Explanation
BACKGROUND: Columbus City Council (Council), by Ordinance 1313-2000, passed June 12, 2000, authorized the City of Columbus (City) to enter into an Enterprise Zone Agreement (the Agreement) with Colpark Associates, L.P. (Enterprise) for a tax abatement of seventy-five percent (75%) for a period of ten (10) years in consideration of $5,600,000 in real property investment to rehabilitate and redevelop the Old Jeffrey Mining site located at 274 East First Avenue. The office and manufacturing buildings located at the site were to be redeveloped into approximately 200,000 square feet of Class A office space. As part of this project, Sixth Street was to be extended between First Avenue and Second Avenue, creating an East Development east of the proposed extension and a West Development west of the proposed extension. The cost of this extension was to be divided between Enterprise and the City. Within the East Development, tenant State of Ohio Library was to relocate 160 employees and tenant GTE was to create 10 new full-time jobs. Within the West Development, unidentified future tenants were to either create or relocate 380 full-time jobs. Total jobs to be either relocated or created within two years of the execution of the Agreement were to be 550 with an associated payroll of $1,875,000. No exemption or credit was to commence prior to tax year 2001 nor to extend beyond tax year 2010. The Agreement was made and entered into to be effective June 13, 2000 (EZA# 023-00-09).
This Agreement was subsequently authorized by Council to be amended for the first time to modify the scope of the project to be limited to the East Development, reducing the number of jobs from the tenant State of Ohio Library to be relocated from 160 to 84 and the jobs from additional tenants to be reduced from 380 to 39, for a total of new or relocated jobs to be 123 by Ordinance 1140-2003, passed February 10, 2003, entered into and effective June 25, 2003; and that this Agreement was subsequently authorized by Council to be amended for the second time to substitute 274 First AGA, LLC for Colpark Associates, L.P. as a party to the Agreement with 274 First AGA, LLC assuming the rights, title and interest in the Agreement by Ordinance 0657-2005, passed April 11, 2005, entered into and effective April 28, 2005.
The 2011 Columbus Tax Incentive Review Council (TIRC) reviewed the 274 First AGA, LLC Enterprise Zone project on August 18, 2011. It was reported to the TIRC that the project had reported low job numbers and attempts to contact Enterprise to arrange for a site visit to discuss the low job situation proved unsuccessful. Additionally, it was reported that the project contact had recently plead guilty to three misdemeanor counts of workers' compensation fraud and was placed on probation for one year and fined $10,000 as part of a "scheme to avoid paying prevailing wages to employees of his development company" (Columbus Dispatch, July 26, 2011). The TIRC recommended that a letter be sent to Enterprise via certified mail requesting a meeting to discuss the employment issues and a jobs plan for the project site within 30 days of receipt of the letter or the Agreement will be dissolved. The end of the 30-day window was determined to be October 6, 2011 and as of that date no response had been received from Enterprise. This legislation seeks to dissolve the 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 274 First AGA, 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 Colpark Associates, L.P. (the "EZA") on June 12, 2000 by Ordinance 1313-2000 and entered into effective June 13, 2000; and
WHEREAS, the EZA granted Colpark Associates, L.P. a 75%/10-Year abatement on real property investment; and
WHEREAS, the EZA committed Colpark Associates, L.P. to invest $5,600,000 in real property improvements and create or relocate 550 permanent full-time jobs with a commensurate payroll of $1,875,000, related to the rehabilitation and redevelopment of approximately 200,000 square feet of Class A office space in two parts, an East Development and a West Development, at the Old Jeffrey Mining site located at 274 East First Avenue; and
WHEREAS, the EZA was authorized by Council to be amended for the first time to modify the scope of the project to be limited to the East Development and reducing the number of new or relocated jobs from 550 to 123 by Ordinance 1140-2003, passed February 10, 2003, entered into and effective June 25, 2003.
WHEREAS, the EZA was authorized by Council to be amended for the second time to substitute 274 First AGA, LLC for Colpark Associates, L.P. as a party to the EZA with 274 First AGA, LLC assuming the rights, title and interest in the EZA by Ordinance 0657-2005, passed April 11, 2005, entered into and effective April 28, 2005.
WHEREAS, the Tax Incentive Review Council (the "TIRC") met on August 18, 2011 and it was reported then that the project had exceeded the real property investment goal of the EZA but that the goal for job retention had fallen short, with 56 jobs reported as of December 31, 2010, compared to the job retention goal of 123; and
WHEREAS, the TIRC recommended that a letter be sent to Enterprise via certified mail requesting a meeting to discuss the employment issues and a jobs plan for the project site within 30 days of receipt of the letter or the EZA will be dissolved. The 30-day window for response by Enterprise was October 6, 2011; and
WHEREAS, as Enterprise did not respond, the City of Columbus concurs with the TIRC recommendation and desires to dissolve the EZA as of December 31, 2009.
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 274 First AGA, LLC Enterprise Zone Agreement (Agreement Number 023-00-09) which applies a 75%/10-year tax abatement to parcel numbers 010-255762 and 010-277009 within the City of Columbus Enterprise Zone as of December 31, 2009, with 2009 as the final tax year for the exemptions.
Section 2. That the Director of Development is hereby directed to notify the necessary local and state agencies of any changes to the 274 First AGA, 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.