Explanation
BACKGROUND: The City with Franklin County, Confluence Community Authority, Crew SC Development Company, LLC, and Crew SC Stadium Company, LLC entered into a Development Agreement and First Amendment authorized by Ordinance No. 1730-2019 and Second Amendment authorized by Ordinance No. 1492-2021 (all three collectively and as may be amended further, the “EDA”). Under the EDA, the parties made commitments relating to the development of a new multi-purpose sports, entertainment, cultural and recreational facility (the “Stadium”), and a project containing mixed-use retail, entertainment, residential, hospitality, office and/or commercial uses (the “Mixed-Use Development” and together with the Stadium, the “Project”). In order to further implement the EDA, Ordinance No. 2545-2020, as amended by Ordinance No. 3265-2021 (together, the “TIF Ordinance”), was passed by City Council to establish a tax increment financing area over the Project (the “Stadium 41 TIF”). The non-school portion of the Stadium 41 TIF service payments deposited with the City are remitted to pay debt service related to the Project and other approved purposes (the “Obligations”) pursuant to the Tax Increment Financing and Cooperative Agreement dated February 23, 2021 (the “TIF Agreement”) by and among the City, the Confluence Community Authority, and Confluence Development LLC authorized by Ordinance No. 2571-2020. As market conditions changed significantly since entering into the TIF Agreement due to the subsequent economic impacts of the COVID-19 pandemic, which have delayed the Mixed-Use Development, Confluence Development LLC and the developer of the Mixed-Used Development have requested the City to amend the TIF Ordinance to remove the undeveloped real estate portion of the Mixed-Use Development, anticipated to be valued upon completion of a 690 unit multifamily residential development at approximately $86.25 million, from the Stadium 41 TIF to create a new tax increment financing area (the “Astor Park TIF”). The creation of the Astor Park TIF will allow for the collection of a full thirty years of service payments from the currently undeveloped Mixed-Use Development, which will ensure there are sufficient revenues available to repay the Obligations.
This Ordinance amends the TIF Ordinance and establishes the Astor Park TIF pursuant to R.C. Section 5709.41 to provide for a one-hundred percent (100%) exemption from real property taxation on improvements to the parcels within the Astor Park TIF for separate periods of not more than 30 years on each of the parcels. Annual service payments in lieu of taxes will be made by the owners of each parcel with respect to the improvements to the Astor Park TIF parcels. Columbus City Schools will receive, in the same manner as usual, all amounts that it would have received in real property taxes had this exemption not been granted. The applicable portion of the service payments will be distributed directly to Columbus City Schools. The remaining non-school portion of those service payments will be paid to the City for deposit into the appropriate TIF fund established by this Ordinance to then finance the Obligations. This Ordinance will also appropriate and authorize the Astor Park TIF service payments in accordance with the TIF Agreement, and this Ordinance will authorize an amendment to the TIF Agreement for those purposes.
FISCAL IMPACT: No funding is required for this legislation. The City is foregoing one-hundred percent (100%) of the real property tax revenue that it would have received from development of the Astor Park TIF parcels (tax revenue that is already foregone under the existing Stadium 41 TIF). Instead, the non-school portion of that revenue will be diverted to the new TIF fund.
EMERGENCY JUSTIFICATION: An emergency exists in the usual daily operation of the Department of Development in that it is immediately necessary to amend the Stadium 41 TIF, create the new Astor Park TIF, and authorize the Director to enter into an amendment to the Tax Increment Financing and Cooperative Agreement dated February 23, 2021, which will allow the parties to promptly close on the refinancing of portions of the project, which such refinancing will enable the Mixed-Use Development to begin construction thereby enabling the provision of workforce housing units to which there is an undersupply within the City, all for the immediate preservation of the public health, peace, property, and safety.
