used to determine the dollar amounts. This plan is an essential piece of information that demonstrates to Commission staff how your organization is planning for the future and how it will remain a viable, sustainable cultural organization for the state of Ohio. Your Commission project manager will also need other financial reporting materials such as audited financial statements, outstanding loan terms and agreements, fund-raising plans, IRS Forms 990 and documentation of other funding sources for the capital project. If your project includes a large or complex capital campaign, Commission staff may conduct a detailed review of your fundraising, including verification of written pledges.

Once this material is received, the Commission staff will review and analyze the materials. Your Commission project manager will advise you of any questions or issues that arise during this analysis and you may be asked to provide clarification or additional information. Your project cannot be presented to the Commission members before the sustainability assessment has been completed. Incomplete financial or fundraising information can delay your project's placement on a Commission meeting agenda. If the sustainability of your project is in doubt, talk to your Commission project manager to explore available options, such as the use of a guarantor.

The specific financial information required will vary by project, but the Commission will normally need:

  • Information to verify that the project meets the local match requirement — a minimum of an amount equal to 50% of the funds provided by the state, but in all cases an amount sufficient to complete the project. The match must represent funds that will be used for the current improvements project, and depending on your project circumstances, may be satisfied by the following:
    • Written fundraising pledge letters or pledge cards signed by donors to your capital campaign;
    • Documentation that local or federal grants have been fully approved for the project, and are not subject to other, still unmet, qualifications;
    • Certification of cash on hand or in a capital fund account (if funds in an endowment are used as the match, the principal must be invested, and only the annual earnings used);
    • Verification of the site value through a property tax statement, an appraisal, or a property insurance certificate stating the site's value.
  • Information to allow the Commission to understand your operating budget and constraints. This may include audited financial statements and/or IRS Form 990 for the current fiscal year plus two or more immediately prior fiscal years. The Commission will also need to confirm any funds on hand, including operating endowments, with information on any restrictions on how those funds can be used.
  • Information to allow the Commission to understand the long-term mission, goals and objectives of your organization outlined in a business plan, with an operating pro forma that projects a minimum of five years of revenues and expenses and includes detailed written descriptions of the assumptions used to derive the projected financial figures. The plan should include the impact of the proposed project on the organization (increases in operating costs, reduced utility costs, more visitors, etc.) as well as a cash flow plan that demonstrates your organization's ability to manage the cash flow requirements of the capital project.
  • A capital project financial plan that demonstrates full funding for your proposed project will also need to be submitted, as outlined in the next section.

Back to top

CAPITAL PROJECT PLANNING

Overview

In a manner similar to the sustainability assessment, Commission staff will review your capital project plans. The staff will need background on how you established the scope of your project and its costs. They will need to ascertain if your proposed project is feasible, makes sense within the context of your organization's and community's goals, and is compatible with the Commission's funding program.

Following the assessment, items relating to project planning may be included in a list of outstanding questions or supplemental information to provide. All items on this list will need to be resolved prior to your project being placed on a Commission meeting agenda. This assessment process also allows the Commission staff to contribute advice and expertise toward helping to make your project a success.

The Concept of a Fully Funded Project

The Commission requires that each project be fully funded before state funds are spent on construction.

Your project is "fully funded" when you can demonstrate that the funds to pay for all hard and soft costs of your project have been "raised." "Raised" means written pledges from credit-worthy entities, written funding commitments from governmental entities and/or written guarantees and/or cash receipts, or a combination of these supported by evidence to the Commission's satisfaction.

Your capital project financial plan needs to account for all of the costs involved in the planning, design, construction and start-up phases of the project. The "bricks and mortar" construction costs are the costs that the Commission will help reimburse, but all of the costs need to be considered when putting together the total project cost.

As previously mentioned, it is important that the bond-funded investments the state makes are secure. For a nonprofit organization to complete and operate a facility successfully, the organization should not be adding a new or expanded facility that entails carrying capital debt.

The only exception would be capital debt that is being paid with funds collected on a defined timeline from a completed capital fundraising campaign, in which written commitments have been obtained that equal or exceed the total project costs and administrative expenses. If a campaign is not yet complete, then written guarantees can stand in for pledges not yet secured in writing, so long as bridge financing or other cash flow mechanisms are in place to ensure that project invoices can be paid in a timely manner. The use of bridge financing is acceptable only when the local sponsor has planned for the loan to be paid off by written pledges receivable on a short-term, defined timeline. The industry standard for paying off such a loan is a maximum of five years.

Any lines of credit, loans, local bonding, bridge financing and/or other cash flow mechanisms must be secured by acceptable written agreements. These agreements include written pledges or written guarantees from credit-worthy entities, written funding commitments from governmental entities, and/or a combination of these. These written agreements are the only instruments acceptable as security for such financing. Lines of credit or loans of any kind may not be secured by the building undergoing the capital improvements project for which you are seeking state funds.

Adequate funding is additionally based on the idea that the project sponsor can:

  • show a positive cash flow during the construction period;
  • demonstrate that capital project debt is not financed by projected revenues from future operations; and
  • verify that any loans and lines of credit are backed up by written pledges or legally binding written guarantees for the full loan amount.

Please note that it is extremely rare, if not impossible, that a nonprofit cultural facility can generate revenue over and above operating expenses to pay off capital debt. For this reason, the Commission cautions that such debt is inadvisable, and we do not invest state bond funds in projects that take on such a risk. The only instance in which such an investment by the state is acceptable is one that secures the state's interest in the facility through a written guarantee or first lien position on the property.

Project Phasing

It may be beneficial to break your project into distinct phases of work. If this approach is used, each phase will need to be fully funded (as described previously) before bond funds are spent on the phase, and each phase will need to result in an open and operable facility (in the case of a local historical facility, a historical plaque or marker describing the building's historical significance may be sufficient to meet the "open and operable" requirement). Additionally, the Commission will need to review each phase and approve expenditure of bond funds as if it were an independent project. Consult with your Commission project manager regarding phasing strategies.

