Explanation
BACKGROUND: Columbus City Council (“Council”), by Ordinance No. 1701-2019 (the “Ordinance”), approved on July 22, 2019, authorized the Director of the Department of Development of the City of Columbus (“CITY”) to enter into a Columbus Downtown Office Incentive Agreement (the “AGREEMENT”) with ORIX Real Estate Capital Holdings, LLC dba Lancaster Pollard Mortgage Company and Red Mortgage Capital (collectively, hereinafter referred to as “GRANTEE”) for an annual cash payment equal to fifty percent (50%) of the City of Columbus income tax withheld on the payroll for the new employees added to the city of Columbus for a term of five (5) consecutive years on the retention of one-hundred eighty-seven (187) full-time positions with an estimated payroll of approximately $18.1 million and the creation of sixty-two (62) net new full-time permanent positions with an annual payroll of $6.1 million at 10 West Broad Street, Columbus, Ohio 43215, (the “PROJECT SITE”). The AGREEMENT was made and entered into effective October 31, 2019, with the incentive term beginning January 1, 2020 through December 31, 2024 for a five (5) year credit.
In an electronic written communication from the GRANTEE received by the CITY on January 11, 2023, the GRANTEE requested that the City of Columbus dissolve its current AGREEMENT with the CITY. Unfortunately, the GRANTEE indicated that the anticipated expansion and growth as previously planned will not occur in the City. Due to the prolonged nature of the COVID-19 pandemic and its many ripple effects, the GRANTEE will not create the proposed new jobs as described in the AGREEMENT. Additionally, the GRANTEE’s parent company acquired another large company of approximately the same size in 2020 and shifted the company’s headquarters from Columbus, Ohio to New York, New York. The GRANTEE is voluntarily seeking to cancel the AGREEMENT effective immediately because of the effects of the coronavirus (“COVID-19”). There is a need to dissolve this AGREEMENT between the CITY and GRANTEE related to the effects of the COVID-19 pandemic, change of ownership, and the relocation of the company’s corporate headquarters.
FISCAL IMPACT:
No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to dissolve the City of Columbus Downtown Office Incentive Agreement with ORIX Real Estate Capital Holdings, LLC dba Lancaster Pollard Mortgage Company and Red Mortgage Capital (collectively, referred to as "GRANTEE").
Body
WHEREAS, the City of Columbus (“CITY”) entered into a Columbus Downtown Office Incentive Agreement (the “AGREEMENT”) with ORIX Real Estate Capital Holdings, LLC dba Lancaster Pollard Mortgage Company and Red Mortgage Capital (collectively, and hereinafter referred to as the “GRANTEE”) effective October 31, 2019; and
WHEREAS, Columbus City Council (“Council”), approved the AGREEMENT by Ordinance No. 1701-2019 (the “ORDINANCE”), adopted on July 22, 2019, and granted an annual cash payment equal to fifty percent (50%) of the City of Columbus income tax withheld on the payroll for the New Employees added to the City of Columbus for a term of five (5) consecutive years thereafter (i.e. January 1, 2020 through December 31, 2024 for a 5-year credit); and
WHEREAS, the incentive was granted in consideration of a total proposed investment of approximately $200,000.00 in stand-alone computers to expand the GRANTEE’s regional office in a commercial office space within the Central Business District consisting of approximately 68,874 square feet, the retention of one hundred eighty-seven (187) full-time permanent positions with an annual payroll of approximately $18.1 million and the creation of sixty-two (62) net new full-time permanent positions with an estimated annual payroll of approximately $6.1 million (the “PROJECT”) at 10 West Broad Street, Columbus, Ohio 43215 (the “PROJECT SITE”) The AGREEMENT was made and entered into effective October 31, 2019, with the incentive term beginning January 1, 2020 through December 31, 2024, for a 5-year credit; and
WHEREAS, in an electronic written communication from the GRANTEE received by the CITY on January 11, 2023, the GRANTEE requested that the City of Columbus dissolve its current AGREEMENT with the CITY. Unfortunately, the GRANTEE indicated that the anticipated expansion and growth as previously planned will not occur in the City. Due to the prolonged nature of the COVID-19 pandemic and its many ripple effects, the GRANTEE will not create the proposed new jobs as described in the AGREEMENT. Additionally, the GRANTEE’s parent company acquired another large company of approximately the same size in 2020 and shifted the company’s headquarters from Columbus, Ohio to New York, New York. The GRANTEE is voluntarily seeking to cancel the AGREEMENT effective immediately because of the effects of the Coronavirus (“COVID-19”). There is a need to dissolve this AGREEMENT between the CITY and GRANTEE related to the effects of the COVID-19 pandemic, change of ownership along and the relocation of the company’s corporate headquarters; and
WHEREAS, it has become necessary in the usual daily operation of the Department of Development, to take action on this agreement in order for this dissolution to be legislated so that this dissolution of the AGREEMENT can be reported to the necessary local and state agencies prior to the end of calendar year 2023, all to preserve the public health, property, safety, and welfare; and NOW THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That Columbus City Council finds and determines that there is good reason to dissolve the Agreement entered into by and between the City and ORIX Real Estate Capital Holdings, LLC dba Lancaster Pollard Mortgage Company and Red Mortgage Capital, dated October 31, 2019. The Agreement is hereby dissolved as of the effective date of this Ordinance.
SECTION 2. That the Director of the Department of Development is authorized and directed to notify the necessary government agencies of the dissolution of this Agreement.
SECTION 3. That this Ordinance shall take effect and be in force from and after the earliest period allowed by law.