Explanation
BACKGROUND: The Director of the Department of Development is requesting authorization to enter into an Enterprise Zone Agreement on behalf of the City of Columbus (“City”) with West-Ward Columbus Inc. and Hikma Pharmaceuticals USA Inc. (collectively and hereinafter referred to as “Enterprise”). The Ohio Enterprise Zone Law Section 5709.62(C) of the Ohio Revised Code authorizes the City to enter into a Council-approved tax abatement agreements between the City and qualifying companies.
West-Ward Columbus Inc. are Hikma Pharmaceuticals USA Inc. (“Hikma”) sister subsidiary companies under the Eurohealth Inc. parent organization. Founded by Samih Darwazah in 1978 in Jordan, Hikma was created with the purpose to make high-quality medicines accessible to the people who need them. Based on the solid foundation built, the company is continuing to transform the lives of the millions of people served. Hikma focuses on three high quality businesses (Injectables, Branded, and Hikma Rx) within three core regions of the world (North America, MENA, and Europe) with a leading market position. With 29 manufacturing plants spread across 10 different countries, Hikma has been able to create a large portfolio of over 800+ products. With their current U.S. Headquarters located in Berkeley Heights, NJ, Hikma has three locations in Ohio. A manufacturing and R&D facilities are both in Bedford and Columbus, and a Distribution facility in Lockbourne. All coming together to make Hikma the 3rd largest manufacturer of Injectables in the U.S. and the largest manufacturing employer in Columbus.
West-Ward Columbus Inc. and Hikma are proposing to invest a total capital expenditure of approximately $215,700,000.00, which includes $92,000,000.00 in real property improvements and $123,700,000.00 in machinery and equipment. The investment in real property improvements include the construction of a new 131,000 square foot pharmaceutical storage and distribution facility as well as a 40,000 square foot expansion to their existing facility at 1809 Wilson Rd. Columbus, OH 43228, Parcel No. 560-138818 (the “Project Site”). Additionally, Hikma will create fifty (50) net new full-time permanent positions with an associated annual payroll of approximately $3,000,000.00 (“New Employees”) and retain one-thousand two hundred twenty-four (1,224) full-time permanent positions with an associated estimated annual payroll of approximately $93,627,177.00 at the proposed Project Site.
The Director of the Department of Development is recommending that City Council approve a 75%/10-year Enterprise Zone tax abatement on real property improvements made by the Enterprise at the Project Site, in consideration of creating the New Employees.
The Hilliard Local School District and Tolles Career & Technical Center have been advised of this project.
This legislation is presented as 30-day legislation.
FISCAL IMPACT:
No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to enter into an Enterprise Zone Agreement with West-Ward Columbus Inc. and Hikma Pharmaceuticals USA Inc. (collectively and hereinafter referred to as “Enterprise”) for a tax abatement of seventy-five percent (75%) for a period of ten (10) consecutive years in consideration of the Enterprise investing approximately $92,000,000.00 in real property improvements, the creation of fifty (50) net new full-time permanent positions with an associated annual payroll of approximately $3,000,000.00, and the retention of one-thousand two hundred twenty-four (1,224) full-time permanent positions with an associated estimated annual payroll of approximately $93,627,177.00. ($0.00)
Body
WHEREAS, the Columbus City Council authorized the designation of the City of Columbus Enterprise Zone by legislation, Ordinance Number 779-85, dated April 22, 1985; and subsequently amended the Zone by Ordinance Nos. 2722-85 in 1986; 2080-89 in 1989; 1949-92, 2690-92 and 2249-92 in 1992; 1079-94 and 1228-94 in 1994; 2196-95 and 2817-95 in 1995; 0533-99 in 1999; 1785-00 in 2000; 1464-02 in 2002; 0225-03 in 2003; 0032-2012 in 2012; 1442-2020 in 2020, 0279-2021 in 2021; and 0736-2022 in 2022; and
WHEREAS, the Director of the Development Department of the State of Ohio (“ODOD”) has determined that the Columbus Enterprise Zone (the “Zone”), as amended by the aforementioned Ordinances, continues to contain the characteristics set forth in Section 5709.61(A) of the Ohio Revised Code. The Director of ODOD has recertified this Zone in 1986, December 20, 1989, September 28, 1992, October 22, 1992, December 17, 1992, May 31, 1994, June 24, 1994, June 16, 1995, October 5, 1995, December 19, 1995, April 1, 1999, September 25, 2000, January 27, 2003, August 19, 2003, April 3, 2012, September 18, 2020, May 20, 2021, and most recently on May 17, 2022 as an “urban jobs and enterprise zone” under Chapter 5709 of the Ohio Revised Code; and