Project Costs and Funding

There are two key financial elements the Commission will need to know about your project. The first is your estimate of all the costs involved, and the second is the source of the funds that will cover those costs. These project costs and funding sources will need to be included in your Project Detail Form.

Funding Sources

All the project costs must be covered by funds already received, or pledged and confirmed in writing. These sources must be documented and reviewed by the Commission staff, as applicable:

  • State funding other than funds administered by the Commission
  • Federal, county or city government contributions to the project
  • Grants
  • Written pledges
  • Projections of all anticipated future funding, identified by source
  • Any proposed bridge financing, loan, line of credit, any existing or planned local bond issuances, letters of credit or written guarantees
  • Certification of cash-on-hand if utilized for the project sponsor's available matching funds and/or the source for construction project costs

Project Costs

It is important to note that typically only "hard" construction costs are eligible for reimbursement by the Commission. These costs include: construction labor and material costs, site improvements, fixtures, furnishings, equipment, and exhibits if applicable. If the Commission agrees to fund fixtures, furnishings and equipment, sponsors must maintain and/or replace in kind those items throughout the term of your agreements with the Commission (see Entering into Legal Agreements). All items and replacement items must be tagged and an inventory must be kept. Project costs which are typically ineligible for reimbursement include, but are not limited to: design and construction management fees, permits, surveys, attorney fees, title work, environmental testing, bonding, insurance premiums, utilities, and general administrative support, including fundraising costs and project sponsor employee time.

Appendix C includes a list of the categories of likely costs to build and open your project. You should include all applicable items in the cost estimate you provide to the Commission. Smaller projects may not involve all the cost categories; very complex projects may involve some additional cost categories not included on the list in Appendix C.

Utilizing Federal Historic Tax Credits or Federal New Markets Tax Credits

If your project will utilize federal historic tax credits or federal new markets tax credits as a portion of your funding sources, only certain types of capital expenditures may be eligible to be paid for through the Commission. Please discuss any tax credits with your Commission project manager early in the review process in order to ensure eligibility. You may also need to engage the services of an attorney to ensure compatibility between the use of federal tax credits and the state tax-exempt bond funds available through the Commission.

Construction Administration Alternatives

The Commission's governing statute (Ohio Revised Code, Chapter 3383) allows project sponsors to seek Commission approval to serve as the construction administrators for their projects, or to have the State Architect's Office (SAO) oversee the project. The majority of our project sponsors prefer to administer their own projects, as local administration provides additional flexibility for the project sponsors. If you are seeking local construction administration, you must demonstrate to the Commission that the team you have assembled is capable of administering the construction project. The process of administering a construction project will differ in several other ways depending upon the method chosen; listed below is a summary of each alternative.

Alternative 1: Local Construction Administration

  • Contracting: The project sponsor oversees completion of all of the construction documents and bid packages, advertises for bids, awards all of the contracts and oversees the project. To the extent reasonably possible, the project sponsor should use a public, competitive bidding process in the selection of the contractors. With minor exceptions, these contracts are not subject to Chapters 123 and 153 of the Ohio Revised Code. The construction contracts must comply with the requirements contained in the Commission's legal agreements regarding construction administration and funding. A construction manager or owner's representative may need to be included on the construction administration team for larger or more complex projects. For more information regarding contracts, see Construction Contract Standards for Locally Administered Projects.
  • Funding: The project sponsor/construction administrator holds all non-state funds for the project. The project sponsor/construction administrator will pay for all invoices associated with the contracts for the project. No state funds will be paid until the project sponsor provides evidence, acceptable to the Commission, that the project sponsor has written commitments for the total costs of the project. See The Concept of a Fully Funded Project.
  • Timing of Payments: State reimbursement of funds may commence when all Commission requirements are met, legal documents executed, a determination is made by the Commission that the project is fully funded, and invoices are approved by the Commission staff. The Commission will reimburse its share of the costs associated with each paid invoice that the project sponsor submits. The state funds are disbursed on a pro-rated reimbursement basis over the duration of construction.
  • Professional Services: Typically, the Commission does not reimburse project sponsors for design and construction management or other professional services on bond-funded projects. It is recommended that design and construction management professionals be selected using a competitive, open, qualifications-based selection process. The Ohio QBS Coalition provides a helpful publication on qualifications-based selection, which is available at www.arc.ohio.gov/pdfs/qbsman.pdf. Although not a requirement, project sponsors may advertise for professional services in the Ohio Register, a publication of the Ohio Department of Administrative Services adminstered by the State Architect's Office. Keep in mind that the selected professionals should have the necessary experience and qualifications for the project so that the project sponsor can demonstrate to the Commission that they have the ability to partner with the sponsor to locally administer the project. Please note, the Commission discourages using a project's architect as the construction manager of the project to avoid a conflict of interest.
  • Legal Document Required: The Commission requires one standard legal agreement called a Cooperative Use Agreement. This agreement also includes provisions regarding construction administration and funding, which previously were outlined in a separate legal document. The Commission combined the two agreements to provide for more efficient administration of the legal agreement process.
  • Eligibility: In accordance with state law, the Commission must determine which method of construction administration is used. The Commission has adopted guidelines that spell out the criteria that the Commission uses in making this determination. Project sponsors and construction managers seeking approval for local construction administration must submit information that outlines their qualifications along with the Commission Project Detail Form. This requested information is listed in the Roadmap Checklist in Appendix A.

