Pursuant to H.B. 283 the State and Local Government Commission (SLGC), the Ohio Y2K Competency Center (Y2KCC), and the Department of Development (ODOD) will administer the "Local Government Y2K Loan Program."

The purpose of the Local Government Y2K Loan Program is to assist county, municipal corporations, and township governments with computer system and related technical adaptations needed for the accurate reading of century dates. The Department of Development will work closely with the Ohio Y2K Competency Center in the Department of Administrative Services and with the State and Local Government Commission to implement the program. The Ohio Y2K Competency Center will provide technical oversight and review of Y2K loan proposals. The State and Local Government Commission will facilitate access and communications between program participants and program administrators.

Local Government Y2K Loan Program monies will be used to assist counties, municipal corporations, and townships with computer and software upgrades or purchases and with any other problems associated with the accurate reading of century dates, or Y2K compliance. (Y2KCC will provide guidelines for projects with application materials.)

$4,837,500 will be sued for the County Y2K Loan Program to provide direct loans to counties to assist with county government projects. These loans, to be determined by a modified population-based formula, will be administered by ODOD. The terms of a loan from this program will be for a maximum period of two years, at a rate of zero per cent interest. One hundred per cent of the loan will be repaid to ODOD, to the credit of the General Revenue Fund, within two years. Failure to repay the loan in accordance with the terms of the agreement will cause the Tax Commissioner to withhold funds from the Local Government Fund distributions, as prescribed in this act.

$4,837,500 will be used for the Municipal and Township Y2K Loan Program to provide direct loans to municipal corporations and townships to assist with their government projects. These amounts will be determined using a modified population-based formula. These loans will be awarded by each participating county, or in the absence of such county by the municipal corporation or township with the largest population within that county, if such municipal corporation or township chooses to act as the administrator under the program established under this section. If a municipal corporation or township administers monies under this section, it can not use more than 50% of the monies distributed to it under the Local Government Y2K Loan Program for its own use. The administering municipal corporation or township will use the criteria provided by the Y2KCC as a guide in reviewing and recommending projects for the other local governments.

The terms of a loan from this program will be for a maximum period of two years, at a rate of zero per cent interest. One hundred per cent of the loan will be repaid to the administering county or largest municipal corporation/township administering the program within two years, to the credit of a Local Government Y2K Loan Repayment Fund. The administering county, municipal corporation, or township will immediately forward loan repayments to ODOD, which will deposit the funds to the credit of the General Revenue Fund. Failure to repay a loan in accordance with the terms of the agreement will cause the administering county or township to notify the county auditor to withhold funds from Local Government Fund distributions, as prescribed in the act.

The Tax Commissioner and county auditors, of each participating county or municipal corporations/township, will assist ODOD with loan payment activities of the Local Government Y2K Loan Program.

Administrative Costs

The Y2KCC may use up to $75,000 for technical assistance provided for this program. ODOD may use up to $25,000 for administration of the program.

Notification Process

The SLGC will send official notice of the program to counties and other units of local governments. This notification will include the following items:

The notification will set forth a 15 business day period, from the date of receipt of the notification, in which a county must respond in writing to the SLGC, that it desires to participate in this program. By doing so, the county acknowledges that it will facilitate giving monies to other units of local governments. County must also assign a Loan Administrator at this time. Any monies set aside by the formula for a County Y2K Loan Program, of a county government, which does not wish to participate, will revert back to GRF. If the county chooses to not participate in the program the largest municipal corporation or township within the county may choose to act as the administering body of the loan program. The largest municipal corporation or township must notify, in writing, their intent to participate to the SLGC within 15 business days from the date the county notifies the SLGC of its intent not to participate in the loan program. (Please be aware that this deadline is only for notification, not for submission of applications.)

Submission Process

The participating counties must submit both the applications for the County Y2K Loan Program and the Municipal and Township Y2K Loan Program at the same time. The application for the County Y2K Loan Program will be a detailed proposal (using guidelines provided by Y2KCC) on what the county intends to use the "county" monies for. The application for the Municipal and Township Y2K Loan Program will be a detailed and itemized proposal of what projects the county intends to distribute "other local government" monies for. In the event that a county does not wish to participate, the most populous municipal corporation or township may submit the application for the Municipal and Township Y2K Loan Program to the SLGC. A county or most populous municipal corporation or township will also submit to SLGC a separate list of units of local governments, which applied for monies but were rejected or not recommended. The SLGC will forward applications received to the Y2KCC. Applications will be accepted on a continuous basis until 5:00pm on Friday, April 14, 2000.

Approval Process

After receiving a package of applications from a county (or administering municipal corporation/township) for itself and for local governments, Y2KCC will notify ODOD and SLGC of approval or disapproval of the applications. If approved, ODOD/SLGC will notify the applicable county or administrative agent and ODOD will begin the process of distributing the funds to the county. If applications are disapproved, SLGC will notify the county with the reasons that the application was not approved. (Y2KCC will have the authority to approve parts of a proposal, without disapproving the entire package.)

Waiver Process

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Municipal fiscal officers, mayors, managers and legal counsel should be aware of the old investment adage: "If the rate of return is much higher than the prevailing market, there are at least three possibilities:

1. There is a substantial risk that all or part of the principle will not be repaid to the municipality or all or part of the interest will not be paid to the municipality. A high risk security may be suitable for professional investment advisors for the private sector. But it is inappropriate for local government to invest in high risk securities. High risk securities are not suitable for governments. In summary: "high rate of return = high risk."

2. The security may not be a legal investment under the Ohio statutes. If it is not, then the municipality may lose some or all of the bargain, be subject to adverse audit reports and findings, and the investing board or officer may be held personally liable for lost funds. While charter cities and villages have some latitude for investing that is different than statute, the principles of this paragraph I. 2. apply, and personal liability may result from illegal investments.

3. The new or high rate of return may be a scam. Fortunately, this is not the case in most such investment programs. Unfortunately, it has been in some.

Remember, a public entity can not delegate authority and responsibility by contract to vendors, other than with respect to implementing authority and in carrying out the responsibility determined by the public entity.

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