Explanation
BACKGROUND: The Tax Incentive Review Council (the "TIRC") reviewed the Weiler-Bowen/City Park Place Enterprise Zone project on August 25, 2006, and recommended that the City meet with the property owner and negotiate an amended Enterprise Zone Agreement with terms the City deems realistic and appropriate. The meeting took place and modifications have been identified that are realistic and appropriate given the history of the project and the current real estate market. This legislation authorizes the Director of Development to amend the existing Weiler-Bowen/City Park Place Enterprise Zone Agreement (the "EZA") to (1) reduce the job requirement to 86 jobs, (2) reduce the payroll requirement to $2.9 million, (3) eliminate the personal property investment goal and reporting requirements, and (4) emphasize the importance of the property owner reporting annually to the City on the tenant jobs and payroll.
Columbus City Council approved the EZA by Ord. No. 2329-97, adopted September 29, 1997. The project entailed renovating two derelict structures into a multi-tenant facility with 54,000 square feet of Class-A office space. The project is located at 79 E. Thurman Avenue near the intersection with City Park Avenue. The EZA granted a real property tax abatement of 10 years (2000-2009), at 100% for the first 5 years and 50% the second 5 years, and a project investment of $3.5 million in real property and $2.75 million in personal property and the creation of 150 jobs with an annual payroll of $5 million. City Council approved a first amendment in 2003 and a second amendment in 2004. The 2003 amendment allows multiple tenants to fulfill the jobs goal and for the jobs and payroll to be either retained or new. The need for the first amendment was due to the loss of the original anchor tenant (CallTech), which had outgrown the facility even before it was completely renovated. The 2004 amendment reduced the real property exemption from 100% to 50% one year earlier than scheduled, due to the project's difficulty in meeting the personal property investment goal.
The project had approximately 136 jobs in December 2004 (91% attainment). Subsequently, two tenants were lost which has left the project with only 86 jobs at present (57% attainment). The property owner has been working hard to secure replacement tenants, which is difficult given the office vacancy rate. Another problem is that the multiple small tenants have been unable to comply with the sizeable personal property investment goal, which was originally the goal of the large anchor tenant (CallTech) who never moved into the facility. In addition, it is difficult to verify the personal property investment reported by the small tenants since taxpayers are no longer required to file returns for listed values of $10,000 or less. It is important to note that the project investment by the property owner allowed the City to achieve two of its primary objectives with the project in 1997: the restoration of two derelict eyesores into handsome structures and the addition of Class-A office space. In 1997, there was a scarcity of Class-A office space near the downtown. The present tax abatement is important to the facility's ability to compete cost-wise for tenants, given the high vacancy rates in the Columbus area. The present legislation will amend the EZA with realistic terms that will afford the project a good chance to be viewed as compliant in future reviews.
This legislation is presented as an emergency measure in order to meet the deadline under state law for City Council to vote on TIRC recommendations.
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 Weiler-Bowen Ltd. to reduce the job requirement from 150 to 86 and the payroll requirement from $5 million to $2.9 million, eliminate personal property tax investment goal and reporting requirements and to emphasize the importance of annual reporting on tenant jobs and payroll; and to declare an emergency.
Body
WHEREAS, the Columbus City Council approved the Enterprise Zone Agreement with Weiler-Bowen on September 29, 1997 by Ordinance No. 2329-97 and amended the Enterprise Zone Agreement on December 8, 2003 by Ordinance 2507-2003 and on November 1, 2004 by Ordinance 1916-2004; and
WHEREAS, as amended, the Enterprise Zone Agreement with Weiler-Bowen (the "EZA") requires Weiler-Bowen to invest $3.5 million in real property, $2.75 million in personal property and create or retain 150 jobs with a payroll of $5 million; and
WHEREAS, the project has met the real property investment goals, but has not met the personal property investment goal or the job level required by the EZA; and
WHEREAS, the Tax Incentive Review Council (TIRC) met on August 25, 2006 and recommended that the City meet with Weiler-Bowen and negotiate an amended EZA with terms the City deems realistic and appropriate; and
WHEREAS, the City met with Weiler-Bowen and determined realistic and appropriate modifications to the EZA that respect the City's original intent with the project, the change from one major tenant to multiple small tenants and the challenges the project is facing given existing conditions in the market for office market; 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, all for the preservation of the public health, property, safety and welfare; NOW, THEREFORE
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. That the Director of the Department of Development is hereby authorized to amend the Weiler-Bowen Ltd./City Park Place Enterprise Zone Agreement (EZA) to (1) reduce the job requirement to 86, and (2) reduce the payroll requirement to $2.9 million, (3) eliminate the personal property investment goal and reporting requirements, and (4) emphasize the importance of the property owner reporting annually to the City on the tenant jobs and payroll.
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.