Explanation
BACKGROUND: The AmerisourceBergen Drug Corporation Enterprise Zone Agreement was authorized by City Council on September 16, 2002 and was entered into effective July 14, 2003. City Council approved an amendment to The AmerisourceBergen Drug Corporation Enterprise Zone Agreement on December 6, 2004, which added The Fifth Third Leasing Company to the Agreement and allowed the personal property exemptions granted to the AmerisourceBergen Drug Corporation under the Enterprise Zone Agreement to extend to personal property leased from the Fifth Third Leasing Company and/or any assignee or successor lessor subsequently identified in writing to the City's Director of Development. The AmerisourceBergen Drug Corporation Enterprise Zone Agreement as amended (the "EZA"), provides for a 75%/10-year tax abatement on real property improvements and new personal property based on an investment of $43,275,000, including approximately $19.5 million in personal property. The project included the construction of a 314,000 square foot new facility at 6305 LaSalle Drive in the Rickenbacker area. The construction was complete in 2003 and the tax exemptions commenced in 2004. The jobs goal under the EZA is 200 jobs retained and 64 new jobs created by July 2006 (a total of 264 jobs). AmerisourceBergen has satisfied the investment goal but is short of the job creation goal. As of July 2007, 200 jobs had been retained and 17 new jobs created, with recruitment underway in July to fill 2 new job openings.
The Tax Incentive Review Council (TIRC) recommended on August 21, 2007 to amend the EZA to reduce the job creation requirement from 64 jobs to 19 jobs, to reduce the corresponding payroll commitment and to eliminate the personal property tax abatement for 2008, which is the final year for personal property tax in Ohio. This legislation will authorize amendment of the EZA to reflect the TIRC recommendation. It is anticipated that the company will be able to be maintain good compliance in future years with the reduced job creation requirement. The loss of the 2008 personal property tax abatement is estimated to cost the company in the range of $45-50,000. There will be no change in the retention requirement of 200 jobs. The real property tax abatement is not modified by this amendment and is expected to run through 2013.
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 AmerisourceBergen Drug Company and The Fifth Third Leasing Company to reduce the job creation requirement to 19 jobs, with a commensurate reduction in the payroll requirement, and to eliminate the personal property tax abatement for 2008; and to declare an emergency.
Body
WHEREAS, the Enterprise Zone Agreement with AmerisourceBergen Drug Corporation was approved by the Columbus City Council on September 16, 2002 by Ord. No. 1350-02 and entered into effective July 14, 2003; and
WHEREAS, the Enterprise Zone Agreement with AmerisourceBergen Drug Corporation was subsequently amended to include The Fifth Third Leasing Company by Ord. No. 2046-04, approved by City Council on December 6, 2004 (the "EZA"); and
WHEREAS, the EZA provides for a 75%/10-year tax abatement on real property improvements and new personal property, requires project investment of $43,275,000, including approximately $19.5 million in new personal property and requires the retention of 200 jobs and the creation of 64 new jobs; and
WHEREAS, the investment goal and the job retention goals of the EZA have been attained but job creation has fallen short, with only 17 jobs created as of July 2007, plus 2 new open positions, compared to the job creation goal of 64 jobs; and
WHEREAS, the Tax Incentive Review Council (the "TIRC") has recommended that the City amend the EZA to reduce the job creation requirement from 64 jobs to 19 jobs, to make a commensurate reduction in the payroll requirement for the new jobs, and to eliminate the personal property tax abatement for 2008, which is the final year for personal property tax in Ohio; and
WHEREAS, the City desires to amend the EZA to reflect the TIRC's recommendations; and
WHEREAS, an emergency exists if the usual daily operation of the Department of Development, in that it is immediately necessary to take action on the TIRC's recommendations to comply with the sixty (60) day deadline for City Council action that R.C. Section 5709.85 imposes and to preserve the public health, property, safety and welfare; 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 AmerisourceBergen Drug Corporation and The Fifth Third Leasing Company to reduce the job creation requirement from 64 jobs to 19 jobs, to make a commensurate reduction in the payroll requirement for the new jobs, and to eliminate the personal property tax abatement for 2008
Section 2. For the reasons stated in the preamble hereto, which is made a part hereof, this Ordinance is declared to be an emergency measure and shall take effect from and after its passage and approval by the Mayor, or ten (10) days after passage if the Mayor neither approves nor vetoes this Ordinance.