Explanation
BACKGROUND: Columbus City Council (“COUNCIL”), by Ordinance No. 0557-2020 (the “ORDINANCE”), approved on March 16, 2020 authorized the Director of the Department of Development of the City of Columbus (“CITY”) to enter into a City of Columbus Jobs Growth Incentive Agreement (the “AGREEMENT”) with Xariable, Inc. dba Loop Returns (the “GRANTEE”). The incentive was granted to the GRANTEE for a proposed total project investment of approximately $200,000.00 in leasehold improvements, furniture and fixtures to relocate its operation to a newly renovated 7,350 square-foot office space (the “PROJECT”) at 797 North Wall Street Columbus, Ohio 43215, parcel number 010-009149 (the “PROJECT SITE”). Additionally, the GRANTEE committed to retain and relocate 14 full-time positions and create 40 net new permanent full-time positions at the PROJECT SITE, in which the AGREEMENT granted an incentive in an amount equal to (i) twenty-five percent (25%) of the City of Columbus income tax withheld on the Columbus payroll of new employees at the PROJECT SITE and (ii) thirty percent (30%) of the City of Columbus income tax withheld on the Columbus payroll of those new employees at the PROJECT SITE who are also City of Columbus residents at the end of each calendar year, for a term of up to thee (3) consecutive years, all as further defined in the AGREEMENT. The AGREEMENT was made and entered into effective July 7, 2020, with the incentive term beginning January 1, 2021 through December 31, 2023 for a consecutive three (3) year credit.
If the GRANTEE is unable to sufficiently document residency for a New Employees associated with this project during a calendar year of the term of the AGREEMENT, the default rate of the Jobs Growth Incentive to be applied that calendar year for that New Employees shall be the lower of the two rates.
In an electronic written communication from Enterprise Advisory Group, LLC, on behalf of the GRANTEE, received by the CITY on January 9, 2023, the GRANTEE requested that the City of Columbus dissolve its current AGREEMENT with the CITY. Due to operational realignment and corporate strategy, the GRANTEE indicated that the anticipated growth as previously planned will not occur through the company, but instead through a third party employer. With this strategic corporate change, the GRANTEE is not eligible to receive any sort of tax savings benefits from the incentive. The anticipated new employees will become employees of the GRANTEE’s third party employer and not of the company. The GRANTEE is voluntarily seeking to cancel the AGREEMENT effective immediately since the new employees will be employed by a third party employer. There is a need to dissolve this AGREEMENT between the CITY and GRANTEE related to the issues between the company and their third party employer.
FISCAL IMPACT:
No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to dissolve the City of Columbus Jobs Growth Incentive Agreement with Xariable, Inc. dba Loop Returns (the "GRANTEE").
Body
WHEREAS, the City of Columbus (“CITY”) entered into a City of Columbus Jobs Growth Incentive Agreement (the “AGREEMENT”) with Xariable, Inc. dba Loop Returns (the “GRANTEE”) effective July 7, 2020; and
WHEREAS, Columbus City Council (“COUNCIL”), approved the AGREEMENT by Ordinance No. 0557-2020 (the “ORDINANCE”), adopted on March 16, 2020 and granted a City of Columbus Jobs Growth Incentive in an amount equal to (i) twenty-five percent (25%) of the City of Columbus income tax withheld on the Columbus payroll of new employees at the PROJECT SITE and (ii) thirty percent (30%) of the City of Columbus income tax withheld on the Columbus payroll of those new employees at the PROJECT SITE who are also City of Columbus residents at the end of each calendar year, for a term of up to 3 years, all as further defined in the AGREEMENT (i.e. January 1, 2021 through December 31, 2023 for a 3-year credit); and
WHEREAS, the incentive was granted in consideration of a total proposed investment of approximately $200,000 in leasehold improvements, furniture, and fixtures to relocate the existing office and employees to establish a new 7,350 square foot office (the “PROJECT”) at 797 North Wall Street Columbus, Ohio 43215, parcel number 010-009149 (the “PROJECT SITE”), in which the GRANTEE committed to retain and relocate 14 full-time positions and create 40 new permanent full-time positions at the PROJECT SITE. The AGREEMENT was made and entered into effective July 7, 2020 with the incentive term beginning January 1, 2021 through December 31, 2023; and
WHEREAS, if the GRANTEE is unable to sufficiently document residency for a New Employees associated with this project during a calendar year of the term of the AGREEMENT, the default rate of the Jobs Growth Incentive to be applied that calendar year for that New Employees shall be the lower of the two rates; and
WHEREAS, in an electronic written communication from Enterprise Advisory Group, LLC, on behalf of the GRANTEE, received by the CITY on January 9, 2023, the GRANTEE requested that the City of Columbus dissolve its current AGREEMENT with the CITY Section 8 of the Agreement. Due to operational realignment and corporate strategy, the GRANTEE indicated that the anticipated growth as previously planned will not occur through the company, but instead through a third party employer. With this strategic corporate change, the GRANTEE is not eligible to receive any sort of tax savings benefits. The anticipated new employees will become employees of the GRANTEE’s third party employer and not of the company. The GRANTEE is voluntarily seeking to cancel the AGREEMENT effective immediately since the new employees will be employed by a third party employer.
WHEREAS, there is a need to dissolve this AGREEMENT between the CITY and GRANTEE related to the issues between the company and their third party employer; and
WHEREAS, it has become necessary in the usual daily operation of the Department of Development, to take action on this agreement in order for this dissolution to be legislated so that this dissolution of the AGREEMENT can be reported to the necessary local and state agencies prior to the end of calendar year 2023, all to preserve the public health, property, safety, and welfare; and NOW THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That Columbus City Council, in conformance with Section 8 of the Agreement, hereby dissolves the Xariable, Inc. dba Loop Returns City of Columbus Jobs Growth Incentive Agreement that was executed by the parties on December 31, 2021.
SECTION 2. That the Director of the Department of Development is hereby authorized and directed to notify the necessary local agencies, in any, of any changes to the Xariable, Inc. dba Loop Returns City of Columbus Jobs Growth Incentive Agreement.
SECTION 3. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.