Explanation
BACKGROUND: Columbus City Council (COUNCIL), by Ordinance No. 0832-2015, passed April 20, 2015, authorized the City of Columbus (CITY) to enter into an Enterprise Zone Agreement (the “AGREEMENT”) with Hirschvogel Incorporated (hereinafter “ENTERPRISE”) for a tax abatement of seventy-five percent (75%) for a period of ten (10) years in consideration of an approximate $14.7 million investment in real property improvements and the creation of thirty-seven (37) full-time permanent positions with an annual payroll of approximately $1.3 million related to the expansion of its Columbus facility by adding approximately 65,000 square feet of manufacturing and machining space to its 142,000 square foot operation located at 2230 S. 3rd Avenue Columbus, OH 43207, at parcel number 010-112529, 010-112530, 010-112727, 010-112778, 010-113245 and 010-113324 (“PROJECT SITE”), within the Columbus City School District and within the City of Columbus Enterprise Zone. The AGREEMENT was made and entered into effective August 24, 2015. The AGREEMENT stated that construction on the improvements (the “PROJECT”) was expected to begin no later than the end of September, 2015 and that all real property improvements were expected to be completed by the end of 2017 and that no real property exemption was to commence after 2018 nor extend beyond 2027.
In a letter from the ENTERPRISE to the City dated July 20, 2016, it was indicated that the aforementioned expansion project was restructured and realigned with the ENTERPRISE’s new corporate strategic growth plan. The letter requested that the AGREEMENT be amended to change the ENTERPRISE’s proposed capital expenditure investment, allow for additional addresses and parcel numbers to be associated with the PROJECT SITE, to modify the proposed new job creation goal along with the associated annual payroll, to change the expected to begin date from September 2015 to no later than the end of December 2016 and to modify the expected completion date for all real property improvements from the end of December 2017 to December 2018. Additionally, the ENTERPRISE requested that the term of real property exemption be amended to commence no later than 2019 nor extend beyond 2028 instead of 2018 through 2027.
The ENTERPRISE is now proposing to invest a total capital expenditure of approximately $28.88 million, with approximately $3.97 million in real property improvements, approximately $24.9 million in land acquisition costs, machinery and equipment instead of the total proposed investment of $50.35 million, create 30 new full-time permanent positions instead of 37, with an estimated annual payroll of approximately $1.16 million instead of the proposed $1.3 million and retain 322 full-time jobs to reconfigure its manufacturing facility and to expand its machining space by an additional 30,000 square feet. In addition, the ENTERPRISE proposes to purchase a 50,000 square-foot facility at 2222 S. 3rd Street, Columbus, Ohio 43207 to add additional manufacturing and workflow space. Also, the ENTERPRISE proposes to purchase three additional parcels just north of the company’s manufacturing facility that will be used for future possible expansion opportunities. The ENTERPRISE’s facilities in Columbus would include their existing North America corporate headquarters at 2230 S. 3rd Street, Columbus, Ohio 43207 parcel number 010-112778, the proposed 50,000 square-foot facility at 2180 S. 3rd Street, Columbus, Ohio 43207 parcel number 010-115936, 2222 S. 3rd Street Columbus, Ohio 43207 parcel numbers 010-115936 and 010-112239, 2166 S. 3rd Street, Columbus, Ohio 43207 parcel number 010-112027, 2160 S. 3rd Street, Columbus, Ohio 43207 parcel number 010-112162 and parcel numbers - 010-112874, 010-102555, 010-112134, 010-112597, 010-113235, 010-296094 to the PROJECT SITE, and has requested that these additional addresses and parcel numbers be added to the description of the PROJECT SITE within the AGREEMENT.
