Explanation
BACKGROUND: Columbus City Council (“COUNCIL”), by Ordinance No. 1948-2018 passed July 23, 2018, authorized the City of Columbus (“CITY”) to enter into an Enterprise Zone Agreement (the “AGREEMENT”) with OBM HQ, LLC, FDP Investments I, LLC and FDP Investments II, LLC (collectively, and hereinafter referred to as “OWNER”) and CoverMyMeds LLC (the future office tenant) (hereinafter referred to as “ENTERPRISE”), for real property tax abatement of one-hundred percent (100%) for a period of fifteen (15) consecutive years in consideration of a proposed total capital investment of approximately $225,000,000.00 in real property improvements to construct a (i) new approximately 200,000 square-foot Class A office building, ancillary campus amenities and surface parking ("PHASE l") and subject to market conditions, construct second (ii) Class A office building of up to approximately 200,000 square feet along with one or more associated parking structures containing up to approximately 1,150 parking spaces at a later date ("PHASE 2"), (collectively, the building or buildings, related amenities, and parking structures that are actually constructed shall be referred to as the "PROJECT") with eighty-six (86) parcels shown in Attachment 1 of the AGREEMENT (referred to in Section 1 of the AGREEMENT as Exhibit B) located along McKinley Avenue west of North Hartford Avenue (the “PROJECT SITE”). Additionally, the ENTERPRISE committed to create one-thousand thirty-two (1,032) net new full-time permanent positions with an associated annual payroll of approximately $75,000,000.00, and the retain and relocate approximately five-hundred and ninety-two (592) existing full-time permanent positions with an associated annual payroll of approximately $43,162,000 at the PROJECT SITE within the City of Columbus and within the Columbus Central Enterprise Zone, to preserve or create employment opportunities within the Columbus Enterprise Zone. The AGREEMENT was made and entered into effective February 6, 2019 with the abatement for PHASE 1 to commence no later than tax year 2022 nor extend beyond tax year 2036 and the abatement for PHASE 2 to commence no later than tax year 2030 nor extend beyond tax year 2044, (EZA #023-19-03). The PHASE 1 abatement commenced in tax year 2021 and extends through tax year 2035, and the PHASE 2 abatement commenced in tax year 2022 and extends through tax year 2036, assuming all commitments under the AGREEMENT are met.
This AGREEMENT was subsequently authorized by COUNCIL to be Amended four separate times, (1) the first time to (i) add McKesson Corporation as an additional entity, (ii) to assign all of the benefits and obligations from OBM HQ, LLC, FDP Investments I, LLC and FDP Investments II to CHI Franklinton, LP, (iii) to add additional sites related to employment, (iv) to revise assignment and transfer language within the AGREEMENT, (v) to revise the parcel list and (vi) to add Amendment Fee language for future amendments, all by Ordinance No. 1258-2019, passed May 20, 2019 and made and entered into effective July 10, 2019; (2) the second time to add CHI Franklinton Phase II, LP to the AGREEMENT and assign all of the benefits and obligations as related to Phase 2 of the PROJECT to CHI Franklinton Phase II, LP by Ordinance No. 0871 -2020, passed April 20, 2020 and made and entered into effective July 30, 2020; (3) the third time to add an entity in relation to Phase 1 of the PROJECT whereby through assignment, MK I Property Company LLC, a Delaware limited liability company would assume the obligations and commitments of the AGREEMENT from CHI Franklinton, LP as Owner related to Phase 1 of the
PROJECT by Ordinance No. 1119-2021, passed May 10, 2021 and made and entered into effective June 2, 2021; (4) the fourth time to assign all benefits and obligations of the AGREEMENT related to PHASE 2 of the PROJECT from CHI Franklinton Phase II, LP as Owner to MK 2 Property Company LLC, a Delaware limited liability company whereby MK 2 Property Company LLC will assume the obligations and commitments of the AGREEMENT from CHI Franklinton Phase II, LP as Owner related to Phase 2 of the PROJECT by Ordinance No. 3007-2022, passed February 6, 2023 and made and entered into effective April 7, 2023.
Through recent conversations and written correspondence, the City received a formal request from the ENTERPRISE dated February 20, 2025, the ENTERPRISE confirmed that McKesson Corporation, and all affiliates and subsidiaries related to the McKesson Corporation, as listed in Exhibit A would be additional entities and party to the AGREEMENT. These new entities, along with CoverMyMeds LLC, will contribute to the new job creation and payroll, and the retained jobs and payroll commitments as set forth in the AGREEMENT. As a result, the ENTERPRISE is requesting the AGREEMENT be amended for the fifth time to add McKesson Corporation, and all affiliates and subsidiaries related to McKesson Corporation as additional entities and party to the AGREEMENT, henceforth contribute to the new job creation and payroll, and the retained jobs and payroll commitments as set forth in the AGREEMENT; and
Paragraph thirteen within Section 6 (Program Compliance) of the AGREEMENT state that the “AGREEMENT is not transferable or assignable without the express, written, approval of the CITY” and subsequent authorization by Columbus City Council” and that “such approval and authorization shall not be unreasonably withheld, conditioned or delayed.”
