Explanation
BACKGROUND: The need exists to enter into a Municipal Jobs Creation Tax Credit Agreement with DSW Inc. ("DSW") and Ozburn Hessey Logistics, LLC ("OHL") in connection with the development of an e-commerce business channel in the City of Columbus ("CITY"). Ohio Revised Code Section 718.15 (the Ohio Jobs Creation Tax Credit law) requires the City to enter into a Council-approved agreement between the City and participating companies. Collectively, DSW and OHC will be referred to as "ENTERPRISE."
ENTERPRISE is seeking to develop an e-commerce business channel whereby DSW would sell products over the internet (the "PROJECT"). DSW, by itself or through OHL, anticipates making investments in the facility that it is currently targeting equal to $8,000,000 to $9,000,000 for machinery and equipment, $800,000 to $900,000 for tenant improvements and approximately $27,000,000 for new inventory. These project investments would be complete by approximately March of 2008. The facility will be used primarily as warehouse and distribution center space to support e-commerce. The PROJECT will be located at 4220-4236 East Fifth Avenue, in Columbus. ENTERPRISE also is considering an existing site in Indiana at which OHL already has space, and thus, State and local incentives are necessary for the Project to go forward in Ohio.
DSW plans to hire, or cause OHL to hire, approximately 201 199 new full-time employees in connection with the PROJECT. Approximately 100 99 of these new employees would be hired as soon as the investments are complete, with the remaining 101 100 new employees hired by the end of 2010. The average wage of the new employees would be approximately $15.90 per hour. It is anticipated that the new employees would initially be hired by OHL.
The Department of Development recommends a 65%/7 year Jobs Creation Tax Credit.
Emergency action is necessary in order to allow ENTERPRISE to begin investing and creating jobs as quickly as possible.
FISCAL IMPACT: No Funding is required for this legislation.
Title
To authorize the Director of Development to enter into an agreement with DSW Inc. and Ozburn Hessey Logistics, LLC, for a Jobs Creation Tax Credit of 65% for a period of 7 years in consideration of an investment of $36,500,000, the creation of 201 199 new full time permanent positions; and to declare an emergency. (AMENDED BY ORD. 0556-2008 PASSED 3/31/2008)
Body
WHEREAS, pursuant to Section 122.17 of the Ohio Revised Code, the State of Ohio is authorized to establish the Tax Credit Authority and to execute agreements with taxpayers of the State of Ohio for the purpose of granting these taxpayers job creation tax credits to be applied against their corporation franchise tax and commercial activity tax liability, which tax credits are provided to create new jobs in the State of Ohio; and
WHEREAS, on August 27, 2007, the State Tax Authority officially approved a State Credit to support the project; and
WHEREAS, pursuant to Section 718.15 of the Ohio Revised Code (the "City Act") the City Council of the City of Columbus (the "City," a municipal corporation) is authorized to grant a local income tax credit ("Local Credit") to be applied against a taxpayer's city income tax liability, contingent upon the taxpayer also receiving a State Credit; and
WHEREAS, contingent on the City granting a Jobs Creation Tax Credit, DSW and OHL Plan to develop an e-commerce business channel in the City whereby DSW would sell products over the internet (the "PROJECT"); and
WHEREAS, in connection with the PROJECT, DSW and OHL will collectively hire approximately 201 (two-hundred one) 199 (one hundred ninety nine) new full-time employees at the PROJECT site with an annual payroll of approximately $4,998,723.20, invest between $8,000,000 and $9,000,000 for machinery and equipment, between $800,000 and $900,000 in tenant improvements, and approximately $27,000,000 in new inventory; and
WHEREAS, receiving these tax credits from the State and the City is a critical factor in the decision of DSW and OHL to go forward with the project in the city of Columbus; and
WHEREAS, Section 718.15 of the Ohio Revised Code requires the City to enter in a formal and binding agreement in order to provide the local credit to DSW and OHL; and
WHEREAS, an emergency exists in the usual daily operation of the Columbus Department of Development in that it is immediately necessary to enter into an agreement with DSW and OHL in order to allow them to begin investing and creating jobs as quickly as possible, all for the preservation of public health, peace, property and safety; 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 credit is a critical factor in the decision by DSW Inc. and Ozburn Hessey Logistics, LLC to go forward with the project.
Section 2. That the City Council hereby finds and determines that the project meets all the requirements of the City Act.
Section 3. That in connection with the proposed PROJECT, the Director of the Department of Development is hereby authorized and directed to enter into and execute a 7-year, 65% Jobs Creation Tax Credit Agreement with DSW Inc. and Ozburn Hessey Logistics, LLC.
Section 4. That the City of Columbus Jobs Creation Tax Credit Agreement be signed by DSW Inc. and Ozburn Hessey Logistics, LLC within 90 days of passage of this ordinance, or the credit, authorized herein is null and void.
Section 5. That for reasons stated in the preamble hereto, which is hereby made a part hereof, the ordinance is hereby 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 days after the passage if the Mayor neither approves nor vetoes the same.