Title
To amend Ordinance No. 2545-2020, as previously amended by Ordinance No. 3265-2021, by removing Franklin County Tax ID Parcel Nos 010-303975, 010-300555, and 010-300556 owned by Confluence Development LLC from the Stadium 41 TIF; to declare the improvements to those parcels to be a public purpose and exempt from real property taxation pursuant to R.C. 5709.41 to create the new Astor Park TIF; to require the owners of those parcels to make service payments in lieu of taxes; to require the distribution of the applicable portion of those service payments to the Columbus City Schools; to establish an urban redevelopment tax increment equivalent fund for the deposit of the remainder of those service payments; to appropriate and authorize the expenditure and transfer of revenues deposited in the aforementioned Astor Park TIF fund; to authorize the Director of the Department of Development to enter into an amendment to the Tax Increment Financing and Cooperative Agreement dated February 23, 2021 by and among the City, the Confluence Community Authority, and Confluence Development LLC to provide those appropriated revenues to the Confluence Community Authority for certain obligations thereunder; and to declare an emergency.($0.00)
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WHEREAS, the City is engaged in urban redevelopment with Franklin County, Confluence Community Authority, Crew SC Development Company, LLC, and Crew SC Stadium Company, LLC, by entering into a Development Agreement and First Amendment authorized by Ordinance No. 1730-2019 and Second Amendment authorized by Ordinance No. 1492-2021 (all three collectively and as may be amended further, the “EDA”); and
WHEREAS, the EDA provides for among other things the development of a new multi-purpose sports, entertainment, cultural and recreational facility (the “Stadium”) and a project containing mixed-use retail, entertainment, residential, hospitality, office and/or commercial uses (the “Mixed-Use Development” together with the Stadium, the “Project”); and
WHEREAS, pursuant to the EDA in order for the City to support the development of the Project with tax increment financing under R.C. Sections 5709.41, 5709.42 and 5709.43 (collectively, the “TIF Statutes”), City Council passed Ordinance No. 2545-2020, as amended by Ordinance No. 3265-2021 (together, the “TIF Ordinance”) declaring the improvements to the Project parcels to be a public purpose (the “Stadium 41 TIF”); and
WHEREAS, as contemplated in the EDA, Ordinance No. 2571-2020 authorized the Director of the Department of Development to enter into the Tax Increment Financing and Cooperative Agreement dated as of February 23, 2021 (the “TIF Agreement”) with the Confluence Community Authority and Confluence Development LLC to provide for the remittance of the non-school portion of the Stadium 41 TIF service payments to the Confluence Community Authority to secure a loan from the state and/or development bonds issued for the Project (the “Obligations”); and
WHEREAS, as market conditions changed significantly since entering into the TIF Agreement due to the subsequent economic impacts of the COVID-19 pandemic, which have delayed the Mixed-Use Development, Confluence Development LLC and its developer of the Mixed-Use Development have requested the City to amend the TIF Ordinance to remove certain real estate associated with the anticipated 690-unit multifamily residential portion of the Mixed-Use Development, estimated to be valued at approximately $86.25 million upon completion, from the Stadium 41 TIF (being the real estate identified as Franklin County Tax ID Parcel Nos 010-303975, 010-300555, and 010-300556, being the “Parcels” and individually, a “Parcel”) to create a new tax increment financing area (the “Astor Park TIF”); and
WHEREAS, the TIF Statutes authorize the legislative authority of a municipal corporation engaged in urban redevelopment, by ordinance, to declare the improvements to certain parcels of real property located within the municipal corporation, and for which it held fee title, to be a public purpose and exempt from taxation, require the owner of each parcel to make service payments in lieu of taxes, provide for the distribution of the applicable portion of those service payments in lieu of taxes to the subjected school district(s), establish an urban redevelopment tax increment equivalent fund for the deposit of the remainder of the service payments in lieu of taxes and payments from such TIF fund; and
WHEREAS, pursuant to R.C. Section 5709.41, which requires the City to hold fee title to the Parcels prior to enacting this Ordinance, the City held fee title to the Parcels (or parent parcels) in 2020 via quit-claim deeds recorded with the Franklin County Recorder’s Office as Instrument Nos. 202011120179454 and 202011120179455; and
WHEREAS, this Council has determined that it is necessary and appropriate and in the best interest of the City to exempt from taxation one hundred percent (100%) of the improvements to each of the Parcels as permitted and provided for in the TIF Statutes for separate periods of up to thirty (30) years for each of the Parcels and to simultaneously direct and require the current and future owner(s) of each of the Parcels (each such owner individually, an “Owner,” and collectively, the “Owners”) to make annual service payments in lieu of taxes, including any penalties and interest (collectively, the “Service Payments”), in the same amount as they would have made real property tax payments but for the exemption provided by this Ordinance; and
WHEREAS, the City has determined that a portion of the Service Payments shall be paid directly to the Columbus City School District (the “School District”) in an amount equal to the real property taxes that School District would have been paid if the improvement to each of the Parcels located within that School District had not been exempt from taxation pursuant to this Ordinance; and
