Explanation
BACKGROUND: The Tax Incentive Review Council (the "TIRC") recommended on August 25, 2006, that the City should amend the Enterprise Zone Agreement with The Trane Company and Millennium Court II LLC (the "EZA") to allow the jobs of the other tenant in the facility to be counted towards the job creation goal, providing that adequate annual reporting information on jobs and payroll is supplied to the City, and to require that if the project does not attain at least 75% of the job creation requirement as of December 31, 2007, the project's real property tax savings from tax years 2006 and 2007 will be repaid and the EZA will be dissolved and the 2007 tax year will be the final year of abatement.
Columbus City Council approved the EZA in December 2001 and it became effective on August 12, 2002. The Trane Company ("Trane") is the tenant and Millennium Ct II LLC is the owner of the real property. The project entailed $5 million to construct a new facility at 2300 CityGate Drive on the city's east side, $529,000 to acquire new machinery & equipment and an increase of $1.2 million in the average value of inventory. As of December 2005, the project had met the investment goals. Trane committed to retain 103 existing jobs and create 54 new jobs. Trane is owned by American Standard Companies Inc., a global corporation, headquartered in New Jersey, with employment of 61,500 and sales of over $10 billion in the U.S.
The tax abatement the EZA provided was 50% on the real property improvements for eight (8) years. However, in October 2005, City Council reduced the abatement to a term of seven (7) years (2003-2009) and also extended the job creation deadline to December 31, 2007. This was due to a lack of job creation and based on a recommendation by the TIRC in 2005. Although there is a second tenant in the facility that could potentially help to satisfy the EZA job requirements, to date this tenant has elected not to be identified (for security reasons) and to not report its jobs and payroll information to the City. As of December 2005 and August 2006, Trane's job creation continued to be zero (0) at the project site. Unfortunately, local management's flexibility to undertake initiatives that would add jobs is subject to decisions at corporate headquarters. The TIRC's recommendation this year would allow the jobs of the second tenant to be counted toward the job creation, provided that annual job and payroll information is reported to the City, and would retain the extended deadline of December 31, 2007 for the job creation. In order to avoid dissolution of the EZA after the 2007 tax year and repayment of the tax savings from the 2006 and 2007 tax years, the project will need to attain at least 75% of the job creation goal by December 31, 2007 (i.e, 41 created jobs in addition to the 103 retained jobs).
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 The Trane Company and Millennium Court II LLC to allow the jobs of the other tenant in the facility to be counted towards the job goal and to require that if the project does not attain at least 75% of the job creation requirement as of December 31, 2007, the project's real property tax savings from tax years 2006 and 2007 will be repaid and the EZA will be dissolved and the 2007 tax year will be the final year of abatement; and to declare an emergency.
Body
WHEREAS, the Columbus City Council approved an Enterprise Zone Agreement with The Trane Company ("Trane") and Millennium Court II LLC (Millennium") on December 18, 2001 by Ord. No. 2089-01 (the "EZA"); and
WHEREAS, the EZA, which was effective August 12, 2002, granted a 50%/8-year abatement on real property improvements; and
WHEREAS, the EZA requires $5 million to be invested in the construction of a new facility and $1.729 million to be invested in new personal property and the project had satisfied these investment levels as of December 2005; and
WHEREAS, Trane agreed to retain 103 existing jobs and to create 54 new jobs by the end of 2005, but due to the lack of progress in job creation and based on a 2005 recommendation from the Tax Incentive Review Council (the "TIRC"), the City amended the EZA by Ord. No. 1737-05, adopted October 26, 2005, to extend the time allowed for the job creation to December 31, 2007 and to reduce the tax abatement by one (1) year; and
WHEREAS, as of December 31, 2005, Trane had retained 103 jobs but still had not created any jobs at the project site; and
WHEREAS, the TIRC recommended on August 25, 2006, that the City should amend the EZA with Trane and Millennium to allow the jobs of a second tenant at the facility to be counted towards the job goal if adequate annual reporting on jobs and payroll is provided, and also to require that if the project does not attain at least 75% of the job creation requirement as of December 31, 2007, the project's real property tax savings from tax years 2006 and 2007 will be repaid and the EZA will be dissolved with the 2007 tax year as the final year of abatement; and
WHEREAS, the City concurs with the TIRC's recommendation and desires to amend the EZA accordingly; 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 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 Enterprise Zone Agreement with The Trane Company and Millennium Court II LLC to allow the jobs of other tenants in the facility to be counted towards the job goal if adequate annual reporting on jobs and payroll is provided, and to require that if at least 75% of the job creation requirement is not attained as of December 31, 2007, the project's real property tax savings from tax years 2006 and 2007 will be repaid and the Enterprise Zone Agreement will be dissolved with the 2007 tax year as the final year of abatement.
Section 2. That the Director of Development is hereby directed to notify the necessary local and state agencies of changes to the Enterprise Zone Agreement with The Trane Company and Millennium Court II LLC.
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.