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What is a port authority?

Historically, port authorities were created to conduct maritime activities. The Ohio enabling statute was passed by the General Assembly in 1955 to promote the development of port facilities capable of taking advantage of the opening of the St. Lawrence Seaway. In the 1970s, airport activities were added to the purposes of Ohio port authorities and, beginning in 1982, Ohio amended its port authority statute numerous times, primarily to permit port authority powers to be used for economic development activities and to be employed cooperatively with state agencies and other political subdivisions.

Is a port authority a governmental entity?

Yes, a port authority is a governmental entity for all purposes, empowered by applicable provisions of Chapter 4582 of the Ohio Revised Code (“Port Act”). A port authority is a “body corporate and politic” and for some purposes a political subdivision, but must be created by local government(s).  Port authorities are each governed by a board of directors appointed by elected officials, and have the responsibilities of a governmental entity including holding public meetings and making its records available for public inspection.

What are the authorized purposes of port authorities?

As independent units of government, Ohio port authorities may conduct the traditional water, air and other transportation activities, as well as own property and provide financing for local economic development initiatives. Ohio law defines the “authorized purposes” of a port authority (and provides various powers to port authorities to further those authorized purposes) as follows,

  1. Activities that enhance, foster, aid, provide, or promote transportation, economic development, housing, recreation, education, governmental operations, culture, or research within the jurisdiction of the port authority.
  2. Activities authorized under Sections 13 and 16 of Article VIII, Ohio Constitution (permitting aid to private enterprises to promote economic development and housing in Ohio).

What is the significance of being a port authority “facility”?

Many provisions of the Port Act that authorize particular activities of Ohio port authorities, including cooperative activities with other political subdivisions and issuing revenue bonds to finance such facilities, depend on the facilities qualifying as a port authority facility. The Port Act defines a port authority facility as…
real or personal property, or any combination thereof, owned, leased, or otherwise controlled or financed by a port authority and related to, useful for, or in furtherance of, one or more authorized purposes.

What is a port authority’s area of jurisdiction?

A port authority’s area of jurisdiction generally includes all the territory of the political subdivision or subdivisions that create the port authority; and if a port authority owns or leases a railroad line or airport, the territory on which the railroad’s line, terminals, and related facilities or the airport’s runways, terminals, and related facilities are located, regardless of whether the territory is located in the political subdivision or subdivisions creating the port authority. Western Reserve Port Authority has jurisdiction in all of Mahoning and Trumbull Counties.

How are port authorities governed?

Ohio port authorities are formed by other political subdivisions, and are governed by the Ohio constitution, the legislation creating the port authority and, if two or more subdivisions join in its formation, by an agreement between them. That agreement, or the formative legislation, must cover a limited number of items, including the composition of the port authority board of directors.  Subject to the other governing documents, the board of directors typically adopts bylaws or regulations providing for the administration, operations, staffing, and governance of the port authority.

What are the powers of an Ohio port authority?

The broad powers of a port authority make it a useful tool for economic and other development purposes. Under Ohio law, port authorities are authorized to, among other things:

  • acquire real and personal property;
  • own, lease, sell, and construct improvements to real property;
  • issue revenue bonds for port authority facilities;
  • issue voted general obligation bonds for port authority facilities and other permanent improvements;
  • levy voted taxes for all purposes of the port authority;
  • receive federal and state grants and loans and other public funds;
  • operate transportation, recreation, governmental or cultural facilities, and set rates and charges for use of port authority facilities;
  • cooperate broadly with other governmental agencies and exercise powers delegated by such agencies;
  • accept assignments of TIF service payments and special assessments;
  • maintain confidentiality within statutory limits for private enterprises;
  • establish and operate foreign trade zones;
  • appropriate property for public use, convey or lease property to (and accept or lease from and exchange with) other governmental units;
  • and straighten, deepen, and improve channels, rivers, streams or other water courses.

What taxing power may Ohio port authorities have, and how is it exercised?

A port authority may levy up to one mill of property tax on property within its territorial jurisdiction for port authority purposes, but only with approval of voters.  The tax levy may not exceed five years, subject to renewal, except when approved for a general obligation bond issue.  The election is held and all customary procedures are followed under general Ohio law for submitting the question of the tax levy (and any general obligation bonds) to the voters.  Several Ohio port authorities do levy taxes, but only one small general obligation bond issue has ever been completed (in 1960 for port facilities at Toledo’s Great Lakes port).

Can a port authority incur debt?

A port authority can issue debt instruments in several forms: (1) Port authority revenue bonds that are limited special obligations payable only from specified revenues and funds pledged to their repayment, (2) voted general obligation bonds payable from the tax levy (limited to one-mill) approved as part of the election on the bond issue, (3) notes issued in anticipation of authorized bonds, and (4) tax anticipation notes issued in anticipation of, and payable only from, a fraction of the proceeds of a voter-approved levy.

Would port authority taxes or bonds affect tax or debt limits on other local governments?

No. Port authorities may not levy a tax unless approved by the voters and voted taxes do not impact the 10-mill unvoted tax limit. Any port authority general obligation bonds (and none have been issued since 1960) have separate direct and indirect debt limits that do not affect debt limits of other political subdivisions. Revenue bonds are outside of all debt limitations.

Can a port authority receive community development block grant funds?

No, a port authority does not satisfy all of the necessary criteria to compete for community development block grant funds; however, a municipality can provide such funds to a port authority for a qualifying purpose.

How do the changes to Ohio law regarding eminent domain impact port authorities?

Port authorities are public agencies governed by Chapter 163, Ohio Revised Code, as amended, and as such are subject to the limitations on taking property for economic development purposes, as implemented by those amendments (generally requiring blight). In addition, port authorities are subject to the provisions of Revised Code Section 163.021 which provides a veto right, upon request of the landowner, to the elected agencies that create an unelected agency, and must give notice of that possible veto right.

What is a port authority common bond fund?

A port authority bond fund is a credit-enhancement vehicle based on a system of common “program” reserves established in special funds of the port authority deposited with a qualified corporate trustee.  Those program reserves, additional reserves funded in connection with each series of revenue bonds issued to finance costs of approved projects, the portfolio of loans that are made from those proceeds and the collateral for each such loan, are all pledged under the applicable trust agreement to support the revenue bonds issued for those projects.  The program reserves are typically funded with a combination of local contributions, state loans (repaid only from investment earnings), and bank letters of credit.

Why is a port authority common bond fund important?

A bond fund is a unique and important tool for economic development because it enables a port authority to provide real value to many projects for which it could only otherwise act as a “conduit” and to much smaller projects.  Port authorities have also pooled the resources of their bond funds and of state programs to provide financing for projects of significant size and have used their bond funds to fill funding gaps on major economic development projects.

Where can I learn more about Ohio port authorities?

Ohio Revised Code Chapter 4582: Port Authorities – http://codes.ohio.gov/orc/4582