Explanation
BACKGROUND:
The City of Columbus currently has an excessive amount of vacant office space in our downtown market. This high vacancy rate is having a negative impact on all business activity downtown and throughout the city. Hexion Specialty Chemicals is the world's largest producer of binders, adhesives, coatings and ink resins for industrial applications employing over 7000 people worldwide. The world headquarters for this large multinational company is located in the Borden Building at 180 East Broad Street. Their net sales grew to over $4 billion in 2005. They are currently exploring downtown Columbus for substantial expansion in the corporate headquarters workforce. They anticipate nearly doubling their downtown employment from 155 to an estimated 300 people by 2008 with an estimated annual payroll of $25 million. This expansion will result in annual City income tax revenue growing from $275,000 to $500,000 by 2008. Based on this anticipated expansion and the signing of a twelve year lease for space in the Borden Building (180 East Broad Street), the Downtown Development Office recommends granting a Columbus Downtown Office Incentive (CDOI) of an amount equal to 50% of the payroll taxes paid on the new to Columbus employees located in the Borden Building (180 East Broad Street) each year for eight (8) years.
FISCAL IMPACT:
No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to enter into a Columbus Downtown Office Incentive Program agreement with Hexion Specialty Chemical, Inc. as provide in Columbus City Council Resolution 075X-2004 adopted March 29, 2004.
Body
WHEREAS, the City desires to increase employment opportunities and encourage establishment of new jobs in the City in order to improve the overall economic climate of the City and its citizens; and
WHEREAS, Resolution 075X-2004, adopted March 29, 2004, authorized the Department of Development to establish the Columbus Downtown Office Incentive Program as modified by this legislation to provide the eight year incentive based on growth of payroll instead of growth in the number of jobs created exclusively; and
WHEREAS, the Department of Development has received a completed application for the Columbus Downtown Office Incentive Program from Hexion Specialty Chemical, Inc.; and
WHEREAS, Hexion Specialty Chemical, Inc. estimates they will create an estimated 145 new jobs at their Corporate Headquarters at 180 East Broad Street (the Borden Building), with a projected payroll of $25 million generating estimated City of Columbus income tax revenue of $500,000 annually by 2008; 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 enter into a Columbus Downtown Office Incentive Program agreement with Hexion Specialty Chemical, Inc., pursuant to Columbus City Council Resolution 075X-2004, for an annual cash payment equal to 50% of the total income tax withholding for the new positions located in downtown Columbus for a term of eight (8) years based on the estimated payroll of $25 million at 180 East Broad Street.
Section 2. This employment at Hexion Specialty Chemical, Inc. is the result of creating 145 new jobs and a projected payroll of $25 million in the Downtown as defined in Columbus City Code Title 33 Section 3359.03 downtown district boundary.
Section 3. Hexion Specialty Chemical, Inc. will qualify for an eight (8) year incentive term based on the size on the payroll and a twelve year lease, the retention of 155 jobs as well as the anticipated creation of 145 new positions by 2008. The term beginning in calendar year 2006, with the incentive payment made in the first quarter of the following year based on actual City of Columbus income tax withholding paid by employees for the preceding year.
Section 4. Each year of the term of the agreement with Hexion Specialty Chemical, Inc. that a payment is due, the City's obligation to pay the incentive is expressly contingent upon the passing of an ordinance appropriating and authorizing the expenditure of monies sufficient to make such payment and the certification of the City Auditor pursuant to Section 159 of the Columbus City Charter.
Section 5. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.