Due diligence has been undertaken by the CITY in that CoverMyMeds, LLC, McKesson Corporation, and all affiliates and subsidiaries related to the McKesson Corporation has agreed to fully assume the terms and commitments of the ENTERPRISE pursuant to the AGREEMENT, has submitted an updated Economic Development Incentive Application, the five-hundred dollars ($500.00) Amendment Fee and that the application and all other pertinent information has been reviewed and vetted.
This legislation is to authorize the Director of the Department of Development to amend the AGREEMENT for the fifth time to add McKesson Corporation, and all affiliates and subsidiaries related to the McKesson Corporation as listed in Exhibit A, and any other affiliates or subsidiaries owned or controlled by McKesson Corporation and which are reported to the Department of Development through McKesson Corporation’s annual report to the Department as additional entities and party to the AGREEMENT and henceforth contribute to the new job creation and payroll, and the retained jobs and payroll commitments as set forth in the AGREEMENT.
This legislation is presented as 30-day legislation.
FISCAL IMPACT:
No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to amend the City of Columbus Enterprise Zone Agreement with CoverMyMeds LLC, McKesson Corporation, MK 1 Property Company LLC, and MK 2 Property Company, LLC to add McKesson Corporation, and all affiliates and subsidiaries related to the McKesson Corporation listed in Exhibit A and any other affiliates or subsidiaries owned or controlled by McKesson Corporation and which are reported to the Department of Development through McKesson Corporation’s annual report to the Department as additional entities and party to the AGREEMENT and henceforth will contribute to the new job and payroll, and the retained jobs and payroll commitments as set forth in the AGREEMENT.
Body
WHEREAS, the City of Columbus (“CITY”) entered into a City of Columbus Enterprise Zone Agreement (the “AGREEMENT”) with OBM HQ, LLC, FDP Investments I, LLC and FDP Investments II, LLC (collectively, and hereinafter referred to as “OWNER”) and CoverMyMeds LLC (the future office tenant) (“ENTERPRISE”), approved by Columbus City Council (“COUNCIL”) by Ordinance No. 1948-2018 passed July 23, 2018, with the AGREEMENT made and entered into effective February 6, 2019; and
WHEREAS, the AGREEMENTS granted a 100%/15-Year abatement on real property improvements; and
WHEREAS, the incentive was granted in consideration of an approximately $225 million investment in real property improvements, the retention and relocation of 592 employees, and the creation of 1,032 full-time jobs with an annual payroll of approximately $75,000,000 related to the construction of two (2) new Class A office buildings of up to approximately 200,000 square feet each along with ancillary campus amenities, surface parking and one or more associated parking structures totaling approximately 1,150 parking spaces in two (2) phases described as PHASE l and PHASE 2, collectively referred to as the “PROJECT” constructed on eighty-six (86) parcels located along McKinley Avenue west of North Hartford Avenue within the City of Columbus and within the Columbus Central Enterprise Zone (the “PROJECT SITE”) with the abatement for PHASE 1 to commence no later than tax year 2022 nor extend beyond tax year 2036 and the abatement for PHASE 2 to commence no later than tax year 2030 nor extend beyond tax year 2044 (EZA #’s. 023-19-03); and
WHEREAS, paragraph thirteen within Section 6 (Program Compliance) of the AGREEMENTS state that the “AGREEMENT is not transferable or assignable without the express, written, approval of the CITY” and subsequent authorization by Columbus City Council” and that “such approval and authorization shall not be unreasonably withheld, conditioned or delayed;” and
WHEREAS, This AGREEMENT was subsequently authorized by COUNCIL to be Amended four separate times, (1) the first time to (i) add McKesson Corporation as an additional entity, (ii) to assign all of the benefits and obligations from OBM HQ, LLC, FDP Investments I, LLC and FDP Investments II to CHI Franklinton, LP, (iii) to add additional sites related to employment, (iv) to revise assignment and transfer language within the AGREEMENT, (v) to revise the parcel list and (vi) to add Amendment Fee language for future amendments, all by Ordinance No. 1258-2019, passed May 20, 2019 and made and entered into effective July 10, 2019; (2) the second time to add CHI Franklinton Phase II, LP to the AGREEMENT and assign all of the benefits and obligations as related to Phase 2 of the PROJECT to CHI Franklinton Phase II, LP by Ordinance No. 0871 -2020, passed April 20, 2020 and made and entered into effective July 30, 2020; (3) the third time to add an entity in relation to PHASE I of the PROJECT whereby through assignment, MK I Property Company LLC, a Delaware limited liability company would assume the obligations and commitments of the AGREEMENT from CHI Franklinton, LP as Owner related to Phase 1 of the