Alternative 2: State Architect's Office Construction Administration

  • Contracting: The contracts are advertised, awarded and administered by the state, and the contracts are subject to Ohio Revised Code, Chapters 123 and 153. The state awards contracts to the most responsive and responsible bidders. To do this, any funds necessary in addition to the appropriation must be on deposit with the Commission before the contracts can be awarded. SAO charges a sliding scale percentage fee based on the size of the project. It typically averages between 5 and 7 percent of construction costs.
  • Funding: The project sponsor is required to deposit all local funds necessary for the construction of the project with the Commission. The local funds are held in a special interest-bearing account in the state treasury. The deposited funds and earned interest are earmarked for the project and any funds remaining in the account after the completion of the project are returned to the project sponsor. The SAO will advertise and award all contracts, and the Commission will pay approved contractor invoices directly. Construction cannot begin until all local funds necessary for the project are deposited with the Commission. If local funds are not required for the project, the Commission will draw solely from the state appropriations and the project sponsor will not need to deposit any funds with the Commission.
  • Timing of Payments: Before any contracts can be awarded for bond-funded projects, all funds necessary for construction, in addition to the state appropriation, must be on deposit with the Commission. All Commission requirements must be met, legal documents executed and the project found to be fully funded before commencement of the project. Under this method, the Commission makes payment on the construction invoices directly to the contractors.
  • Professional Services: The SAO advertises for professional services in the Ohio Register. Qualification statements are submitted to the SAO by interested design and/or construction management firms. Together, an SAO representative, Commission representative and the project sponsor will select two to four qualified applicants to interview. The group makes a selection, the SAO awards and administers the contract(s), and the Commission pays the invoices for the contract(s) with the project sponsor's approval as the work is completed.
  • Legal Documents Required: The Commission requires the execution of a Cooperative Use Agreement. The State Architect's Office uses its own professional services and construction contract for the design and construction work; therefore, the Commission's Cooperative Use Agreement does not include any provisions regarding construction administration and funding.

Project Construction Standards

If your project is approved for local construction administration, you will need to follow all Commission standards, and all applicable federal, state and local laws, including, but not limited to, the areas that follow in this section and the Construction Contract Standards for Locally Administered Projects section of this guide. The Commission will need to have copies of your project schedule, bid packages and insurance certificates that reflect the underlying insurance agreed to in your executed legal document.

Selection of Design Professionals

Typically the Commission does not reimburse for design or other professional services for projects, but rather these fees are typically part of the local share of the project costs. Under certain limited circumstances, the Commission may reimburse for all or a portion of the professional fees. Please discuss special circumstances with your Commission project manager. If you seek approval from the Commission for professional fees, the following guidelines must be followed:

Professional design services estimated at $25,000 and over are to be publicly announced using a Request for Qualifications (RFQ) process. It is preferable to have the RFQ advertised in the Ohio Register, which is published by the State Architect's Office. There is no charge for this service. A Commission project manager can discuss with you the limited circumstances where professional design services can be reimbursed by the Commission and also the guidelines for the RFQ and the process for interviewing candidates.

For professional design fees less than $25,000, the sponsor must interview a minimum of three qualified candidates but does not need to conduct an open competitive bidding process. Fees should be equal to or less than the State Architect's Office fees for such services in order to be eligible to be reimbursed from the state bond funds.

Pre-Construction Standards

Prior to construction, the Commission will need to know several things about your project. In addition to the items previously mentioned, the Commission requires:

  • Local Construction Administration Information:
    • If your organization wishes to locally administer the construction, information about the construction administration team will be required so the Commission can determine if your organization has the ability to successfully complete the project. Please see the section on Construction Administration Alternatives to help you determine if local administration is the best option for your project.
  • Project Schedule:
    • A detailed project schedule, including the projected project opening or re-opening, if applicable. Your Commission project manager needs to be kept apprised of any schedule changes that occur during the course of the project.
  • Construction Related Insurance:
    • See the Insurance section of this guide for information on builder's risk insurance, installation floater and design professional liability insurance.
  • Copies of all bid tabulations, construction documents and contractor contracts.

Back to top

PROPERTY INFORMATION

Overview

Because the state's capital appropriations are financed through long-term tax-exempt bonds, the Commission must maintain a long-term relationship with the project sponsor to provide for the continuing use of the facility for cultural purposes. The Commission will need to enter into a Cooperative Use Agreement for the facility and site for at least 15 years. To do so, you will have to provide complete documentation that you own or have a long-term lease on the site, and that nothing will prevent the operation of an Ohio cultural facility there. If another organization owns the site, it will have to provide that documentation. Typically, this is the step that takes the longest to evaluate because the Commission must review title information.

We need to see all previous environmental assessments that have been done on the property. If there is no complete, current environmental report on the property, you will need to inspect your site (or have it inspected) and fill out and certify an environmental screening sheet. If items are identified that need more investigation, a formal Environmental Phase I site assessment may be conducted.

In its project application, the Commission asks if the property has a Current Agricultural Use Value (CAUV) designation. If the land to be developed is farmland, the Commission is required by a Governor's Executive Order to investigate and determine if the proposed site is appropriate.

Determining the State's Ability to Enter into a Cooperative Use Agreement

In determining if the Commission can enter into a Cooperative Use Agreement, several factors must be determined through supporting documentation:

  • Are there any easements or restrictions on the property that would prevent the facility from operating as an Ohio cultural facility?
  • Are there any liens or mortgages on the property? This would be determined through an examination of a current title commitment, or title policy, and a title opinion letter provided by an attorney.
  • Third-Party Ownership:
    • Coordination is required when the project sponsor leases the cultural facility property from a third party. Although the property owner does not need to be a 501(c)(3) organization or governmental entity, the property owner must acknowledge that the Commission can continue to utilize the facility for the provision of culture to the public, at no cost to the Commission, even if the lease between the owner and the project sponsor is terminated.
    • The property owner must also cooperate in providing the underlying lease between the property owner and project sponsor, as well as the necessary deeds and title policy or commitment for review, and enter into a Non-Disturbance and Estoppel Agreement with the Commission. This agreement becomes part of the Cooperative Use Agreement between the Commission and the project sponsor. The underlying lease term must be equal to or exceed the term of the Commission agreements.

To determine that the citizens of Ohio will be served by the cooperative use of the property, the Commission reviews all relevant information about the property. Examination of the deeds and title material and subsequent discussions about rights and easements can affect the timely preparation of legal documents. You should provide up-to-date title work to the Commission well in advance of your desired Commission meeting date to ensure the legal documents can be executed immediately after the meeting.

