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4/23/2010
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FDIC seeks $518M from AmTrust’s parent firm
Ohio taxes obstruct wind tech movement Legislation aims to propel industry’s competitiveness
AmFin rebuffs liability; case may set precedent for accountability to feds
By DAN SHINGLER dshingler@crain.com
When it comes to putting up turbines to turn moving air into electricity, Ohio is sucking wind. However, wind industry proponents hope legislation pending in the Statehouse will whip Ohio into shape this year. The legislation would enable the state to play catch-up with neighboring states that are well ahead in the race to develop wind power. It also would better position Ohio to cement its place as a top wind industry supply state. If passed, the new law would lower the taxes levied on wind turbines. The change would make Ohio more competitive with surrounding states, which already have addressed the tax issue with their own laws. “While every neighboring state in the northeast quadrant has moved ahead with wind farm development, Ohio has not,” said Brad Lystra, manager of economic development for the American Wind Energy Association, the industry’s primary trade group. The problem, Mr. Lystra and other industry proponents say, is Ohio’s tax structure. A developer who puts up a wind turbine in Ohio can expect to pay about $40,000 in annual property taxes. That same turbine in Michigan, Indiana, Pennsylvania and many other states would cost less than $10,000 a year in taxes, Mr. Lystra said, speaking last Tuesday, April 20, to a group of about 50 Northeast Ohio manufacturers who hope to supply the wind industry. “Of all the states in the country right now, in my opinion, Ohio is in a tight spot,” Mr. Lystra said. The result of Ohio’s current tax policy is readily visible. Since 2008, neighboring states have been building wind turbines like Amish barns. Indiana alone has put up 1,000 megawatts of wind power production in the last two years; its turbines
By ARIELLE KASS akass@crain.com
NEED FOR SPEED Efforts under way to accelerate residential, commercial connection to faster Internet service By CHUCK SODER csoder@crain.com
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rganizations and government agencies all across Northeast Ohio are trying to add more lanes to the information superhighway. Several local groups are working on projects to make the region’s Internet faster and get more people to use it, efforts driven in part by ever-increasing demands for bandwidth and an influx of federal stimulus money. Some projects focus on helping low-income people gain access to reasonably fast Internet service or teaching them how to use it. Others aim to give local residents and businesses that have good Internet connections even faster access. See INTERNET Page 18
The Federal Deposit Insurance Corp. claims it is owed more than $500 million from the holding company of the former AmTrust Bank for failing to be a “source of strength” to the bank, a claim the FDIC and others say could have broad implications for banks nationwide. In pleadings related to the bankruptcy case of AmTrust Financial Corp. — now known as AmFin Financial Corp. — FDIC attorneys said by agreeing to a Nov. 19, 2008, cease-and-desist order that required the bank to have a prescribed amount of capital, AmFin committed “It’s not a small to keeping AmTrust Bank matter. We’re well-capitalized. going to litigate AmFin therefore should be on the hook for at least over who gets the $518.5 million, which was money.” AmTrust Bank’s capital – Eric Goodman, deficit as of Sept. 30, 2009, attorney, Baker according to the FDIC. Hostetler After its parent company filed for Chapter 11 bankruptcy protection last Nov. 30, AmTrust Bank — which now is known as Ohio Savings Bank in this area — failed and was taken over by New York Community Bank last Dec. 4 in a deal orchestrated by the FDIC. Attorneys for AmFin disagree with the FDIC and say the government agency is owed nothing. They say the company made no promises to keep AmTrust Bank well-capitalized and that AmTrust Financial noteholders and others should receive priority over the government agency. While the Office of Thrift Supervision, regulator of AmTrust Financial and AmTrust Bank, asked the holding See BANK Page 6
ON THE WEB Tune in with Crain’s This week’s podcast takes you further into the stories of Ohio’s wind market, the need for improving high-speed Internet access, the implications of the AmFin/FDIC quagmire and a boon in the housing market. Visit www.CrainsCleveland.com/podcasts.
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HIGHER EDUCATION Colleges boost tuition amid anticipated state financing cuts, inflation increase ■ Page 11 PLUS: ETHICS ■ QUEST TO DIVERSIFY ■ & MORE
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