WHEREAS, pursuant to R.C. Section 5709.43(B), this Council has determined to establish an urban redevelopment tax increment equivalent fund (the “TIF Fund”) in which there shall be deposited the remaining non-school Service Payments distributed to the City as provided herein; and
WHEREAS, notice of this proposed Ordinance has been delivered to the Board of Education of the School District in accordance with and within the time periods prescribed in R.C. Sections 5709.41 and 5709.83; and
WHEREAS, it is necessary and appropriate to authorize the City to enter into the first amendment to the TIF Agreement (the “First Amendment”) to allow for the non-school Service Payments to be pledged, in additional to the service payments in lieu of taxes from the Stadium 41 TIF already pledged, to ensure there are sufficient revenues available to repay the Obligations; and
WHEREAS, it is now necessary to appropriate and authorize the expenditure and transfer of the non-school Service Payments and any monies deposited into the TIF Fund to the Confluence Community Authority, or its designee, pursuant to the TIF Agreement and the First Amendment; and
WHEREAS, an emergency exists in the usual daily operation of the Department of Development in that it is immediately necessary to amend the Stadium 41 TIF, create the new Astor Park TIF, and authorize the Director to enter into an amendment to the Tax Increment Financing and Cooperative Agreement dated February 23, 2021, which will allow the parties to promptly close on the refinancing of portions of the project, which such refinancing will enable the Mixed-Use Development to begin construction thereby enabling the provision of workforce housing units to which there is an undersupply within the City, all for the immediate preservation of the public health, peace, property, and safety., NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. TIF Ordinance Amendment. That this Council finds and determines that amending the TIF Ordinance is in furtherance of and supports the City’s engagement in urban redevelopment pursuant to the EDA. Exhibit B to Ordinance No. 2545-2020, as was previously repealed and replaced by Exhibit B to Ordinance No. 3265-2021, are both hereby repealed and replaced with Exhibit B2 attached hereto to remove the Parcels from the Stadium 41 TIF to add the Parcels to the new Astor Park TIF.
Section 2. Parcels of the Astor Park TIF. That the Parcels, as currently or subsequently configured, subject to this Ordinance are identified and depicted on Exhibit A. Pursuant to the TIF Statutes, the Parcels will be included in a new tax increment financing area known hereafter as the Astor Park TIF the boundaries of which shall correspond with the boundary of, and shall include, the Parcels.
Section 3. Parcels Ownership and Urban Redevelopment. That this Council finds that the City is engaged in urban redevelopment pursuant to the EDA first executed in 2019, and the City held fee title to each of the Parcels (or its parent parcel) in 2020 prior to passage of this Ordinances as such conveyances were authorized by Ordinance No. 2481-2020.
Section 4. Exemption. That pursuant to R.C. Section 5709.41, this Council hereby finds and determines that one-hundred percent (100%) of the increase in assessed value of each of the Parcels subsequent to the acquisition of each of the Parcels by the City (which increase in assessed value is hereinafter referred to as the “Improvement” as defined in R.C. Section 5709.41(A)) is hereby declared to be a public purpose and exempt from taxation for a period commencing on a Parcel-by-Parcel basis on January 1st of the tax year in which, for each such Parcel, at least an aggregate of One Hundred Fifty Thousand Dollars ($150,000) in true value of Improvement attributable to building value (but only after the issuance of a certificate of occupancy for one or more buildings on such Parcel) would appear on the tax list and duplicate for such tax year for each such Parcel were it not for the exemption granted by this Ordinance and ending for each such Parcel on the earlier of: (a) thirty (30) years after such commencement or (b) the date on which the Improvement ceases to be a public purpose, all in accordance with the requirements of the TIF Statutes (the “TIF Exemption”). The TIF Exemption provided by this Ordinance is subordinate to any exemption for a Parcel granted pursuant to R.C. Section 140.08 (hospital agencies), R.C. Sections 717.05 through 717.053 (municipal corporations), R.C. Section 3735.65 et. seq. (community reinvestment area), R.C. Section 5709.61 et. seq. (enterprise zone) and R.C. Section 5709.08 (government and public property), 5709.081 (public recreational facility used for athletic events), 5709.12 through 5709.121 (public or charitable purposes) (collectively, the “Authorized Superior Exemptions”). In accordance with R.C. Section 5709.911(B), by this duly enacted Ordinance, this Council provides its duly authorized written consent to any Authorized Superior Exemptions to the Parcels applied for after the TIF Exemption.
Section 5. Service Payments. Subject to the Authorized Superior Exemptions, that as provided in R.C. Section 5709.42, each Owner and collectively the Owners are hereby required to make the Service Payments with respect to the Improvement allocable to each Parcel to the Franklin County Treasurer or its designee on or before the final dates for payment of real property taxes. The Service Payments will be charged and collected in the same manner and in the same amount as the real property taxes that would have been charged and collected against that Improvement if it were not exempt from taxation pursuant to this Ordinance. The Service Payments, and any other payments with respect to each Improvement that are received in connection with the reduction required by R.C. Sections 319.302, 321.24, 323.152 and 323.156, as the same may be amended from time to time, or any successor provisions thereto as the same may be amended from time to time (the “Property Tax Rollback Payments”), will be deposited and distributed in accordance with this Ordinance.
