Explanation
BACKGROUND: Columbus City Council (“COUNCIL”), by Ordinance No. 3015-2017, passed December 4, 2017, authorized the City of Columbus (“CITY”) to enter into an Enterprise Zone Agreement (the “AGREEMENT”) with 1086 North Fourth St. LS, LLC and Lykens Companies LLC (collectively, and hereinafter referred to as “ENTERPRISE”) for a tax abatement of seventy-five percent (75%) for a period of ten (10) consecutive years in consideration of a proposed total capital investment of roughly $5.45 million, which includes approximately $4.75 in real property improvements and another $300,000 in improvements for retail space, $200,000 in machinery and equipment, $200,000 in furniture and fixture to renovate and convert an old manufacturing facility (known as The Budd Dairy Building) consisting of approximately 40,451 sq. ft. into a new mixed-use Class A commercial office. The proposed mixed-use redevelopment contains approximately 35,000 sq. ft. +/- of new Class A office space, which will includes an Entrepreneurial center and a co-working space, and approximately 5,451 sq. ft. +/- of retail space located at 1086 N. 4th Street, Columbus, Ohio 43201, parcel number 010-009127 (the “PROJECT SITE”).
The “PROJECT” related to the AGREEMENT consisted of the development of the 35,000 sq. ft. Class A office space as it related to the aforementioned project. The ENTERPRISE committed to invest approximately $4.75 million of the proposed $5.45 million in real property improvements, on the development of the commercial office space. Lykens Companies LLC committed to be one of the office tenants and employer of record, and enter into a lease agreement with 1086 North Fourth St. LS, LLC (“land owner”) to expand and relocate its corporate headquarters (HQ) from 1020 Dennison Avenue, Suite 102 Columbus, Ohio 43201 to the proposed PROJECT SITE. Additionally, Lykens Companies LLC committed to retain 10 full-time employees with an annual payroll of approximately $410,000 and create 6 new full-time permanent positions with an estimated annual payroll of approximately $180,000 at the PROJECT SITE. The AGREEMENT was made and entered into effective March 2, 2018 (Agreement #023-18-03) with this PROJECT expected to begin first quarter of 2018 with all real property improvements expected to be completed by January 2019, with the abatement to begin no later than 2020 nor extend beyond 2029.
In a letter received by the Department of Development on June 24, 2021, and through ensuing correspondence, it was requested that the AGREEMENT be amended. Due to a number of factors related to construction, the project was not completed within the timeframe per the AGREEMENT, thus the improvements have no taxable value until tax year 2021, per the County Auditor, and if not amended, the term of the abatement would only be effective for nine (9) years instead of the allowable ten-year exemption term. Therefore, the ENTERPRISE is requesting that the AGREEMENT be amended to revise the abatement term window.
Additionally, COUNCIL, by Ordinance No. 3221-2018, passed March 13, 2019, authorized the Director of Development to establish a fee schedule that supports the Department’s administrative and project costs associated with administering Department programs with one of those fees being an Amendment Fee.
This legislation is to authorize the Director of the Department of Development to amend the AGREEMENT for the first time to (1) revise the allowable abatement term window from no real property exemption shall commence after 2020 nor extend beyond 2029 to no real property exemption shall commence after 2021 nor extend beyond 2030, and (2) add language requiring an Amendment Fee for future ENTERPRISE-initiated Amendments.
This legislation is being presented as an emergency measure in order for this amendment to be legislated in as expedient a manner as possible so that this amendment to the AGREEMENT can be executed and ensure that ENTERPRISE receive any future tax savings from the approved tax abatement.
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 1086 North Fourth St. LS, LLC and Lykens Companies LLC for the first time to (1) revise the allowable abatement term window from no real property exemption shall commence after 2020 nor extend beyond 2029 to no real property exemption shall commence after 2021 nor extend beyond 2030, and (2) add language requiring an Amendment Fee for future ENTERPRISE-initiated Amendments, and to declare an emergency.