PROJECT by Ordinance No. 1119-2021, passed May 10, 2021 and made and entered into effective June 2, 2021; (4) the fourth time to assign all benefits and obligations of the AGREEMENT related to Phase 2 of the PROJECT from CHI Franklinton Phase II, LP as Owner to MK 2 Property Company LLC, a Delaware limited liability company whereby MK 2 Property Company LLC will assume the obligations and commitments of the AGREEMENT from CHI Franklinton Phase II, LP as Owner related to Phase 2 of the PROJECT by Ordinance No. 3007-2022, passed February 6, 2023 and made and entered into effective April 7, 2023; and
WHEREAS, through recent conversations and written correspondence, the City received a formal request from the ENTERPRISE dated February 20, 2025, to amend the AGREEMENT to add McKesson Corporation, and all affiliates and subsidiaries related to the McKesson Corporation, as listed in Exhibit A as additional entities and party to the AGREEMENT, henceforth contribute to the new job creation and payroll, and the retained jobs and payroll commitments as set forth in the AGREEMENT; and
WHEREAS, due diligence has been undertaken by the CITY in that CoverMyMeds, LLC, McKesson Corporation, and all affiliates and subsidiaries related to the McKesson Corporation has agreed to fully assume the terms and commitments of the ENTERPRISE pursuant to the AGREEMENT, has submitted an updated Economic Development Incentive Application, the five-hundred dollars ($500.00) Amendment Fee and that the application and all other pertinent information has been reviewed and vetted; and
WHEREAS, the need exists to amend the AGREEMENT for the fifth time to add McKesson Corporation, and all affiliates and subsidiaries related to the McKesson Corporation as listed in Exhibit A, and any other affiliates or subsidiaries owned or controlled by McKesson Corporation and which are reported to the Department of Development through McKesson Corporation’s annual report to the Department as additional entities and party to the AGREEMENT and henceforth will contribute to the job and payroll new and retained commitments as set forth in the AGREEMENT; and
WHEREAS, the Director of the Department of Development of the CITY has investigated the Economic Development Application of CoverMyMeds, LLC and the McKesson Corporation and concurs with the Columbus City Council they are qualified by financial responsibility and business experience to create and preserve employment opportunities in the Columbus Enterprise Zone and improve the economic climate of the CITY; and
WHEREAS, the need exists to amend the AGREEMENT for the fifth time to add McKesson Corporation, and all affiliates and subsidiaries related to the McKesson Corporation as listed in Exhibit A, and any other affiliates or subsidiaries owned or controlled by McKesson Corporation and which are reported to the Department of Development through McKesson Corporation’s annual report to the Department as additional entities and party to the AGREEMENT and henceforth contribute to the job and payroll, and the retained job and payroll commitments as set forth in the AGREEMENT; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That the Council of Columbus finds that the enterprise submitting this proposal is qualified by financial responsibility and business experience to create and preserve employment opportunities in the zone and improve the economic climate of the municipal corporation.
SECTION 2. That the Director of the Department of Development is hereby authorized to amend the City of Columbus Enterprise Zone Agreement with CoverMyMeds LLC, McKesson Corporation, MK 1 Property Company LLC, and MK 2 Property Company, LLC for the purpose of adding McKesson Corporation, and all affiliates and subsidiaries related to the McKesson Corporation as listed in Exhibit A, and any other affiliates or subsidiaries owned or controlled by McKesson Corporation and which are reported to the Department of Development through McKesson Corporation’s annual report to the Department as additional entities and party to the AGREEMENT and henceforth contribute to the new job creation and payroll, and the retained jobs and payroll commitments as set forth in the AGREEMENT.
SECTION 3. That this Fifth Amendment to the City of Columbus Enterprise Zone Agreement be signed by CoverMyMeds LLC, MK 1 Property Company LLC, and MK 2 Property Company, LLC and McKesson Corporation on behalf of itself and all affiliates and subsidiaries related to McKesson Corporation as listed in Exhibit A within ninety (90) days of passage of this ordinance, or this ordinance and the incentive authorized herein shall be null and void.
SECTION 4. That this Ordinance shall take effect and be in force from and after the earliest period allowed by law.