Explanation
BACKGROUND: Columbus City Council approved an Enterprise Zone Agreement with Roxane Laboratories, Inc., renamed Boehringer Ingelheim Roxane, Inc. in April 2005, and seven of it's affiliated entities (collectively, "Roxane") on July 29, 2002 by Ord. No. 1195-02 and amended the Enterprise Zone Agreement on July 28, 2003 by Ord. No. 1915-03. The Enterprise Zone Agreement, as amended (the "EZA"), grants a 75%/10-yr abatement on real property improvements (2006-2015) and personal property (2005-2014) including new machinery & equipment, and inventory. The Roxane EZA project sites are located at 1809 Wilson Road and at 700 Manor Park Road, on the west side of Columbus.
The Tax Incentive Review Council recommended on August 24, 2006, that the City amend the EZA to eliminate the requirement for inventory investment, the exemption on inventory, and the annual reporting requirements that relate to inventory, thus easing the reporting and monitoring burden on the company and City. The reason is that the 75% exemption on inventory provided by the EZA is no longer need by Roxane because its project sites in Columbus were approved for inclusion in Foreign Trade Zone No. 138 as of November of 2005. The 100% inventory tax exemption in Foreign Trade Zone locations is a benefit the State has conferred. Moreover, the State is eliminating the personal property tax in Ohio as of tax year 2009. The City desires to follow the TIRC recommendation and to amend the EZA to remove the inventory element, which will ease the reporting and monitoring burden on Roxane and the City. The EZA will continue, without the inventory element. The real and personal property investment goals and exemptions, except for inventory, will continue unchanged, as will the job retention, creation and payroll goals.
Roxane committed to invest a total of approximately $245.5 million, including $10 million in real property improvements, $35.5 million in machinery & equipment and $200 million in new average annual of inventory, to retain existing 900 jobs and create 95 new jobs. The company has exceeded the EZA goal for investment in machinery & equipment, has satisfied most of the real property investment goal, has satisfied the job retention goal and is ahead of schedule in the job creation and payroll goals. With respect to the inventory investment, Roxane is behind schedule due to the slow process of obtaining FDA approval for Roxane to manufacture Spiriva at the Columbus plant for distribution in the U.S. Spiriva is a new drug to treat chronic obstructive pulmonary disease and the Columbus plant is the main production facility for the drug in the U.S.
FISCAL IMPACT: No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to amend the Enterprise Zone Agreement with Boeheinger Ingelheim Roxane, Inc. to eliminate the requirement for inventory investment, the exemption on inventory, and the annual reporting requirements that relate to inventory; and to declare an emergency.
Body
WHEREAS, by Ord. No. 1195-02, adopted July 29, 2002, the Columbus City Council approved an Enterprise Zone Agreement with Roxane Laboratories, Inc., renamed Boehringer Ingelheim Roxane, Inc. in April 2005, and its affiliates Boehringer Ingelheim Chemicals, Inc., Boehringer Ingelheim Pharmaceuticals, Inc, Boehringer Ingelheim Vetmedica, Inc., Beohringer Ingelheim Canada, Ltd., Bio Development Corporation, Boehringer Ingelheim International, GmbH and Promeco S.A. Dec. V. (collectively, hereinafter "Roxane"), and the Enterprise Zone Agreement with Roxane was entered into effective January 3, 2003; and
WHEREAS, the Columbus City Council by Ord. No. 1915-03, adopted on July 28, 2003 authorized the First Amendment to the Enterprise Zone Agreement with Roxane; and
WHEREAS, the Enterprise Zone Agreement with Roxane, as amended by Ord. No 1915-03 (the "EZA"), grants a 75%/10-yr abatement on real property improvements (2006-2015) and personal property (2005-2014) including new machinery & equipment, and inventory; and
WHEREAS, the EZA commits Roxane to invest a total of approximately $245.5 million, including $10 million in real property improvements, $35.5 million in machinery & equipment and $200 million in new average annual of inventory, to retain existing 900 jobs and create 95 new jobs; and
WHEREAS, in November of 2005, Roxane's EZA project sites in Columbus were approved for inclusion in Foreign Trade Zone No. 138 and a resulting benefit is that the inventory at these sites is 100% exempt from Ohio's inventory tax, rendering superfluous the EZA's 75% exemption on inventory ; and
WHEREAS, the Tax Incentive Review Council (the "TIRC") has recommended that the City amend the EZA to eliminate the requirement for inventory investment, the exemption on inventory, and the annual reporting requirements that relate to inventory, thus easing the reporting and monitoring burden on the company and City; and
WHEREAS, the City desires to follow the TIRC's recommendation and to amend the EZA accordingly; and
WHEREAS, aside from inventory, the real and personal property investment goals and exemptions under the EZA, as well as the job retention and creation goals, will continue unchanged; 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 the TIRC's recommendations to comply with the sixty (60) day deadline for City Council action imposed by imposed by R.C. Section 5709.85 and to preserve the public health, property, safety and welfare; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. To authorize the Director of the Department of Development to amend the Enterprise Zone Agreement with Boehringer Ingelhem Roxane, Inc. to eliminate the requirement for inventory investment, the exemption on inventory, and the annual reporting requirements that relate to inventory.
Section 2. 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.