Explanation
BACKGROUND: Columbus City Council (Council), by Ordinance No. 1212-2007, passed July 23, 2007, authorized the City to enter into a Community Reinvestment Area Agreement (CRA Agreement) with Whirlpool Corporation (Enterprise), Penske Logistics (Employer) and DB RREEF US Properties LLC (Owner) for a tax abatement of fifty percent (50%) for a period of fifteen (15) years and a Job Creation Tax Credit Agreement (JCTC Agreement) with Enterprise and Employer for a tax incentive of sixty-five percent (65%) for a period of seven (7) years in consideration of a $46,200,000 investment in real property improvements and the creation of 301 permanent full-time jobs related to the construction of a new 1,560,000 square foot facility at 1912 London-Groveport Road, consisting of all or part of parcel numbers 495-234526, 495-234996, and 152-001755 in Columbus, Ohio and within the Rickenbacker Community Reinvestment Area. The actual physical address of the project site is 6241 Shook Road, Lockbourne Ohio, 43127 on parcel numbers 495-286103 and 495- 287287 however the abatement is applied only to parcel number 495-286103. The CRA Agreement was made and entered into to be effective February 26, 2008 (Agreement #08-001 within CRA #049-18000-14). The JCTC Agreement was made and entered into to be effective March 13, 2008. These Agreements were subsequently authorized by Council to be amended for the first time for the purpose of replacing Penske Logistics as Employer and party to both Agreements with Kenco Logistic Services, LLC as Employer and party to both Agreements by Ordinance No. 1868-2008, passed December 1, 2008.
The 2010 Columbus Tax Incentive Review Council (TIRC) reviewed the Whirlpool Corporation, Kenco Logistic Services, LLC & DB RREEF US Properties LLC Community Reinvestment Area project on August 19, 2010, and recommended that the CRA Agreement be continued and that City send Enterprise a job creation warning letter and request a meeting with Enterprise to (1) determine the nature of the non-Whirlpool Corporation and non-Kenco Logistic Services, LLC jobs at the project site (were they created as a result of the project), (2) determine the total number of applicable jobs that will be able to be created and maintained at the project site, and (3) amend CRA Agreement to revise the job creation numbers and commensurate payroll and to allow the non-Whirlpool Corporation and non-Kenco Logistics Services, LLC jobs at the project site that were created as a result of the project to be counted towards the job creation goal of the CRA Agreement. Both City and Enterprise have been compliant with the requests of the TIRC.
This legislation seeks to authorize amendment of the CRA Agreement to amend the job creation requirements as set forth in the CRA Agreement to create 200 permanent full-time jobs with a commensurate payroll of $5,609,426 by 2013. It is anticipated that the company will be able to maintain good compliance in future years with the revised created job level requirement. The terms of the Community Reinvestment Area tax abatement are not modified by this amendment and it is expected to run through 2024.
Additionally this legislation seeks to authorize amendment of the JCTC Agreement to amend the job creation requirements as set forth in the JCTC Agreement to create 200 permanent full-time jobs. The terms of the Job Creation Tax Credit are not modified by this amendment and it is expected to run through 2016.
Finally this legislation seeks to correctly identify the Owner and party to the CRA Agreement and so replace DB RREEF US Properties LLC as Owner and party to the CRA Agreement with D/P Rickenbacker LLC as Owner and party to the CRA Agreement.
This legislation is presented as an emergency measure in order for these amendments to be legislated prior to the end of 2010 so that the amendments to the Agreements can be reported to the necessary local and state agencies prior to the end of calendar year 2010.