Body
WHEREAS, the City of Columbus (“CITY”) entered into an Enterprise Zone Agreement (the “AGREEMENT”) with 1086 North Fourth St. LS, LLC and Lykens Companies LLC and was approved by Columbus City Council (“COUNCIL”) on December 4, 2017 by Ordinance No. 3015-2017 with this AGREEMENT made and entered into effective March 2, 2018; and
WHEREAS, the AGREEMENT granted a 75%/10-Year tax abatement on real property improvements; and
WHEREAS, the incentive was granted in consideration of a total capital investment of approximately $5.45 million, which includes $4.75 million in real property improvements and another $300,000 in improvements for retail space, $200,000 in machinery and equipment, $200,000 in furniture and fixture to renovate and convert an old vacant manufacturing facility (known as The Budd Dairy Building) consisting of approximately 40,451 sq. ft. into a new mixed-use Class A commercial office. The proposed mixed-use redevelopment will contain approximately 35,000 sq. ft. +/- of new Class A office space, which will include an Entrepreneurial center and a co-working space, and approximately 5,451 sq. ft. +/- of retail space at 1086 N. 4th Street Columbus, Ohio 43201, parcel number 010-009127 (“PROJECT SITE”); and
WHEREAS, the “PROJECT” related to the AGREEMENT consist of the development of the 35,000 sq. ft. Class A commercial office space as it relates to the aforementioned project. The ENTERPRISE will invest approximately $4.75 million of the proposed $5.45 million in real property improvements, on the development of the commercial office space. Lykens Companies LLC will be one of the office tenants and employer of record, and enter into a lease agreement with 1086 North Fourth St. LS, LLC to expand and relocate its corporate headquarters (HQ) from 1020 Dennison Avenue to the proposed project site. Additionally, ENTERPRISE will retain 10 full-time employees with an annual payroll of approximately $410,000 and create 6 new full-time permanent positions with an estimated annual payroll of approximately $180,000, to preserve or create employment opportunities within the Columbus Enterprise Zone, (hereinafter referred to as the "PROJECT") provided that the appropriate development incentives are available to support the economic viability of said PROJECT. The AGREEMENT was made and entered into effective March 2, 2018 (Agreement #023-18-03) with this PROJECT expected to begin first quarter of 2018 with all real property improvements expected to be completed by January 2019, with the abatement to begin no later than 2020 nor extend beyond 2029; and
WHEREAS, in a letter received by the Department of Development on June 24, 2021, and through ensuing correspondence, it was requested that the AGREEMENT be amended. Due to a number of factors related to construction, the project was not completed within the timeframe per the AGREEMENT, thus the improvements have no taxable value until tax year 2021, per the County Auditor, and if not amended, the term of the abatement would only be effective for nine (9) years instead of the allowable ten-year exemption term. Therefore, the ENTERPRISE is requesting that the AGREEMENT be amended to revise the abatement term window; and
WHEREAS, by Ordinance No. 3221-2018, passed by COUNCIL on March 13, 2019, authorized the Director of Development to establish a fee schedule that supports the Department’s administrative and project costs associated with administering Department programs with one of those fees being an Amendment Fee; and
WHEREAS, an amendment to the AGREEMENT is now needed to (1) revise the allowable abatement term window from no real property exemption shall commence after 2020 nor extend beyond 2029 to no real property exemption shall commence after 2021 nor extend beyond 2030, and (2) add language requiring an Amendment Fee for future ENTERPRISE-initiated Amendments; and
WHEREAS, an emergency exists in the usual daily operation of the Columbus Department of Development in that it is immediately necessary to seek a First Amendment to the AGREEMENT with 1086 North Fourth St. LS, LLC and Lykens Companies LLC for the purpose of (1) revising the allowable abatement term window from no real property exemption shall commence after 2020 nor extend beyond 2029 to no real property exemption shall commence after 2021 nor extend beyond 2030, and (2) add language requiring an Amendment Fee for future ENTERPRISE-initiated Amendments; thereby preserving the public health, peace, property and safety, 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 1086 North Fourth St. LS, LLC and Lykens Companies LLC to revise the allowable abatement term window from "no real property exemption shall commence after 2020 nor extend beyond 2029" to "no real property exemption shall commence after 2021 nor extend beyond 2030."
Section 2. That the Director of Development is hereby authorized to amend the final paragraph of Section 6 (Program Compliance, modification provision paragraph) of the AGREEMENT to state that “Any request from the ENTERPRISE to modify any of the terms of this AGREEMENT must be received by the CITY at least 90 days prior to the expiration date of the AGREEMENT and shall require the payment to the CITY by the ENTERPRISE or any other potential Grantee and AMENDMENT FEE in the amount of five hundred dollars ($500.00)."
Section 3. That this FIRST AMENDMENT to the City of Columbus Enterprise Zone Agreement be signed by 1086 North Fourth St. LS, LLC and Lykens Companies LLC within ninety (90) days of passage of this ordinance, or this ordinance and the incentive authorized herein shall be 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.