Required Documentation

To verify ownership of the property, the Commission requires a copy of your deed(s) and/or a recent title insurance policy or commitment, with all the attachments describing the property restrictions, as well as a title opinion letter from a qualified attorney. Title policies that are over six months old should be replaced with a current title policy or commitment. A Non-Disturbance and Estoppel Agreement is used if the property is owned by one entity and operated by another. Your Commission project manager has samples of an acceptable title opinion letter and estoppel agreement. The Commission also requires a diagram, survey or site plat that graphically represents the property.

A review of the title policy and associated paperwork must show that there are no property rights (e.g., mineral rights), easements (e.g., right of way), deed restrictions or reverters (e.g., clauses that return ownership of the property to its previous owner if certain conditions are or are not met) that would interfere with the operation of a complete cultural facility.

Definition of a Complete Cultural Facility

In a few cases, the Commission does not need to use the entire facility and the site on which it is located. If part of the property can be operated independently as a complete cultural facility, a Cooperative Use Agreement may pertain only to that part of the site. For example, if the property consists of several buildings, it may make sense for the Commission and project sponsor to enter into a Cooperative Use Agreement only for those buildings where state monies will be used. However, if the project sponsors plan to obtain future state appropriations that entail other portions of the property, it might be better to enter into a Cooperative Use Agreement for the whole property at the outset. Each situation is different, but in general the Commission requires that:

  • The area be accurately identified through a survey or by description of the parcels, or by metes and bounds, so legal documents can be prepared;
  • The facility provides for the presentation of culture to the public;
  • The area included in the Cooperative Use Agreement includes access from a public right-of-way;
  • The facility (or buildings) can be separately secured for access and egress;
  • The facility has its own climate control and restroom facilities;
    • Associated parking is available if needed for operation of the cultural facility. You may find that it is simplest and most cost effective to enter into an agreement for the entire property.

Liens and Mortgages

The owner of the property must agree not to enter into any mortgages or allow any liens to be placed on the property without the Commission's written concurrence. If your facility does have mortgages or liens in place, the Commission may be able to accept guarantee agreements or identify other alternatives that would still permit the investment of state bond funds in the property. In any case, it is critical that you discuss the situation with your project manager as early in the process as possible.

Environmental Information

To protect the public's investment, the state must evaluate information on any potential environmental hazards on the property.

The sponsor must provide copies of any environmental reports and/or other data as necessary for the state to understand the environmental conditions of the property and surrounding properties. For most projects, an Environmental Site Assessment Phase I Report, consistent with current American Society of Testing and Materials (ASTM) standards, shall be provided. If a complete and current Phase I Report is not available and the sponsor believes that such report is not necessary, the site construction manager or other official with appropriate knowledge must complete an Environmental Site Assessment Transaction Screening Form (ESA-TS). The ESA-TS is included in Appendix D of this guide.

The ESA-TS provides a checklist of potential hazard indications for the project evaluator to complete. The evaluator should be familiar with the project, buildings, site, construction and basic environmental issues (i.e., lead paint, asbestos, radon, etc.) but does not need to be an environmental professional. The evaluation should be based on a physical inspection of the site and property. Photos can be useful in communicating the nature and extent of any potential hazard indications. If the evaluator has indicated "yes" to any questions, more investigation is necessary and a written explanation of the "yes" answers should be submitted with the ESA-TS. The ESA-TS requires the evaluator to certify that the information provided to the Commission is accurate.

Once completed, the ESA-TS should be forwarded to the Commission, along with any explanation of answers required by the ESA-TS form, photographs, and copies of any previously completed environmental surveys/site assessments that have been done on any part of the contiguous property. The Commission staff may ask for additional reports or investigations as necessary to assess the risks of loss to the state due to conditions at or near the property. The decision of whether additional information on environmental conditions at or near the property will be necessary is the sole discretion of the executive director of the Commission, based upon advice from the Attorney General or other counsel. Although not an exhaustive list, following are some common ESA-TS items that may point to situations where more scrutiny is necessary.

  • Electrical utilities or transmission lines
    • Old transformers or electrical apparatus may contain polychlorinated biphenyl (PCBs). If you are not sure that you have only the new "dry type" transformer, additional investigation may be required.
  • Sumps or floor drains
    • Sumps or floor drains may drain directly into the ground or stream, drain to a septic system, or connect to the area's storm water or sewage drains. Each situation imposes some environmental risk, either with harmful substances potentially entering the water system, or with risk to your building from water backing up. You should be prepared to determine and report where the water from your sump and floor drains goes.
  • Radon testing
    • If your basement houses offices, or other places where employees or guests will gather, you should conduct a radon test.
  • Mold
    • It is important to report the location and extent of any mold within the facility, and how you plan to eliminate it.
  • Asbestos and Lead
    • The location of any lead or asbestos containing materials should be documented and proper remediation procedures should be followed in the removal of such materials.

After reviewing the ESA-TS, the Commission may require that you undertake further investigation of the property. Any environmental assessments or Phase 1 ESAs must be completed prior to the state entering into a Cooperative Use Agreement.

Farmland Use Determination

In accordance with Executive Order 98-03V, Ohio Farmland Protection Policy, the Commission must evaluate construction of a cultural facility in the context of its impact, if any, on Ohio farmlands.

If the area to be developed is farmland, a significant factor is whether the property is registered for Current Agricultural Use Value (CAUV). This program was implemented by the state of Ohio to permit the valuing of farmland on its ability to produce income rather than on its market value. Information about this program is available at: www.seorf.ohiou.edu. Project sponsors must complete the Farmland Use Determination Report included as Appendix E of this guide.

Back to top

INSURANCE

Overview

The state will require evidence of several types of insurance with certain minimum coverages in order to protect the state's investment.