FISCAL IMPACT: No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to amend the Community Reinvestment Area Agreement with Whirlpool Corporation, Kenco Logistic Services, LLC & DB RREEF US Properties LLC; to amend the Job Creation Tax Credit Agreement with Whirlpool Corporation & Kenco Logistic Services; and to declare an emergency. (AMENDED BY ORD. 1558-2014 PASSED 7/14/2014)
Body
WHEREAS, the Columbus City Council (Council) approved the Community Reinvestment Area Agreement with Whirlpool Corporation, Penske Logistics & DB RREEF US Properties LLC (the CRA Agreement) and the Job Creation Tax Credit Agreement with Whirlpool Corporation & Penske Logistics (the JCTC Agreement) on January 28, 2008 by Ordinance No. 0069-2008; and
WHEREAS, the CRA Agreement was made and entered into effective February 29, 2008 and the JCTC Agreement was made and entered into effective March 13, 2008; and
WHEREAS, the CRA Agreement grants a 50%/15-Year abatement on real property improvements and the JCTC Agreement grants a 65%/7-Year tax credit; and
WHEREAS, the Agreements in both or in part require the investment of $46,200,000 in real property improvements and the creation of 301 permanent full-time jobs at the new facility to be constructed at 1912 London-Groveport Road (actual current physical address of 6241 Shook Road, Lockbourne Ohio, 43127); and
WHEREAS, the Agreements were subsequently authorized by Council to be amended for the first time for the purpose of replacing Penske Logistics as Employer and party to both Agreements with Kenco Logistic Services, LLC as Employer and party to both Agreements by Ordinance No. 1868-2008, passed December 1, 2008; and
WHEREAS, the Tax Incentive Review Council (the "TIRC") met on August 19, 2010 and it was reported then that the project had exceeded the real property investment goal of the CRA Agreement but that job creation was falling short, with 124 jobs reported as created as of December 31, 2009, compared to the interim end-of-2009 job creation goal of 247; and
WHEREAS, the TIRC recommended that the CRA Agreement be continued and that City send Whirlpool Corporation a job creation warning letter and request a meeting with Whirlpool to (1) determine the nature of the non-Whirlpool and non-Kenco Logistic Services, LLC jobs at the project site (were they created as a result of the project), (2) determine the total number of applicable jobs that will be able to be created and maintained at the project site, and (3) amend CRA Agreement to revise the job creation numbers and commensurate payroll and to allow the non-Whirlpool and non-Kenco Logistics Services, LLC jobs at the project site that were created as a result of the project to be counted towards the job creation goal of the CRA Agreement; and
WHEREAS, as the City and Enterprise have been compliant with the recommendations of the TIRC, the City desires to amend the job creation requirements of the CRA Agreement; and
WHEREAS, as Whirlpool Corporation and Kenco Logistic Services, LLC are also both party to the JCTC Agreement, the City also desires to amend the job creation requirements of the JCTC Agreement; and
WHEREAS, as DB RREEF US Properties LLC is identified as the Owner of the real property and party to the CRA Agreement but has never held title to parcel number 495-286103 to which the abatement is applied, and as D/P Rickenbacker LLC is listed as the Owner of the property having assumed ownership of parcel number 495-286103 from Pizzuti Rickenbacker West on July 7, 2009, the City also desires to amend the listed Owner in the CRA Agreement; and
WHEREAS, an emergency exists in the usual daily operation of the Department of Development, in that it is immediately necessary to take action on this agreement in order for this amendment to be legislated prior to the end of 2010 so that this amendment to the Agreement can be reported to the necessary local and state agencies prior to the end of calendar year 2010, 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 Whirlpool Corporation, Kenco Logistic Services, LLC & DB RREEF US Properties LLC Community Reinvestment Area Agreement (CRA Agreement) to amend the job creation requirement as set forth in the CRA Agreement to the creation of 200 jobs with a commensurate new job payroll of $5,609,426 by 2013 and to allow the non-Whirlpool Corporation and non-Kenco Logistics Services, LLC jobs at the project site that were created as a result of the project to be counted towards the job creation goal of the CRA Agreement and to amend the listed Owner in the CRA Agreement to D/P Rickenbacker LLC.
Section 2. That the Director of the Department of Development is hereby authorized to amend the Whirlpool Corporation & Kenco Logistic Services, LLC Job Creation Tax Credit Agreement (JCTC Agreement) to amend the job creation requirements as set forth in the JCTC Agreement to create 200 permanent full-time jobs.
Section 3. 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 and be in force 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.