Explanation
BACKGROUND: Columbus City Council (COUNCIL), by Ordinance No. 2516-2018, passed September 24, 2018, authorized the City of Columbus (CITY) to enter into an Enterprise Zone Agreement (the “AGREEMENT”) with EX2 Investment LTD and Carr Supply Co. (collectively, and hereinafter referred to as “ENTERPRISE”) for a tax abatement of seventy-five percent (75%) for a period of ten (10) years in consideration of an investment of approximately $2,700,000.00, which included $2,600,000.00 in real property improvements, $25,000.00 in machinery and equipment, and $80,000.00 in furniture and fixtures to expand its corporate headquarters and distribution facility by approximately 30,000 square feet on parcel number 010-231120 located at 1415 Leonard Avenue, Columbus, Ohio 43219 (the “PROJECT SITE”). Additionally, the ENTERPRISE committed to create fifteen (15) net new full-time permanent positions with an estimated annual payroll of approximately $521,456.00 and retain one-hundred twenty-two (122) full-time jobs with an annual payroll of approximately $7,080,000.00 to preserve or create employment opportunities within the Columbus Enterprise Zone, (hereinafter referred to as the “PROJECT”). The AGREEMENT was made and entered into effective November 21, 2018 (EZA #023-18-07).
The CITY reported the status of the PROJECT to the 2023 Tax Incentive Review Council (“TIRC”) on August 18, 2023. The TIRC noted from the annual report that the net new jobs and retained jobs were both below the commitment as outlined in the AGREEMENT. Based on the presentation of the annual report, the TIRC recommend that the AGREEMENT be continued, and for the City to send a letter to the ENTERPRISE requesting a jobs plan outlining the process for attaining the commitment in the AGREEMENT, with the jobs plan to be received by the City within sixty (60) days of receipt date of the notification.
In a letter received by the CITY from the ENTERPRISE dated July 31, 2023 and through ensuing correspondence, it was confirmed that Winsupply Inc. acquired the ENTERPRISE including all assets, through its property company, Wholesalers Property Co. LLC. With this acquisition, the ENTERPRISE laid off a significant amount of their employees; therefore, the company will not meet its job creation or retention commitments as outlined in the AGREEMENT. As such, the need exists to dissolve the AGREEMENT.
This legislation is to authorize the Director of the Department of Development to dissolve the AGREEMENT between the CITY and the ENTERPRISE.
FISCAL IMPACT: No funding is required for this legislation.
Title
To dissolve the Enterprise Zone Agreement with EX2 Investment LTD and Carr Supply Co. (collectively, referred to as “ENTERPRISE”); and to authorize and direct the Director of the Department of Development to notify as necessary the local and state tax authorities.
Body
WHEREAS, the City of Columbus (CITY) entered into an Enterprise Zone Agreement (the “AGREEMENT”) with EX2 Investment LTD and Carr Supply Co. (collectively, referred to as “ENTERPRISE”), approved by Columbus City Council (COUNCIL) on September 24, 2018 by Ordinance No. 2516-2018 with this AGREEMENT made and entered into effective November 21, 2018; and
WHEREAS, the AGREEMENT granted a 75%/10-Year abatement on real property improvements; and
WHEREAS, the incentive was granted in consideration of an investment of approximately $2,700,000.00, which included $2,600,000.00 in real property improvements, $25,000.00 in machinery and equipment, and $80,000.00 in furniture and fixtures to expand its corporate headquarters and distribution facility by approximately 30,000 square feet on parcel number 010-231120 located at 1415 Leonard Avenue, Columbus, Ohio 43219 (the “PROJECT SITE”), in Columbus Ohio, within the Columbus City School District and within the Columbus Enterprise Zone; and
WHEREAS, the ENTERPRISE committed to create fifteen (15) net new full-time permanent positions with an estimated annual payroll of approximately $521,456.00 and retain one-hundred twenty-two (122) full-time jobs with an annual payroll of approximately $7,080,000.00 at the PROJECT SITE; and
WHEREAS, the CITY reported the status of the PROJECT to the 2023 Tax Incentive Review Council (“TIRC”) on August 18, 2023. The TIRC noted from the annual report that the net new jobs and retained jobs were both below the commitment as outlined in the AGREEMENT; and
WHEREAS, based on the presentation of the annual report, the TIRC recommend that the AGREEMENT be continued, and for the City to send a letter to the ENTERPRISE requesting a jobs plan outlining the process for attaining the commitments in the AGREEMENT, with the jobs plan to be received by the City within sixty (60) days of receipt date of the notification; and
WHEREAS, in a letter received by the CITY from the ENTERPRISE and through ensuing correspondence, it was confirmed that Winsupply Inc. acquired the ENTERPRISE through its property company, Wholesalers Property Co. LLC. With this acquisition, the ENTERPRISE laid off a significant amount of their employees; therefore, the company will not meet its job creation or retention commitments as outlined in the AGREEMENT; and
WHEREAS, the AGREEMENT was subsequently recommended for dissolution, as the ENTERPRISE will not be able to meet its jobs creation and retention commitments as outlined in the AGREEMENT. The CITY advised the TIRC that it was not amenable to amending the AGREEMENT. The TIRC then recommended that the AGREEMENT be dissolved; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That Columbus City Council hereby dissolves the EX2 Investment LTD and Carr Supply Co. Enterprise Zone Agreement (EZA#023-18-07) as of December 31, 2022, which was to apply a 75%/10-year real property tax abatement to the value of real property improvements made to parcel number 010-231120 within the Columbus Enterprise Zone.
SECTION 2. That the Director of the Department of Development is hereby authorized and directed to notify the necessary local and state agencies that the Enterprise Zone Agreement between the CITY and the ENTERPRISE has terminated.
SECTION 3. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.