Your organization needs to carry certain types and amounts of insurance. The insurance policies must name the Commission, the bond issuer (currently the Treasurer of the State of Ohio), the Ohio Public Facilities Commission, and the state as additional insureds, and must also include a waiver of subrogation in favor of the same. Certificates of insurance must be provided to the Commission to verify the coverages. The Commission recognizes that each project is unique, and if you believe your project cannot meet the insurance requirements, please speak with your project manager to explore available alternatives. In most cases, however, the Commission requires the following types of insurance.

Commercial General Liability Insurance

This insurance protects against claims for personal injury and property damage to others in and around the facility. The Commission has standard minimum coverage requirements based on the cost of the project being undertaken and the nature of the facility. After discussion of your particular project, your Commission project manager will identify the insurance coverages required for your project. See Appendix F for information regarding the Commission's minimum insurance coverage levels.

Special Form Property Insurance

This insurance protects against damage to the facility, and normally the state requires full replacement cost insurance. For older facilities, full replacement cost would cover the amount necessary to rebuild a similar facility (i.e., same seating capacity, square footage) with current construction materials and workmanship. Property insurance should include the special peril of floods if your facility is located in a flood plain. Again, specific circumstances and minimum coverages will have to be determined in consultation with your Commission project manager.

Workers' Compensation Insurance

Your organization must comply with state law concerning workers' compensation insurance.

Employer's Liability Insurance

Your organization will be required to carry employer's liability insurance for each employee for bodily injury.

Automobile Liability Insurance

Depending on the project, the Commission may require you to carry automobile liability insurance, in an amount determined after discussion with your Commission project manager. Normally, required coverage is for one million dollars.

Project-Related Insurance

Builder's Risk Insurance or Installation Floater
The minimum coverage for this policy is normally the completed value of the cultural project. This policy will have to name the Commission, the Treasurer of State, the Ohio Public Facilities Commission, and the state as additional insureds, as well as include a waiver of subrogation in favor of the same. Certificates of insurance must be provided to the Commission to verify the coverages.

Typically this insurance is carried by the contractor, but the project sponsor is responsible for ensuring the requirement is fulfilled.

Design Professional Liability Insurance
This insurance covers acts, errors or omissions arising out of "professional services" provided for the project. This insurance must cover the design period through five years after completion of construction. The Commission has a list of standard minimum coverages based on the cost and nature of the project being undertaken. After discussion of your particular project, your Commission project manager will identify the insurance amounts required for your project.

Typically this insurance cost is shared between the design professional and the contractors, but the project sponsor is responsible for ensuring the requirement is fulfilled.

Back to top

Section III: Preparing to Commence Work
Construction Contract Standards for Locally Administered Projects

CONSTRUCTION CONTRACT STANDARDS FOR LOCALLY ADMINISTERED PROJECTS

Overview

Each project must comply with all Commission standards and all applicable federal, state and local laws, as well as with the requirements of the legal documents entered into with the Commission. These standards are tailored for cases where the project sponsor acts as the construction administrator. The items listed below are not a complete list of contract-related requirements, but merely describe some of the topics that are commonly the subject of project sponsor questions. Of special note, the Commission strongly supports the efforts of the project sponsor, general contractor, and others to ensure a safe, accident-free job site during construction.

If you are approved for local construction administration, you will be responsible for compliance with and documentation of each of the items outlined in this section.

Prevailing Wage

As required in the state capital improvements bill, which included the appropriation of funds for your project, all contracts must meet the state's prevailing wage requirements as outlined in Ohio Revised Code, Chapter 4115.

If you have questions concerning the prevailing wage requirements, or wish to submit a request for prevailing wage rates, please access the Ohio Department of Commerce web-site at www.com.state.oh.us. You can also submit a request for prevailing wage rates on that same website. Alternatively, contact the Labor & Worker Safety, Wage & Hour Bureau at 614-644-2239.

Additional information is also available at the state architect Web site, under frequently asked questions, www.das.ohio.gov/gsd/SAO/sao.html.

Domestic Steel

All contracts must meet the state's domestic steel requirements as outlined in Ohio Revised Code Section 153.011. Information on this requirement can be found in the Ohio Department of Administrative Services, Directive number 04-30 effective date 07-01-03, Policies Regarding the Required Use of Domestic Steel: http://www.das.ohio.gov/Directives/direct_03-04/04-30.pdf.

Mechanics Liens

The Commission requires that you put in place a system to prevent mechanics liens from being placed against the project. The standard Commission legal agreement states:

"The construction administrator will establish a retainage/escrow system for all contracts to ensure that no mechanics liens can be placed on the real property or the construction project. All prime contracts and subcontracts must include language in which the prime and subcontractors acknowledge and agree that liens can be made against the retainage/escrow and not the project or the property."

Equal Opportunity

The standard Commission legal agreement states in part:

"No contractor shall, by reason of race, color, religion, creed, sex, sexual orientation, handicap or national origin discriminate against any person who is qualified and able to perform the work....no contractor shall discriminate against or intimidate any employee hired..."
"The construction administrator shall use its best efforts to cooperate with the state's equal opportunity coordinator, with any other official or agency of the state or federal government, which seeks to eliminate unlawful employment discrimination, and with all other state and federal efforts to assure equal employment practices..."

Americans with Disabilities Act

All contracts entered into and all work resulting from those contracts (i.e., the design of the facility) shall comply fully with all applicable requirements of the Americans with Disabilities Act.

Competitive Bidding

The standard Commission legal agreement states:

"To the extent reasonably possible ... the construction administrator shall employ an open competitive bidding process in the selection of its contractors."

Standardized Forms

The standard Commission legal agreement states:

"The construction administrator will organize the project employing standardized forms for use by all consultants and contractors, including but not limited to, requests for information (RFI's), professional services and contractor pay requests."

Contracts, Change Orders, Invoices, and Construction Meetings

The project sponsor must provide copies of all contracts to the Commission within 15 days of the contracts being awarded. The Commission must be notified and given the opportunity to review, comment and consult on change orders that exceed a certain minimum (normally the lesser of 10% of the project cost or $50,000). The state will only reimburse for approved, written change orders that pertain to the project as described in the project-specific legal documents, and copies of all approved change orders must be submitted with the corresponding invoice(s). Additional details on invoice submittals are included in the standard Commission legal agreement. The Commission also requires a schedule of project meetings, with no less than 15 days notification prior to such meetings. The section of the standard Commission legal agreement entitled "Reports" gives further information about reporting, inspections, and meeting requirements during construction of your project.

