Explanation
BACKGROUND: Columbus City Council, by Ordinance 0694-2010, passed May 24, 2010, authorized the Director of the Department of Development to enter into an Enterprise Zone Agreement (Agreement) with Metro City Ventures, LLC and Southwestern Acquisitions, LLC (together hereinafter "Enterprise") for a tax abatement of seventy-five percent (75%) for a period of ten (10) years in consideration of an investment of $1.59 million in real property improvements with the Agreement being made and entered into to be effective June 30, 2010 (EZA #023-10-05) with the term of the abatement not to commence after 2012 nor extend beyond 2021. The actual term of the abatement is from 2011 to 2020. The Agreement committed Enterprise to invest approximately $1.1 million in real property improvements and to create at least 49 new full-time permanent positions to result in approximately $1.96 million of annual payroll related to the renovation of part of the first floor and all of the fourth and fifth floors of a 5-story commercial building, such area consisting of approximately 21,300 square feet of space on Parcel Numbers 010-004994 and 010-004995 located at 45 North Fourth Street (the Project Site) in Columbus, Ohio, within the City of Columbus Enterprise Zone (Zone #023) and within the Columbus City School
District the Enterprise be sent a "30-Day or Dissolve" letter requesting (1) full reporting and compliance (real estate investment and taxes paid and forgone information and (2) a proposal to redefine the scope of the project as per the Agreement following the exit of Southwestern Acquisition, LLC. If there was no response within 30 days the Agreement should be dissolved. If Enterprise was compliant with the request, then the proposal should be evaluated and the Agreement should either be amended or dissolved.
Enterprise was not compliant with the TIRC recommendation. With the 2013 annual reporting cycle beginning January 2014, Enterprise was extended one final opportunity to comply with the TIRC recommendation as part the 2014 annual reporting process. The annual reporting deadline was March 31, 2014 and no submission was received from Enterprise.
This legislation is presented as an emergency measure in order for this dissolution to be legislated in the most expedient manner as possible so that this dissolution of the Agreement can be reported to the necessary local and state agencies and to the 2014 Tax Incentive Review Council.
FISCAL IMPACT: No funding is required for this legislation.
Title
To dissolve the Enterprise Zone Agreement with Metro City Ventures, LLC and Southwestern Acquisitions, 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 Metro City Ventures, LLC and Southwestern Acquisitions, LLC (Agreement) on May 24, 2010 by Ordinance 0694-2010 and entered into effective June 30, 2010; and
WHEREAS, the Agreement granted Metro City Ventures, LLC and Southwestern Acquisitions, LLC (together also known as "Enterprise") a 75%/10-Year abatement on real property improvements with the term of the abatement running from 2011 through 2020; and
WHEREAS, the Agreement committed Metro City Ventures, LLC and Southwestern Acquisitions, LLC to an investment of approximately $1.1 million in real property improvements and the creation of at least 49 new full-time jobs with a commensurate annual new job payroll of approximately $1.96 million related to the renovation of part of the first floor and all of the fourth and fifth floors of a 5-story commercial building, such area consisting of approximately 21,300 square feet of space on Parcel Numbers 010-004994 and 010-004995 located at 45 North Fourth Street (the Project Site) in Columbus, Ohio, within the City of Columbus Enterprise Zone (Zone #023) and within the Columbus City School District; and
WHEREAS, having missed the annual reporting deadline of March 31, 2013, the annual report submitted for Report Year 2012 was received on April 26, 2013; and
WHEREAS, within the report, Enterprise reported no new jobs on site as of December 31, 2012, only $387,000 in new job payroll for the year, did not report the cumulative level of real estate investment, did not report taxes paid and forgone, and during the reporting cycle it was brought to the attention of the City by Southwestern Acquisitions, LLC that they had shut down their Lincoln College project in August 2012, all of which placed the project in a state of non-compliance as per the terms of the Agreement; and
WHEREAS, this information was presented at the 2013 Columbus Tax Incentive Review Council (the TIRC) where the TIRC recommended the Enterprise be sent a "30-Day or Dissolve" letter requesting (1) full reporting and compliance (real estate investment and taxes paid and forgone information) and (2) a proposal to redefine the scope of the project as per the Agreement following the exit of Southwestern Acquisitions, LLC; and
WHEREAS, the TIRC also held that if there was no response within 30 days the Agreement should be dissolved but if Enterprise was compliant with the request, then the proposal should be evaluated and the Agreement should then either be amended or dissolved; and
WHEREAS, Enterprise was not compliant with the TIRC recommendation; and
WHEREAS, with the 2013 annual reporting cycle beginning January 2014, Enterprise was extended one final opportunity to comply with the TIRC recommendation as part the 2014 annual reporting process; and
WHEREAS, the annual reporting deadline was March 31, 2014 and no submission was received from Enterprise; and
WHEREAS, the recommendation of the TIRC was to dissolve the Agreement should compliance not be made with the TIRC recommendation; 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 this agreement in order for this dissolution to be legislated following the end of 2014 reporting cycle so that the dissolution of the Agreement can be reported to the necessary local and state agencies and to the 2014 Tax Incentive Review Council, all 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 Metro City Ventures, LLC and Southwestern Acquisitions, LLC Enterprise Zone Agreement (Agreement Number 023-10-05) which applied a 75%/10-year real property tax abatement to parcel numbers 010-004994 and 010-004995 within the City of Columbus Enterprise Zone as of December 31, 2011, with Tax Year 2012 being the final year for Enterprise to realize any forgone tax benefit.
SECTION 2. That the Director of Development is hereby directed to notify the necessary local and state agencies of any changes to the Metro City Ventures, LLC and Southwestern Acquisitions, 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.