Explanation
BACKGROUND: This legislation authorizes the Development Director to dissolve the City's Enterprise Zone Agreement (EZA) and Jobs Creation Tax Credit Agreement (JCTCA) with Distribution Fulfillment Services, Inc. (DFS). City Council approved the incentives on May 24, 1994 by Ordinance No. 1080-94 (EZA) and Ordinance No. 1081-94 (JCTCA). The jobs tax credits could be used through 2004 or 2005 and the personal property tax exemptions could be used as late as 2009, depending on how the eligible investments were timed. The Tax Incentive Review Council recommended (11/12/2003) that the City dissolve the EZA with DFS because the job goals are not being met. The City concurs with the TIRC's recommendation and wishes also to dissolve the JCTCA.
In 1994, DFS, a subsidiary of Spiegel, Inc., wanted to expand its distribution capacity and became interested in a vacant 4 million square foot facility at 4545 Fisher Road (west side). Columbus granted DFS tax incentives to occupy, renovate and create/retain jobs at the facility: a 100%/10-year abatement on real property improvements, a 50% (avg)/10-year abatement on personal property (sliding scale, 100% in the first year decreasing to 10% in the final year), and a 50%/10-year municipal tax credit based on the creation of new jobs. DFS agreed to invest $58.5 million (of which $55 million was for fixed assets including site/facility acquisition costs, real property improvements and M & E) and create 375 new jobs plus retain 375 existing jobs relocated to the site from other local DFS operations (i.e., 750 jobs in total). By the end of 2002, DFS reported 626 jobs at the Fisher Road site and an investment of $83.5 million, of which $51 million was in M & E and other personal property.
The DFS parent corporation, Spiegel, filed for bankruptcy in March of 2003. To streamline and gain efficiency, DFS/Spiegel has elected to consolidate jobs and operations at the DFS facility in Groveport. Jobs have been reduced and/or moved out of the Fisher Road facility and DFS is currently looking to sell (or lease) that facility. The number of DFS jobs at the Fisher Road facility is expected to dwindle to 50 by the end of 2003.
FISCAL IMPACT: No funding is required for this legislation.
Title
To authorize the Development Director to dissolve the existing Enterprise Zone Agreement (EZA) and Jobs Creation Tax Credit Agreement (JCTCA) with Distribution Fulfillment Services (DFS) and to end the related tax incentives; and to declare an emergency.
Body
WHEREAS, Columbus City Council on May 24, 1994 approved Ordinance No. 1080-94 to enter into an Enterprise Zone Agreement (EZA) with Distribution Fulfillment Services, Inc. (DFS) and Ordinance No. 1081-94 to enter into a Jobs Creation Tax Credit Agreement (JCTCA) with DFS; and
WHEREAS, the City on June 28, 1994 entered into an EZA and a JTCTA with DFS granting DFS a 100%/10-year real property tax abatement (EZA), a 50%/10-year personal property tax abatement (EZA) and a 50%/10 year jobs creation tax credit (JCTCA); and
WHEREAS, DFS agreed in the two tax incentive agreements to occupy and renovate the project site at 4545 Fisher Road, to invest $58.5 million in real and personal property, to create 375 new jobs and to retain 375 existing jobs (750 in total); and
WHEREAS, in March of 2003 the parent corporation of DFS, Spiegel, Inc., filed for bankruptcy and DFS is streamlining and consolidating its operations to gain efficiency; and
WHEREAS, in connection with its streamlining and consolidating, DFS has moved jobs out of the Fisher Road facility and out of city of Columbus, only 50 DFS are anticipated to be at the facility by the end of 2003, and DFS/Spiegel currently has the facility for sale; and
WHEREAS, the Columbus Tax Incentive Review Council (TIRC) unanimously voted on November 12, 2003 to recommend that the City dissolve the EZA with DFS and end the property tax abatements; and
WHEREAS, the City concurs with the TIRC recommendation to dissolve the EZA and to end the property tax abatements and also the City desires to dissolve the JCTCA and to end the municipal tax credits;
WHEREAS, an emergency exists in the usual daily operation of the City of Columbus in that it is immediately necessary to authorize the Development Director to dissolve the existing Enterprise Zone Agreement and Jobs Creation Tax Credit Agreement with Distribution Fulfillment Services (DFS) and to end the related tax incentives in order to preserve the public health, peace, property, safety, and welfare NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. That the Development Director is hereby authorized to dissolve the Enterprise Zone Agreement (EZA) and the Jobs Creation Tax Credit Agreement (JCTCA) between the City and Distribution Fulfillment Services, Inc. (DFS) and to end the associated tax incentives. The final year for the property tax exemptions and tax credits shall be tax return year 2003.
Section 2. That for the reasons stated in the preamble thereto, which is hereby 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 days after passage if the Mayor neither approves nor vetoes the same.