Explanation
BACKGROUND: The need exists to enter into an Enterprise Zone Agreement with DSW Inc. and 4300 Venture 34910 LLC (lessor) and to enter into a Jobs Creation Tax Credit Agreement with DSW Inc. The Ohio Enterprise Zone law O.R.C. Section 5709.62 (C) and Jobs Creation Tax Credit law (O.R.C. Section 718.158) require the City to enter into a Council-approved agreement between the City and participating companies.
DSW Inc. (DSW) is one of the fastest growing retailers in the country. DSW currently operates 204 retail stores in 33 states with plans to open 200 more stores in the near future. In order to accommodate this growth, DSW needs to expand its current headquarters.
DSW is proposing to build a new headquarters in Columbus. This new location is currently being used as warehouse space and is located at 4030 East Fifth Avenue, approximately 100 yards from their current headquarters located at 4150 East Fifth Avenue. The proposed project will convert 147,000 square feet of current warehouse space into a new headquarters. The project will include an investment of $6,500,000 in real property improvements, an investment of $2,000,000 in personal property (machinery & equipment, furniture & fixtures, and stand-alone computers), the retention of 195 (one hundred ninety-five) full-time permanent jobs, and the creation of 75 (seventy-five) new full-time permanent jobs.
The Department of Development recommends a 75%/10 year Enterprise Zone tax abatement on real property improvements, a 75%/3 year Enterprise Zone tax abatement on personal property under the City's Enterprise Zone Program and a 65%/8 year Jobs Creation Tax Credit.
The Columbus Public School District has been advised of this project.
FISCAL IMPACT: No funding is required for this legislation.
Title
To authorize the Director of Development to enter into an agreement with DSW Inc. and 4300 Venture 34910 LLC (lessor) for a real estate tax abatement of 75% for a period of ten years and a personal property tax abatement of 75% for a period of three years; to enter into an agreement with DSW Inc. for a 65%/8 year Jobs Creation Tax Credit in consideration of a proposed $6,500,000 investment in real property improvements, the investment of $2,000,000 in personal property, the retention of 195 full-time permanent jobs and the creation of 75 full-time permanent jobs; and to declare an emergency. (AMENDED BY ORDINANCE 2057-2006 PASSED 12/04/06)
Body
WHEREAS, the Columbus City Council authorized the designation of the Enterprise Zone by legislation, Ordinance Number 779-85, dated April 22, 1985; and subsequently amended the Zone by Ordinance Nos. 2722-85 in 1986; 2080-89 in 1989; 1949-92, 2609-92 and 2249-92 in 1992; 1079-94 and 1228-94 in 1994; 2196-95 and 2817-95 in 1995; 533-99 in 1999; 1785-00 in 2000; 1464-02 in 2002; and 225-03 in 2003; and
WHEREAS, the Director of the Development Department of the State of Ohio determined that the Columbus Enterprise Zone as amended by the aforementioned Ordinances continued to contain the characteristics set forth in Section 5709.61(A) of the Ohio Revised and recertifed said Zone in 1986, December 20, 1989, September 28, 1992, October 22, 1992, December 17, 1992, May 31, 1994, June 24, 1994, June 16, 1995, October 5, 1995, December 19, 1995, April 1, 1999, September 25, 2000, January 27, 2003 and most recently on August 19, 2003 as an "urban jobs and enterprise zone" under Chapter 5709 of the Ohio Revised Code; and
WHEREAS, pursuant to Section 122.17 of the Ohio Revised Code, the State of Ohio is authorized to establish the Tax Credit Authority and to execute agreements with taxpayers of the State of Ohio for the purpose of granting these taxpayers job creation tax credits against their corporate franchise or income tax, which tax credits are provided to create new jobs in the State of Ohio; and
WHEREAS, legislative approval is contingent upon a Jobs Creation Tax Credit being granted by the State of Ohio; and
WHEREAS, pursuant to Section 718.15 of the Ohio Revised Code a municipal corporation is authorized to grant local income tax credits to taxpayers who have received tax credits from the State; and
WHEREAS, DSW Inc. and 4300 Venture 34910 LLC plan to build a new headquarters for DSW Inc. at 4030 East Fifth Avenue in Columbus, a location approximately 100 yards from the current headquarters of DSW Inc. located at 4150 East Fifth Avenue by converting the 147,000 square feet of warehouse space into the new headquarters for DSW Inc.; and
WHEREAS, DSW Inc. and 4300 Venture 34910 LLC agree to invest approximately $6,500,000 in real property improvements within the City and invest in approximately $2,000,000 in personal property (machinery & equipment, furniture & fixtures, and stand-alone computers) within the City; and
WHEREAS, DSW Inc. agrees to retain 195 (one hundred ninety-five) full-time permanent jobs and create 75 (seventy-five) new full time permanent jobs; and
WHEREAS, receiving these tax incentives from the State and the City is a critical factor in the decision of DSW Inc. and 4300 Venture 34910 LLC to go forward with the project in the City of Columbus; and
WHEREAS, it is required by law to enter into a formal and binding agreement in order to provide and obtain both Enterprise Zone and Jobs Creation Tax Credit tax incentives in the State and City; and
WHEREAS, the City desires to enter into such agreements with DSW Inc. and 4300 Venture 34910 LLC to foster economic growth; and
WHEREAS, an emergency exists in the usual daily operations of the Department of Development in that it is immediately necessary to enter into contract with DSW Inc. and 4300 Venture 34910 LLC to facilitate this development project for the preservation of public health, peace, property and safety, NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. That the City hereby finds and determines that the project will (1) create jobs in the State and City; (2) the project is economically sound and will benefit the people of the Stat and city by increasing opportunities for employment and strengthening the economy for the State and city; and (3) receiving the aforementioned tax incentives are a critical factor in the decision by DSW Inc. and 4300 Venture 34910 LLC to go forward with the project.
Section 2. That the Director of Development is hereby authorized to enter into (i) an Enterprise Zone Agreement with DSW Inc. and 4300 Venture 34910 LLC, and to provide therewith an exemption of seventy-five percent (75%) on real property improvements for a term of ten (10) tax years and an exemption of seventy-five percent (75%) on personal property investments for a term of three (3) tax years, and (ii) and Jobs Creation Tax Credit Agreement with DSW Inc. and to provide therewith a sixty-five percent (65%) Jobs Creation Tax Credit for a term of eight (8) tax years, in association with the project's proposed $8,500,000 investment, job retention, and job creation.
Section 3. That the City of Columbus Jobs Creation Tax Credit Agreement and Enterprise Zone Agreement must be signed by DSW Inc. within 90 days of passage of this ordinance, or the incentives authorized herein are null and void.
Section 4. 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.