Explanation
BACKGROUND: This legislation will dissolve the Enterprise Zone Agreement with Mohawk Carpet Distribution LP (the "EZA"). Mohawk Carpet Distribution LP is a subsidiary of Mohawk Industries, Inc. ("Mohawk").
Mohawk's Attorney sent a letter to the Economic Development Division, dated August 22, 2006, which states that in the past 18 months Mohawk experienced a dramatic market downturn in the central Ohio area and will be unable to continue participation in the Enterprise Zone Agreement.
Columbus City Council approved the EZA by Ord. No. 2366-2003, adopted on November 3, 2003. The EZA was entered into on March 15, 2004 and provided for a 75%/10-year tax abatement (2005-2014) on real property improvements, the construction of a 350,000 square foot distribution facility, the retention of 100 existing jobs and the creation of 50 new jobs over a five year period, of which 10 jobs were to have been created by December 31, 2005. The facility has been built and the real and personal property investment satisfied. The project has created no jobs to date, however.
The EZA will be dissolved upon approval of this legislation. Mohawk has not commenced taking tax exemptions under the EZA and thus there are no forgone taxes.
The present legislation will also rescind Ord. No. 396-2006, approved by Columbus City Council on March 13, 2006, which authorized modifying the EZA by adding FED ONE Properties VI, LLC, owner of the real property at the project site. FED ONE had been inadvertently omitted in drafting the EZA. The City did not move forward with executing an amended agreement, however, due to problems that emerged related to lack of job creation and reporting.
This legislation is presented as an emergency measure in order to meet the deadline under state law for City Council to vote on TIRC recommendations.
FISCAL IMPACT: No funding is required for this legislation.
Title
To dissolve the Mohawk Carpet Distribution LP Enterprise Zone Agreement; to rescind Ordinance 0396-2006; 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, Columbus City Council approved an Enterprise Zone Agreement with Mohawk Carpet Distribution LP (the "EZA") by Ord. No. 2366-2003, adopted on November 3, 2003 and entered into the EZA on March 15, 2004; and
WHEREAS, the EZA grants a 75%/10 year abatement real property abatement; and
WHEREAS, the EZA requires Mohawk to invest $18 million, retain 100 jobs and create new 50 jobs over 5 years, of which 10 new jobs were required by December 31, 2005; and
WHEREAS, Columbus City Council authorized an amendment to the EZA on March 13, 2006, by Ord. No. 396-2006, however the City never moved forward with executing an amended agreement due to the emergence of problems job creation and reporting, and the City now desires to rescind Ord. No. 396-2006; and
WHEREAS, Mohawk did not meet the job creation requirement for 2005 and has stated in writing that it believes it will not be able to achieve the anticipated job numbers and will be unable to continue participation in the EZA; and
WHEREAS, the City desires to dissolve the EZA given that Mohawk believes it will not be able to create jobs locally and has said that it will be unable to continue participation in the EZA; 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 the TIRC's recommendations to comply with the sixty (60) day deadline for City Council action imposed by imposed by R.C. Section 5709.85, all for the preservation of 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 Enterprise Zone Agreement with Mohawk Carpet Distribution LP, rescinds Ord. No. 396-2006, and authorizes the Director of Development to notify as necessary the state and local authorities.
Section 2. 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.