Section 6. TIF Fund. That this Council establishes, pursuant to and in accordance with the provisions of R.C. Section 5709.43, the Astor Park Urban Redevelopment Tax Increment Equivalent Fund (the “Astor Park TIF Fund” or the aforesaid “TIF Fund”) into which the appropriate Service Payments and Property Tax Rollback Payments collected with respect to the Parcels and not required pursuant to this Ordinance to be distributed to the School District will be deposited to the City. The TIF Fund will be maintained in the custody of the City. The City may use amounts deposited into the TIF Fund only for the purposes authorized in the TIF Statutes and this Ordinance (as it may be amended). The TIF Fund will remain in existence so long as the Service Payments and Property Tax Rollback Payments are collected and used for the aforesaid purposes, after which time the TIF Fund will be dissolved and any surplus funds remaining therein transferred to the City's General Fund, all in accordance with R.C. Section 5709.43.
Section 7. Distributions; Payment of Costs. Pursuant to the TIF Statutes, the Franklin County Treasurer is requested to distribute the Service Payments and Property Tax Rollback Payments as follows:
a. To the School District, an amount equal to the amount the School District would otherwise receive as real property tax payments (including the applicable portion of any Property Tax Rollback Payments) derived from the Improvement to each Parcel if the Improvement had not been exempt from taxation pursuant to this Ordinance.
b. To the City, all remaining amounts for further deposit into the TIF Fund for payment of costs of urban redevelopment identified in the EDA, the TIF Agreement, and the First Amendment, including, without limitation, to pay debt charges on any securities of or loans undertaken by the Confluence Community Authority to pay or to reimburse financing costs or those costs of urban redevelopment related to the Project.
All distributions required under this Section are to be made at the same time and in the same manner as real property tax distributions.
Section 8. Further Authorizations. This Council hereby authorizes the Director of the Department of Development, the City Clerk, or other appropriate officers of the City (or each’s designee) to deliver a copy of this Ordinance to the Ohio Development of Development and to make such arrangements as are necessary and proper for collection of the Service Payments and Property Tax Rollback Payments. This Council further authorizes the Director of the Department of Development, the City Clerk, the City Attorney, or other appropriate officers of the City (or each’s designee) to prepare and sign all agreements and instruments and to take any other actions as may be appropriate to implement this Ordinance.
Section 9. First Amendment. That the Director of the Department of Development or his or her designee (the “Director”), on behalf of the City, is hereby authorized to enter into the First Amendment presently on file with the Department of Development, along with any changes or amendments thereto not inconsistent with this Ordinance and not substantially adverse to the City and which shall be approved by the Director and the City Attorney, provided that the approval of such changes and amendments thereto, and the character of those changes and amendments not being substantially adverse to the City, shall be evidenced conclusively by the execution and delivery thereof.
Section 10. Appropriation and Expenditure. That the Service Payments and Property Tax Rollback Payments to be deposited into the TIF Fund created by this Ordinance shall be deemed appropriated for the purposes set forth in the TIF Agreement and First Amendment and authorized to be expended therefrom in accordance with the TIF Agreement and First Amendment, and the City Auditor is authorized to make payments to the Confluence Community Authority or its designee(s), including its trustee, from the TIF Fund in accordance with the TIF Agreement and First Amendment upon order of the Director and that no order shall be drawn or money paid except by voucher, the form of which shall be approved by the City Auditor.
Section 11. City Fees. That the City Auditor is authorized to make annual transfers of $5,000 from the Service Payments and Property Tax Rollback Payments in the TIF Fund to the Business Tax Incentive Fund (Fund 2229), subject to the authorization of the Director, for the “City TIF Administrative Fee” in accordance with the TIF Agreement, First Amendment, and Ordinance No. 3169-2022, as amended by Ordinance No. 3449-2023.
Section 12. Account Codes. That the City Auditor is authorized to establish such accounting codes, as necessary, to make any accounting changes to revise the funding source for all agreements, contracts, or modifications associated with this Ordinance or the transactions contemplated by the TIF Agreement and First Amendment.
Section 13. Balances. That the City Auditor is authorized to transfer the unencumbered balance in a project account or subfund to the unallocated balance account within the same fund upon receipt of certification by the Director of the Department administering said project that the project has been completed and the monies are no longer required for said project.
Section 14. Effective Date. That for the reasons stated in the preamble hereto, which is hereby made a part hereof, this 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 passage if the Mayor neither approves nor vetoes the same.