This legislation is to authorize the Director of the Department of Development to (1) amend the AGREEMENT for the first time to reduce the proposed capital expenditure investment from $50.35 million to $28.88 million, with approximately $3.97 million in real property improvements; (2) reduce the proposed job creation goal from 37 new full-time permanent positions to 30; (3) reduce the estimated associated annual payroll for those jobs from $1.3 million to $1.16 million; (4) to add 2180 S. 3rd Street, Columbus, Ohio parcel number 010-115936, 2222 S 3rd Street, Columbus, Ohio 43207 parcel numbers 010-112239 and 010-217867, 2166 S. 3rd Street, Columbus, Ohio 43207 parcel number 010-112027, 2160 S. 3rd Street, Columbus, Ohio 43207 parcel number 010-112162 and parcel numbers - 010-112874, 010-102555, 010-112134, 010-112597, 010-113235, 010-296094 as additional addresses and parcel numbers to the PROJECT SITE; (5) to modify the dates of the construction of real property improvements from being expected to begin no later than September 2015 to begin no later than the end of December 2016; (6) to change the expected completion date for all real property improvements from December 2017 to December 2018; (7) to modify the term of the exemption from not to commence after 2018 nor extend beyond 2027 to not commence after 2019 nor extend beyond 2028.
This legislation is being presented as an emergency measure in order for this amendment to be legislated in as expedient manner as possible so that this amendment to the AGREEMENT can be executed and ensure that ENTERPRISE remains in compliance with the terms of the AGREEMENT.
FISCAL IMPACT: No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to amend the Enterprise Zone Agreement with Hirschvogel Incorporated for the first time to change the total proposed capital expenditure investment from $50.35 million to $28.88 million, the new job creation goal from 37 full-time permanent positions to 30, the estimated annual payroll for those new positions from $1.3 million to $1.16 million, add additional addresses and parcel numbers to the project site, state that the construction on the improvements is expected to begin no later than the end of December 2016 and that all improvements are expected to be completed by the end of December 2018, and that no real property exemption would commence after 2019 nor extend beyond 2028; and to declare an emergency.
Body
WHEREAS, the City of Columbus (CITY) entered into an Enterprise Zone Agreement (the “AGREEMENT”) with Hirschvogel Incorporated (“ENTERPRISE”), approved by Columbus City Council (“COUNCIL”) on April 20, 2015 by Ordinance No. 0832-2015 with this AGREEMENT made and entered into effective August 24, 2015; and
WHEREAS, the AGREEMENT granted a 75%/10-Year abatement on real property improvements; and
WHEREAS, the incentive was granted in consideration of an approximate $50.35 million investment with approximately $14.7 million in new construction and real property improvements, the creation of 37 new full-time permanent positions with an annual payroll of approximately $1.3 million related to the expansion of its North America facility by adding approximately 65,000 square feet of additional manufacturing and machining space to its 145,821 square-foot operation located at 2230 S. 3rd Avenue, Columbus, OH 43207, at parcel numbers 010-112529, 010-112530, 010-112727, 010-112778, 010-113245 and 010-113324, within Columbus City School District and within the City of Columbus Enterprise Zone; and
WHEREAS, the AGREEMENT stated that construction on the improvements (the “PROJECT”) was expected to begin no later than the end of September 2015 and that all real property improvements were expected to be completed by December 2017 and that no real property exemption was to commence after 2018 nor extend beyond 2027; and
WHEREAS, in a letter from the GRANTEE received by the CITY in July 2016, the ENTERPRISE indicated that company’s expansion plans were realigned and restructured with a new strategic growth plan; therefore, the aforementioned capital expenditure investment along with the proposed new job creation were readjusted to correspond with this new strategic growth plan. The ENTERPRISE indicated that the expansion will move forward, but with the following parameters: the capital expenditures investment will be reduced from $50.35 million to $28.88 million, with approximately $3.97 in real property improvements, and $24.91 million in land acquisition costs, machinery and equipment, reduction of the job creation goal from 37 new full-time permanent positions to 30, reduction of the estimated annual payroll for those new positions from $1.3 million to $1.16 million, and the retention of 322 jobs. In addition, the ENTERPRISE requested that the following addresses - 2180 S. 3rd Street Columbus, Ohio 43207 parcel number 010-115936, 2222 S. 3rd Street, Columbus, Ohio parcel numbers 010-112239 & 010-217867, 2166 S. 3rd Street, Columbus, Ohio parcel number 010-112027, 2160 S. 3rd Street, Columbus, Ohio 43207 parcel number 010-112162 and parcel numbers - 010-112874, 010-102555, 010-112134, 010-112597, 010-113235, 010-296094 be added to the description of the PROJECT SITE within the AGREEMENT; and