Not Acting on Behalf of the State

The construction administrator must add a statement substantially similar to the following to all project contracts:

"Each party hereto recognizes and agrees that the Ohio Cultural Facilities Commission, the Ohio Public Facilities Commission, the Treasurer of State of the State of Ohio, and the state of Ohio are not bound or liable under this contract or license, as applicable, and are not responsible for the acts and omissions of the construction administrator, which is acting solely as an independent contractor."

Back to top

Section IV: Commission Meeting and Legal Agreements
A Successful Commission Meeting
Entering Into Legal Agreements

A SUCCESSFUL COMMISSION MEETING

Overview

The most important preparation for the Commission meeting is working with your Commission project manager to make sure the Commission has, in advance, all the information needed to understand your organization's sustainability, your capital project's financial plan and the project's funding sources.

Presenting Project Results

A major milestone to a successful project is the presentation about your organization and your project to the Commission, and receiving its approval to commit state funds to the project.

In conjunction with working with you to resolve any outstanding issues related to your project, your Commission project manager will prepare a package of information to be mailed in advance to the Commission members once your project is placed on a Commission agenda. Typically, the Commission's approval is given contingent upon certain items being completed following the meeting, such as the execution of legal documents. These conditions will need to be met before any funds can flow to your project.

Placing Your Project on a Commission Meeting Agenda

The Commission meets quarterly and dates are scheduled a year in advance of meetings. Local sponsors are required to complete their Project Registration and Detail forms and submit all necessary materials for review by the posted submittal deadline. For an updated list of quarterly Commission meeting dates and corresponding submittal deadlines, please visit our Web site, www.culture.ohio.gov.

Your Commission project manager will review and analyze the information you provided as part of the assessment process. Once the Commission staff has verified that your organization and your project appear to have met the necessary requirements, a recommendation for inclusion on a Commission meeting agenda will be made. Your Commission project manager will compile the necessary information for presenting your project to the Commission. Your timeliness in submitting requested information and in responding to questions during the assessment process is critical in making a recommendation for inclusion on a Commission meeting agenda. Incomplete submittals or the inability to meet the document submittal deadlines will result in extending the review period for your project by deferring it until the next submittal deadline date.

Meeting Deliberations

What Needs to Be Determined at the Meeting
Although the state Legislature has appropriated funds for your project, the Commission's statutory obligation is to review your project and determine that it is well planned and likely to be successful. In accordance with statute, the Commission takes action on resolutions that:

  • Determine that there is a need for the project;
  • Ensure that there is substantial regional support (in the form of matching resources equaling 50% of the state's contribution) and verify that the project is "fully funded." Refer to the Concept of a Fully Funded Project section for more information;
  • Authorize the execution of appropriate legal agreements;
  • Approve local construction administration (when applicable); and
  • Authorize the expenditure of funds for the project.

In making its determinations, the Commission confirms that:

  • Your organization is in sound financial condition and is projected to remain so during the foreseeable future;
  • Your organization has the necessary community support;
  • You have an accurate idea of how you will utilize the state funds. This means that you know the project scope, the project costs, and, if other funding will be used for the project, what costs will be covered by the state appropriation;
  • You understand and agree to enter into the legal document(s) that must be signed prior to the expenditure of state funds. Refer to the Entering into Legal Agreements section of this guide for descriptions of the legal agreement(s). Refer to Appendix H of this guide for the sample resolution from your board that authorizes your organization to enter into legal agreements with the state;
  • You have assembled a team with sufficient expertise to properly manage the construction process and deal with all the issues that may arise during construction; and
  • You have sufficient expertise to properly manage the facility and provide general building services.

Presenting Your Information

Project sponsors with small, basic improvement projects may not be required to appear at a quarterly Commission meeting — usually held in Columbus — to present your information. If this is the case as determined by the Commission staff, your Commission project manager will present your project at the meeting, but you may need to be available during the meeting via phone to answer any questions that your Commission project manager cannot answer.

Sponsors with large and/or complex projects will be asked to attend a quarterly Commission meeting. Commission members may ask questions which require project sponsors and Commission project managers to have a clear understanding of the project's costs, sufficient project funding, the qualifications of the team proposed for local construction administration, and the status of local fundraising. Questions about the accuracy of projected operating revenues and expenses may also be raised.

All official approvals, including expenditure of funds for any given project, must be approved by a majority of the voting members of the Commission — at least five affirmative votes.

After Commission approval, you can move on to the next milestone, executing the required legal document(s), followed by project construction and invoice payments.

Back to top

ENTERING INTO LEGAL AGREEMENTS

Overview

Legal documents explain in detail the responsibilities of all parties — the state, the project sponsor, and the construction administrator. In most cases, you, as project sponsor, will take on the roles and responsibilities of facility owner, manager, and construction administrator.

Legal Agreements

The following information describes the legal agreements typically used by the Commission. All Commission-funded projects are required to enter into a Cooperative Use Agreement. Additional agreements may be required depending on the specifics of your project.

  • Cooperative Use Agreement — The project sponsor maintains control over the facility's operations. For this reason, a Cooperative Use Agreement is entered into. The purpose of the Cooperative Use Agreement is to ensure that cultural programming will be presented to the public for at least the length of time the state's bonds are outstanding (typically 15 years) in exchange for the state providing capital improvements funding. The Commission does not involve itself in the day-to-day operations of the facility, but instead relies upon the project sponsor to manage the facility and present programming. The Commission's interest is in ensuring that culture is presented to the public and that the state-funded facility or improvements are properly built and maintained.

    When an organization can successfully demonstrate its capabilities to oversee a construction project, it is eligible for local administration from the Commission. The Cooperative Use Agreement will incorporate provisions for local construction administration and funding.

