Explanation
Background: Pursuant to Ordinance 2932-2019 and Ordinance 2934-2019, respectively, the Director of the Department of Development entered into separate agreements dated March 11, 2019 with Pulte Homes of Ohio, LLC (the “Harlem Road Plan”) and November 22, 2019 with Cimenello Incorporated (the “Walnut Street Plan”). Pursuant to the Harlem Road Plan and the Walnut Street Plan, the Department of Development proposed establishing a tax increment financing incentive district under Ohio Revised Code (“ORC”) Section 5709.40(C) in the NE area of the City of Columbus (the “Harlem-Walnut Incentive District”). Pursuant to ORC Section 5709.4(E), not later than forty-five business days prior to City Council adopting the ordinance to establish the Harlem-Walnut Incentive District, the City delivered notice to the Franklin County, Ohio Board of County Commissioners (the “Commissioners”) of the City’s intent to exempt improvements with respect to the parcels within the Harlem-Walnut Incentive District for more than ten years and greater than seventy-five percent. Within thirty days after receipt of the City’s notice, pursuant to the Commissioners’ Resolution No. 0833-21, the Commissioners formally objected to the exemption for the number of years in excess of ten (10) until such time as either the Commissioners negotiate a mutually acceptable compensation agreement with the City, or the City proceeds to create the Harlem-Walnut Incentive District providing for compensation to the Commissioners at the default rate as set forth in ORC Section 5709.40(E)(2). The City has determined to enter into a mutually acceptable compensation agreement with the Commissioners pursuant to ORC Section 5709.40(E) (the “Compensation Agreement”), wherein the City has agreed to modify its plan to enact a fifty percent (50%) exemption rather than a one-hundred percent (100%) exemption as originally contemplated. This Ordinance approves and authorizes entering into the Compensation Agreement between the City and the Commissioners to outline the respective compensation and remittance.
Emergency Justification: Emergency legislation is required to allow for the immediate effectiveness of this ordinance, which is necessary for City Council to be able to adopt the Harlem-Walnut Incentive District ordinance after the Compensation Agreement is agreed to by the Commissioners and City Council.
Fiscal Impact: No funding is required for this legislation. The compensation contemplated by this legislation will be paid, in the same manner as usual, from the real property taxes that the appropriate taxing authorities would have received in real property taxes from the improvements to the parcels in the incentive district or from the service payments in lieu of taxes required to be paid by the owners of the parcels in the Harlem-Walnut Incentive District.
Title
To authorize the Director of the Department of Development or his or her designee, on behalf of the City, to execute and deliver a mutually acceptable compensation agreement between the City and the Franklin County, Ohio Board of County Commissioners (the “Commissioners”) for the mutually agreed upon compensation as required by Ohio Revised Code Section 5709.40(E) following the Commissioners’ objection to the City’s proposed ordinance to establish the Harlem-Walnut Incentive District under Ohio Revised Code Section 5709.40(C); and to declare an emergency.
