Explanation
BACKGROUND: Columbus City Council (Council), by Ordinance 0684-2010, passed May 10, 2010, authorized the City of Columbus (City) to enter into an Enterprise Zone Agreement (the Agreement) with 3MX Partners, LLC (Enterprise) for a tax abatement of seventy-five percent (75%) for a period of ten (10) years in consideration of $2,200,000 in real property investment to renovate a vacant commercial building of approximately 13,000 square feet located at 495 East Main Street in Columbus, Ohio and within the City of Columbus Enterprise Zone (Zone #023). Enterprise was to create seven (7) new permanent full-time jobs within three (3) years following the execution of the agreement with a payroll of $314,900. The project was expected to begin in July 2010 with all real property improvements expected to be completed by December 31, 2010. No exemption or credit was to commence prior to tax year 2012 nor to extend beyond tax year 2021. The Agreement was made and entered into to be effective June 3, 2010 (EZA# 023-10-04).
The 2011 Columbus Tax Incentive Review Council (TIRC) reviewed the 3MX Partners, LLC Enterprise Zone project on August 18, 2011. It was reported to the TIRC that the project had provided incomplete annual reporting information and so was in a state of non-compliance. Additionally, just prior to the TIRC, it was reported to the City by the Franklin County Auditor that Enterprise was not the owner of record of the project site, as that following the purchase of the project site in April 2010 (date of conveyance April 21, 2010), Enterprise in turn conveyed the site to the Columbus-Franklin County Finance Authority on May 18, 2010. Being that the execution date of the Agreement was June 3, 2010, the question put forth was (1) is the Agreement valid being that Enterprise was not the owner of the project site at the time of Agreement execution, and (2) would new ownership have an interest in assuming the Agreement should that be a possibility.
The TIRC recommended that a letter be sent to the new ownership entity requesting that a meeting be held within 30 days of receipt of the letter to discuss interest in assuming the Agreement by the new ownership entity; if interested in assumption then full reporting must be made within 30 days of that meeting and that City staff will proceed with the assumption process; if no interest then dissolve the Agreement. A meeting was held within the first 30-day window and the new ownership entity expressed an interest in assumption, if possible. Additionally, full reporting was made within the second 30-day window. However, upon consultation with the office of the Columbus City Attorney, it is the opinion of the City Attorney that the Agreement is not valid and so no assumption is possible. As a matter of record, this legislation seeks to dissolve Agreement.
This legislation is presented as an emergency measure in order for this dissolution to be legislated prior to the end of 2011 so that the dissolution of the Agreement can be reported to the necessary local and state agencies prior to the end of calendar year 2011.
FISCAL IMPACT: No funding is required for this legislation.
Title
To dissolve the Enterprise Zone Agreement between the City of Columbus and 3MX Partners, LLC; to direct the Director of the Department of Development to notify as necessary the local and state tax authorities; and to declare an emergency.
Body
WHEREAS, the Columbus City Council approved the Enterprise Zone Agreement with 3MX Partners, LLC (the "EZA") on May 10, 2010 by Ordinance 0684-2010 and entered into effective June 3, 2010; and
WHEREAS, the EZA granted 3MX Partners, LLC a 75%/10-Year abatement on real property investment; and
WHEREAS, the EZA committed 3MX Partners to invest $2,200,000 in real property improvements and create 7 permanent full-time jobs with a commensurate payroll of $314,900, related to the renovation of a vacant commercial building of approximately 13,000 square feet located at 495 East Main Street; and
WHEREAS, the Tax Incentive Review Council (the "TIRC") met on August 18, 2011 and it was reported then that the project had provided incomplete annual reporting information and so was in a state of non-compliance; and
WHEREAS, it was also reported to the TIRC that just prior to the TIRC meeting it was reported to the City by the Franklin County Auditor that 3MX Partners, LLC was not the owner of record of the project site, as that following the purchase of the project site in April 2010 (date of conveyance April 21, 2010), 3MX Partners, LLC in turn conveyed the site to the Columbus-Franklin County Finance Authority on May 18, 2010; and
WHEREAS, the question was put forth to the TIRC that (1) is the EZA valid being that 3MX Partners, LLC was not the owner of the project site on the date the EZA was executed, and (2) would new ownership have an interest in assuming the EZA should that be a possibility; and
WHEREAS, the TIRC recommended that a letter be sent to the new ownership entity requesting that a meeting be held within 30 days of receipt of the letter to discuss interest in assuming the EZA by the new ownership entity; if interested in assumption then full reporting must be made within 30 days of that meeting and that City staff will proceed with the assumption process; if no interest then dissolve the EZA; and
WHEREAS, a meeting was held within the first 30-day window and the new ownership entity expressed an interest in assumption, if possible. Additionally, full reporting was made within the second 30-day window; and
WHEREAS, that upon consultation with the office of the Columbus City Attorney, it is the opinion of the City Attorney that the EZA is not valid and so no assumption is possible. As a matter of record, this legislation seeks to dissolve the Agreement.
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 dissolution to be legislated prior to the end of 2011 so that the dissolution of the EZA can be reported to the necessary local and state agencies prior to the end of calendar year 2011, 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 Columbus City Council hereby dissolves the 3MX Partners, LLC Enterprise Zone Agreement (Agreement Number 023-10-04) which applies a 75%/10-year tax abatement to parcel number 010-017929 within the City of Columbus Enterprise Zone as of June 3, 2010.
Section 2. That the Director of Development is hereby directed to notify the necessary local and state agencies of any changes to the 3MX Partners, LLC Enterprise Zone Agreement.
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.