  • Capital Expenditure Reimbursement Agreement — In certain cases, the Legislature appropriates funds for projects that have already been constructed. The appropriation may supplement prior state funding for which the Commission has already approved the project and the expenditure of funds, or, a project sponsor may complete construction on a project and subsequently be appropriated state capital funds. In such cases, the Commission utilizes a Capital Expenditure Reimbursement Agreement (CERA). The agreement requires the local project sponsor to represent and warrant to the Commission that it has conducted its capital project in accordance with specific conditions established in statute, bond documents, and Commission guidelines. The execution of a CERA is accompanied by the execution of a Cooperative Use Agreement between the Commission and the local sponsor.

  • Memorandum of Understanding — For projects that have not yet met all of the requirements to receive state funds, a Memorandum of Understanding may be entered into between the project sponsor and the Commission immediately after a Commission meeting during which certain preliminary approvals were made by the Commission. The Memorandum of Understanding documents the intent of the parties and details the remaining requirements that need to be met prior to the Commission's approval for the expenditure of state funds.

Depending on your situation, additional legal documents may be required such as:

  • Non-Disturbance and Estoppel Agreements (if the sponsor leases the facility from a separate entity, that entity will be required to contract with the Commission);
  • Consents or Subordination Agreements (if there is special financing for the project such as local bonds, letters of credit or outstanding mortgages);
  • Guaranty Agreements (if circumstances of your project require one or more commitments guaranteeing repayment of state bond funds in the event of a default).

Process for Executing Legal Agreements

Sample Agreements
Your Commission project manager will make available a sample set of documents that will allow you and your legal counsel to review the Commission's standard language and requirements. These sample documents represent standard form documents, the terms of which generally are non-negotiable. Any issues from review of these documents that you or your counsel believe do not reflect your project's situation should be communicated to your Commission project manager as soon as they are identified.

Board Resolution
Your board will need to pass a resolution authorizing your organization to enter into legal agreements with the Commission and indicating who will sign the agreements on behalf of your organization. The Commission has a sample resolution drafted for this purpose, included in Appendix H.

Project-Specific Information
Once the Commission has an understanding of your project's scope and costs, your Commission project manager will begin a dialogue on what information is needed to draft the legal documents specific to your project. Final documents are prepared and forwarded for signature. The authorized representative of the project sponsor signs the documents first, and then sends them to the Commission for the signatures and approval by the Attorney General and the Commission.

Back to top

Section V: Construction and Reimbursement
Managing the Construction Phase
Getting Your First Invoice Paid

MANAGING THE CONSTRUCTION PHASE

Overview

During the construction phase, the Commission needs to be kept informed of any changes in project scope, resources, funding and schedule. The Commission's legal documents outline standards related to the use of the facility, construction oversight, state recognition, and other matters for projects funded with state bond funds. Adherence to these standards must begin before contracts are executed, in order to ensure state reimbursement.

Management Considerations

How you manage the day-to-day details of your project is something that will vary with the size of your project, your staff, and your in-house expertise. Some considerations are included in the Commission's Project Planning and Assessment Guide. No matter your particular arrangement, clear communication and documentation must be provided to the Commission on the project's progress and any changes to project scope, resources, available funding, or schedule. Of special note, active involvement by all parties to ensure an accident-free worksite should be a central management goal.

Review of Requirements

The Commission's legal documents, particularly the provisions regarding construction administration and funding, lay out requirements for projects funded with state dollars. Careful monitoring is required in order to ensure full compliance, and adherence to these standards is necessary in order to ensure reimbursement of your project costs.

Back to top

GETTING YOUR FIRST INVOICE PAID

Overview

The steps to obtain state reimbursement begin early in the construction process, well before signed, certified invoices are submitted with supporting documentation.

Vendor Information Packet

There are several forms that must be completed before the Commission and the state can begin the reimbursement process. You are encouraged to complete all the forms that make up the state's vendor information packet, included here as Appendix B, early in your project's Commission approval process.

State Accounting System - IRS W-9 Form

If your organization has never received state funding or has not received state funds recently, your organization will need to be entered into the state's accounting system through submission of an IRS W-9 form. The form, as well as instructions for completing it, is included in Appendix B.

Vendor Information Form

This form ensures that the state has an accurate record of your organization's information, including legal name, address, and taxpayer ID number. The form, as well as instructions for completing it, is included in Appendix B.

Electronic Funds Transfer

Processing of state payments for locally administered projects is accomplished through an electronic funds transfer (direct deposit) into the project sponsor's bank account. By utilizing the electronic funds transfer system, your payment is deposited directly into your bank account, reducing the chance of error and eliminating the time to receive the payment via mail. Please note that your first payment from the state will be in the form of a check in the mail; however, all subsequent payments will be done by electronic funds transfer.

The Authorization Agreement for Automatic Deposit of State Warrants (along with instructions) is included in Appendix B, and should be completed as soon as you sign legal documents with the Commission. Please provide a copy of the form with an original signature of an authorized representative to your Commission project manager.

Reimbursement Guidelines

Locally administered projects are eligible for reimbursement of hard construction costs upon the execution of legal agreements and completion of all Commission requirements. A project sponsor must be pre-approved by the Commission for local administration of the project in order to use the procedures as described in this section. Requirements for local administration of the construction project and reimbursement of construction costs are contained within the Cooperative Use Agreement, and are described in the Construction Administration Alternatives section of this guide.

It is important to note that typically only "hard" construction costs are eligible for reimbursement by the Commission. Please refer to the section in this guide titled Project Costs and Funding for a list of the categories of likely costs to build and open your project.

Requirements

The standard Commission legal agreement contains specific requirements that must be fulfilled by the project sponsor for the bidding, award and execution of construction contracts, as well as the submittal of invoices for reimbursement of construction costs.

