Explanation
BACKGROUND: The need exists to enter a Job Creation Tax Credit Agreement with Hikma Pharmaceuticals USA Inc. (“Hikma”). The Ohio Tax Credit Legislation (Section 718.15 of the Ohio Revised Code) authorizing such agreements became effective January 14, 1993 and requires the City to enter a Council-approved agreement between the City and a participating company.
Founded in 1978 in Jordan, Hikma was founded by Samih Darwazah with the purpose to make high-quality medicines accessible to the people who need them. Based on the solid foundation they have built, they are continuing to transform the lives of the millions of people they serve. Hikma focuses on three high quality businesses (Injectables, Branded, and Hikma Rx) within three core regions of the world (North America, MENA, and Europe) with a leading market position. With 29 manufacturing plants spread across 10 different countries, Hikma has been able to create a large portfolio of over 800+ products. With their current U.S. Headquarters located in Berkeley Heights, NJ, Hikma has three locations in Ohio. The company has a manufacturing and R&D facilities in both Bedford and Columbus, and a Distribution facility in Lockbourne. All coming together to make Hikma the 3rd largest manufacturer of Injectables in the U.S. and the largest manufacturing employer in Columbus.
Hikma is proposing to invest a total capital expenditure of approximately $215,700,000.00, which includes $92,000,000.00 in real property improvements and $123,700,000.00 in machinery & equipment. With this investment, Hikma is proposing to construct a 131,000 square-foot pharmaceutical storage and distribution facility as well as a 40,000 square-foot expansion to their existing facility at 1809 Wilson Road, Columbus, Ohio 43228, Parcel No. 560-138818 (the “Project Site”), to increase pharmaceutical manufacturing, increase storage and distribution, to expand R&D capabilities, and to grow their presence in the Columbus market. The proposed project will allow Hikma to modernize and expand their current facility in the Columbus region and create fifty (50) net new full-time permanent positions with a cumulative associated estimated annual payroll of approximately $3,000,000.00 and retain one-thousand two hundred twenty-four (1,224) full-time permanent positions with an associated estimated annual payroll of approximately $93,627,177.00 at the proposed Project Site.
Hikma Pharmaceuticals USA Inc. is requesting a Job Creation Tax Credit from the City of Columbus to assist in the development of the aforementioned project.
This legislation is presented as 30-day legislation.
FISCAL IMPACT:
No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to enter into a Job Creation Tax Credit Agreement of forty-five percent (45%) for a term of up to six (6) consecutive years with Hikma Pharmaceuticals USA Inc., in consideration of the company’s proposed total capital investment of $215,700,000.00, the creation of fifty (50) net new full-time permanent positions with an estimated annual payroll of approximately $3,000,000.00 and the retention of one-thousand two hundred twenty-four (1,224) full-time permanent positions with an associated estimated annual payroll of approximately $93,627,177.00. ($0.00)
Body
WHEREAS, founded in 1978 in Jordan, Hikma Pharmaceuticals (“Hikma”) was founded by Samih Darwazah with the purpose to make high-quality medicines accessible to the people who need them. Based on the solid foundation they have built, they are continuing to transform the lives of the millions of people they serve. Hikma focuses on three high quality businesses (Injectables, Branded, and Hikma Rx) within three core regions of the world (North America, MENA, and Europe) with a leading market position. With 29 manufacturing plants spread across 10 different countries, Hikma has been able to create a large portfolio of over 800+ products. With their current U.S. Headquarters located in Berkeley Heights, NJ, Hikma has three locations in Ohio (a manufacturing and R&D facilities in both Bedford and Columbus, and a Distribution facility in Lockbourne). All coming together to make Hikma the 3rd largest manufacturer of Injectables in the U.S. and the largest manufacturing employer in Columbus; and
WHEREAS, the company is proposing to invest a total capital expenditure of approximately $215,700,000.00 which includes $92,000,000.00 in real property improvements and $123,700,000.00 in machinery & equipment. With this investment, Hikma is proposing to construct a 131,000 square-foot pharmaceutical storage and distribution facility as well as a 40,000 square-foot expansion to their existing facility at 1809 Wilson Road, Columbus, Ohio 43228, Parcel No. 560-138818 (the “Project Site”), to their increase pharmaceutical manufacturing, increase storage and distribution, to expand R&D capabilities, and to grow their presence in the Columbus market; and
WHEREAS, Hikma proposes to create fifty (50) net new full-time permanent positions with a cumulative associated estimated annual payroll of approximately $3,000,000.00 and retain one-thousand two hundred twenty-four (1,224) full-time permanent positions with an associated estimated annual payroll of approximately $93,627,177.00 at the proposed Project Site; and
WHERESAS, the City desires to increase employment opportunities and encourage the creation of new jobs in the City in order to improve the overall economic climate of the City and its citizens; and
WHEREAS, Hikma has indicated that a Job Creation Tax Credit is crucial to its decision to establish the aforementioned project in the City of Columbus; and
WHEREAS, the City of Columbus desires to facilitate the future growth of Hikma at the proposed Project Site by providing a Job Creation Tax Credit; 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 State and City by increasing opportunities for employment and strengthening the economy of the State and City; and (3) receiving the aforementioned tax credits is a critical factor in the decision for Hikma Pharmaceuticals USA Inc. to go forward with the project.
SECTION 2. That the Director of the Department of Development is hereby authorized to enter into a Job Creation Tax Credit Agreement with Hikma Pharmaceuticals USA Inc. of forty-five percent (45%) of the amount of City income tax withheld on new employees for a term up to six (6) consecutive years with Hikma Pharmaceuticals USA Inc.
SECTION 3. That the City of Columbus Job Creation Tax Credit Agreement is signed by Hikma Pharmaceuticals USA Inc. within 90 days of the passage of this ordinance, or this ordinance and the credit herein shall be null and void.
SECTION 4. That the Columbus City Council hereby extends authority to the Director of the Department of Development to amend Hikma Pharmaceuticals USA Inc., City of Columbus Job Creation Tax Credit Agreement for certain modifications to the agreement requested in writing by the company and or the City and deemed appropriate by the Director of the Department of Development with these certain modifications being specifically limited to reductions in length of term, methods of calculating the incentive, or adding or deleting business entities associated with the employment commitments related to this incentive. Columbus City Council must approve all other requested amendments.
SECTION 5. That this Ordinance shall take effect and be in force from and after the earliest period allowed by law.