WHEREAS, the letter also requested that the AGREEMENT be modified to state that the PROJECT is expected to begin no later than the end of December 2016 and that all improvements are expected to be completed by December 31, 2018 and that no real property exemption would commence after 2019 nor extend beyond 2028; and
WHEREAS, an amendment to the AGREEMENT is now needed to revise the PROJECT by reducing the proposed capital expenditures investment from $50.35 million to $28.88 million, the proposed job creation goal from 37 new full-time permanent positions to 30, the estimated annual payroll for those new positions from $1.3 million to $1.16 million, add 2180 S. 3rd Street, Columbus, Ohio 43207, 2222 S. 3rd Street, Columbus, Ohio 43207, 2166 S. 3rd Street, Columbus, Ohio 43207, 2160 S. 3rd Street, Columbus, Ohio 43207 and parcel numbers - 010-112874, 010-102555, 010-112134, 010-112597, 010-113235, 010-296094 as additional addresses and parcel numbers to the PROJECT SITE as described in the AGREEMENT, and state that the PROJECT is expected to begin no later than the end of December 2016 and that all real property improvements are expected to be completed by December 31, 2018, and that no real property exemption would commence after 2019 nor extend beyond 2028; and
WHEREAS, an emergency exists in the usual daily operation of the Columbus Department of Development in that it is immediately necessary to seek an amendment to the AGREEMENT with Hirschvogel Incorporated and to revise the scope of the project related to the ENTERPRISE’s capital expenditure investment, job creation goal, to add additional addresses and parcel numbers to the PROJECT SITE as described in the AGREEMENT, to modify the commencement and completion dates as well to revise the dates for which the abatement would begin and end; thereby preserving the public health, peace, property and safety, NOW, THEREFORE
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That the Director of the Department of Development is hereby authorized to amend the Enterprise Zone Agreement with Hirschvogel Incorporated (1) to change the total estimated capital expenditure investment from $50.35 million to $28.88 million, which includes approximately $3.97 million in real property improvements; (2) reduce the proposed job creation goal from 37 new full-time permanent positions to 30; (3) reduce the estimated annual payroll for those new positions from $1.3 million to $1.16 million; (4) to add 2180 S. 3rd Street, Columbus, Ohio parcel number 010-115936, 2222 S. 3rd Street, Columbus, Ohio parcel numbers 010-112239 and 010-217867, 2166 S. 3rd Street, Columbus, Ohio parcel number 010-112027, 2160 S. 3rd Street, Columbus, Ohio parcel number 010-112162, and parcel numbers - 010-112874, 010-102555, 010-112134, 010-112597, 010-113235, 010-296094 to the PROJECT SITE as described in the AGREEMENT; (5) to modify the dates of the construction of real property improvements from being expected to begin no later than September 2015 to begin no later than the end of December 2016; (6) to change the expected completion date for all real property improvements from December 2017 to December 2018, (7) to modify the term of the exemption from not to commence after 2018 nor extend beyond 2027 to not commence after 2019 nor extend beyond 2028.
SECTION 2. That this FIRST AMENDMENT to the City of Columbus Enterprise Zone Agreement be signed Hirschvogel Incorporated within ninety (90) days of passage of this ordinance, or this ordinance and the incentive authorized herein shall be null and void.
SECTION 3. That for reasons stated in the preamble hereto, which is hereby made a part hereof, the ordinance is hereby declared to be an emergency measure and shall take effect and be in force from and after its passage and approval by the Mayor or ten days after the passage if the Mayor neither approves nor vetoes the same.