Body
WHEREAS, pursuant to Ordinance 2932-2019 and Ordinance 2934-2019, respectively, the Director of the Department of Development entered into separate agreements dated March 11, 2019 with Pulte Homes of Ohio, LLC (the “Harlem Road Plan”) and November 22, 2019 with Cimenello Incorporated (the “Walnut Street Plan”), which both plans identified tax increment financing (“TIF”) for these developers’ properties to finance regionally beneficial public infrastructure improvements; and
WHEREAS, Ohio Revised Code (“ORC”) Sections 5709.40, 5709.42, and 5709.43 (collectively, the “TIF Statutes”) authorize this Council, by ordinance, to create one or more incentive districts, declare the improvement to parcels of real property located within each incentive district to be a public purpose and exempt from taxation, require the owner of each parcel to make service payments in lieu of taxes, provide for the distribution of the applicable portion of such service payments to the school districts and the appropriate taxing authorities, establish one or more municipal public improvement tax increment equivalent funds for the deposit of those non-school and non-taxing authority service payments, and specify the purposes for which money in those funds will be expended; and
WHEREAS, in relation to the undeveloped portion of the developers’ property subject to the Harlem Road Plan and Walnut Street Plan but not already subject to a TIF, the Department of Development determined that it is necessary and appropriate and in the best interest of the City to establish a new incentive district under ORC Section 5709.40(C) (the “Harlem-Walnut Incentive District”); and
WHEREAS, the Department of Development proposed the Harlem-Walnut Incentive District would exempt from taxation one-hundred percent (100%) of the improvements to each parcel in the TIF as permitted and provided in ORC Section 5709.40(C), as applicable, for up to a thirty (30) year period, and to simultaneously direct and require the current and future owners of each parcel within the TIF to make annual payments in lieu of taxes in the same amount as they would have made in real property tax payments but for the exemption provided by this Ordinance; and
WHEREAS, notice of the proposed ordinance for the Harlem-Walnut Incentive District was delivered to the Board of County Commissioners of Franklin County, Ohio (the “Commissioners”) in accordance with and within the time periods prescribed in ORC Section 5709.40(E)(1); and
WHEREAS, pursuant to ORC Section 5709.40(E)(2) and the Commissioners’ Resolution No. 0833-21, the Commissioners formally objected to the exemption for the number of years in excess of ten (10) until such time as either the Commissioners negotiate a mutually acceptable compensation agreement with the City or the City proceeds to create the Harlem-Walnut Incentive District providing for compensation to the County at the default rate as set forth in ORC Section 5709.40(E)(2); and
WHEREAS, the City has determined to enter into a mutually acceptable compensation agreement with the Commissioners pursuant to ORC Section 5709.40(E)(2) and (3) (the “Compensation Agreement”), wherein the City has agreed to modify its plan to enact a fifty percent (50%) exemption rather than a one-hundred percent (100%) exemption as originally contemplated; and
WHEREAS, pursuant to the TIF Statutes, the Columbus City Schools will receive, in the same manner as usual, an amount equal to the real property taxes that the Columbus City Schools would have been paid if the improvements within the Harlem-Walnut Incentive District and the Columbus City School District had not been exempted from taxation; and
WHEREAS, the appropriate taxing authorities under ORC Section 5709.40(F) will also receive, in the same manner as usual, the amounts they would have received in real property taxes attributable to any amount by which the effective tax rate of either a renewal levy with an increase or a replacement levy exceeds the effective tax rate of the levy renewed or replaced, or that are attributable to an additional levy, for a levy authorized by the voters on or after January 1, 2006 for any applicable services as described in ORC Section 5709.40(F)(1)-(13); and
WHEREAS, the County, the City, and those appropriate taxing authorities shall receive, in the same manner as usual, an amount equal to fifty percent (50%) of the remaining real property taxes that they would have been paid for the improvements to each parcel located within the Harlem-Walnut Incentive District pursuant to the City modifying its original plan to seek a one hundred percent (100%) exemption to a fifty percent (50%) exemption under the Compensation Agreement; and
WHEREAS, the City shall receive the other remaining fifty percent (50%) of the revenue generated from the improvements as service payments in lieu of taxes attributable to the Harlem-Walnut Incentive District; and
WHEREAS, pursuant to ORC Section 5709.40(E), the Commissioners, by Resolution No. 0969-21, have authorized the County to enter into the Compensation Agreement; and
WHEREAS, an emergency exists in the daily operations of the Department of Development in that this Ordinance needs to be immediately effective to approve the Compensation Agreement and authorize entering into the Compensation Agreement in order to establish the Harlem-Walnut Incentive District prior to the assessment of any improvements to the parcels and before the end of the year to maximize revenue available for the public infrastructure improvements, such action being necessary for the preservation of the public health, peace, property and safety; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. Compensation Agreement. That the Director of the Department of Development (the “Director”) or his or her designee, for and in the name of the City, is hereby authorized to execute and deliver the Compensation Agreement presently on file with the Director along with any changes or amendments thereto not inconsistent with this Ordinance and not substantially adverse to the City and which shall be approved by the Director and the City Attorney, provided that the approval of such changes and amendments thereto, and the character of those changes and amendments as not being substantially adverse to the City, shall be evidenced conclusively by the Director’s execution and delivery thereof.
Section 2. Effective Date. For the reasons stated in the Preamble hereto, which is hereby made a part hereof, this 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.