Prior to Submission of Invoices

The Commission must receive copies of bid documents, bid tabulation sheets and copies of construction contracts for all contractors that will be reimbursed with state funds, as described in the Pre-Construction Standards of this guide. The Commission retains the right to review, comment and consult on the content of bid documents, prior to distribution to the public. The bid tabulation sheets should identify all bidders and clearly identify which bids and which alternates (if any) were accepted.

All executed construction contracts must be submitted to the Commission. Contracts must comply with requirements previously described in the section on Construction Contract Standards for Locally Administered Projects. Your Commission project manager will be unable to approve reimbursement of any costs for a project unless the requirements are specifically addressed and implemented on all contracts.

Before reimbursing your first invoice, the Commission will need to determine that all outstanding conditions from the Commission resolution, and all requirements regarding the construction administration and funding contained in your Cooperative Use Agreement, have been completed.

With All Invoice Submissions

The project sponsor should utilize standard forms similar to the AIA application and certificate for payment forms to review and approve construction invoices, as confirmed by the sponsor's design or construction management representative. The forms used must clearly identify original contract values, changes in scope and cost, work completed in the field, retainage withheld, current payment due and the balance of work yet to be completed. Please see your specific Commission legal agreement for details.

Your request for reimbursement will include a signed certification, located in your Commission legal agreement, which states:

"By signing below, I certify that the charges being invoiced for have been paid and are for actual work completed on Cultural Project for the period from _______ to _______, and the charges are true, accurate and appropriate and that no liens have been filed on the Cultural Project or the Facility. I further certify that all work has been done in compliance with all applicable laws, including but not limited to prevailing wage law."

See the section on Mechanics Liens and your specific Commission legal agreement for details.

Invoice submittals should include copies of the contractor invoices, copies of the checks or vouchers used to pay the contractors, a summary of the request (a sample of which is included with the standard Commission legal agreement), and a signed certification (see above). Invoice submittals should also include reports and documentation specified by the agreements between the project sponsor and the Commission. For example, monthly progress reports, construction coordination meeting minutes, change orders, schedule updates, and progress photos should be included with invoice submittals, if required by your specific agreements.

Reimbursement

Your Commission project manager will review the reimbursement request and contact you if any additional documentation is required. The typical turnaround time from submittal of a complete and accurate invoice to reimbursement is 30 days or less.

Back to top

Section VI: Ongoing Partnership
Project Completion
Long Term Obligations

PROJECT COMPLETION

Overview

After the project is completed, you will continue to have a relationship with the state and will be required to provide periodic reports and updates to the Commission. The Commission's cooperative use interest continues for a minimum of 15 years after the project is completed. Completion is typically documented by a copy of the certificate of use and occupancy.

Cooperative Use Interest

The Commission's cooperative use interest begins from the execution of the Cooperative Use Agreement and expires on the later of: a) 15 years from the project completion date; or b) the date upon which all facility bonds issued to finance or refinance the project have been paid in full. Project completion is determined by the date of a final certificate of use and occupancy, or the date as determined by the Commission as the project completion. If the Commission determines the project completion date, the sponsor is notified by a letter from the Commission's executive director. (The letter from the Commission would follow receipt of a notification letter from the project sponsor provided to the executive director when a certificate of use and occupancy is not required.)

Lessons Learned

After your project is complete, your Commission project manager will ask you to fill out a questionnaire, and do a follow-up interview with key members of your organization. The questionnaire and interview have two basic goals. The first is to capture how the Commission can improve the services it offers to project sponsors. What did we do well, and where do we need to improve? The second goal is to capture knowledge about cultural projects in Ohio. What happened on your project that would be useful for other project sponsors, legislators, and community leaders to know about building first-class cultural facilities? What did you learn during the process that you wished you had known at the beginning? Were the goals you set for this project realized? Why or why not? Only by critically assessing how the project went, can improvements be made that benefit future cultural institutions and, in a broader sense, other Ohio citizens.

Being a Sponsor Mentor

Since the Commission is assigned new projects with each biennial capital bill, there will continue to be organizations that are new to working with the Commission. The Commission is in the process of developing a list of project sponsors who are willing to mentor these new organizations on the ins and outs of completing a successful project. After your project is complete, please consider becoming a sponsor mentor and talk it over with your Commission project manager.

Back to top

LONG TERM OBLIGATIONS

Overview

During the term of the Cooperative Use Agreement, the Commission will need to see annual reports about your organization and the facility. These are normally due shortly after the end of your fiscal year. Quarterly fundraising reports will be required until all the funds needed to fully fund your project have been collected.

Annual Reports

The Commission requires several reports on a periodic basis once the legal agreements have been signed. These reports provide information to the Commission that your organization is in good financial health and that you are presenting culture to the public at your facility. On a yearly basis, normally within four months of the end of your fiscal year, the Commission must receive:

  • Certification that you have taken all actions so that the state bonds remain tax-exempt. The Commission's standard language is included as Appendix I of this guide;
  • A written report of the uses made of the facility during the previous fiscal year to illustrate that you have been presenting culture to the public;
  • A projected schedule of events for the current fiscal year to illustrate your plans to present culture to the public in the future;
  • Financial information, including an audited financial report, IRS 990 form, or similar information, agreed upon in the legal documents;
  • Copies of all insurance certificates for all the types of insurance agreed upon in the legal documents.

Quarterly Reports

When part of the total project funds include anticipated pledges and contributions, quarterly financial reports are required until the project funds have been raised and collected and the project is fully funded. Other quarterly reports may be required, depending on the special conditions or situations of the organization.

Triennial Reports and Evaluations

Every three years the Commission requires the submission of your Emergency Procedures Manual. Also, insurance coverages are normally re-evaluated every three years to ensure adequate coverage.

Continued Sharing of Information and Commission Visits

In addition to the annual reports, please keep the Commission apprised of any significant changes in your operation or financial situation. Should such changes occur, it is important to share them with the Commission as soon as possible. This will allow the Commission to assist and advise you, as well as protect the state's investment.

Your Commission project manager will make periodic visits to your facility to see how the project is faring over time.

Back to top