WHEREAS, West-Ward Columbus Inc. and Hikma Pharmaceuticals USA Inc. (“Hikma”) are sister subsidiary companies under the Eurohealth Inc. parent organization. West-Ward Columbus Inc. owns the proposed site and manufactures the products for Hikma and other CMO (contract manufacturing organization) clients ; and
WHEREAS, founded by Samih Darwazah in 1978 in Jordan, Hikma was created with the purpose to make high-quality medicines accessible to the people who need them. Based on the solid foundation they have built, they are continuing to transform the lives of the millions of people they serve. Hikma focuses on three high quality businesses (Injectables, Branded, and Hikma Rx) within three core regions of the world (North America, MENA, and Europe) with a leading market position. With 29 manufacturing plants spread across 10 different countries, Hikma has been able to create a large portfolio of over 800+ products. With their current U.S. Headquarters located in Berkeley Heights, NJ, Hikma has three locations in Ohio. A manufacturing and R&D facilities in both Bedford and Columbus, and a Distribution facility in Lockbourne. All coming together to make Hikma the 3rd largest manufacturer of Injectables in the U.S. and the largest manufacturing employer in Columbus; and
WHEREAS, the Enterprise has submitted a proposal (“Proposal”) to invest approximately $92,000,000.00 in real property improvements (the “Project”) for the construction of a new 131,000 square foot pharmaceutical storage and distribution facility and the expansion of approximately 40,000 square feet to an existing building at 1809 Wilson Rd. Columbus, OH 43228, Parcel No. 560-138818 (the “Project Site”); and
WHEREAS, the Enterprise anticipates that the Project will create fifty (50) net new full-time permanent positions with an associated annual payroll of approximately $3,000,000.00 (“New Employees”) and retain one-thousand two hundred twenty-four (1,224) full-time permanent positions with an associated estimated annual payroll of approximately $93,627,177.00; and
WHEREAS, after reviewing and investigating the Proposal submitted by the Enterprise, the Director of the Department of Development believes that the Enterprise has demonstrated that it is qualified by financial responsibility and business experience to create and preserve employment opportunities in the Columbus Enterprise Zone and improve the City’s economic climate; and
WHEREAS, the Director of the Department of Development is recommending that City Council approve a 10-year, 75% tax abatement on the assessed valuation of the Project Site due to the construction of a new 131,000 square foot pharmaceutical storage and distribution facility as well as a 40,000 square foot expansion of an existing facility in the City of Columbus with an associated investment of real property improvements of $92,000,000.00 to incentivize the Enterprise to construct/expand in the City’s western corridor; and
WHEREAS, the Development Director has notified the Hilliard Local School District and Tolles Career & Technical Center of the Project; and
WHEREAS, the City desires to enter into an agreement with the Enterprise in order to incentivize economic growth and create employment opportunities for its citizens, and for the preservation of public health, peace, property and safety; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That Columbus City Council, having reviewed the proposal, finds that the Enterprise is qualified by financial responsibility and business experience to create and preserve employment opportunities in the City of Columbus Enterprise Zone and improve the City’s economic climate pursuant to Revised Code Section 5709.62(C).
SECTION 2. That Columbus City Council finds and determines (1) that the Enterprise will create, or cause to be created, the New Employee positions in the State and City; (2) that the Project is economically sound and will benefit the people of the State and City by increasing opportunities for employment and strengthening the economy of the State and City; and (3) that receiving the aforementioned tax abatement is a critical factor in the decision by representatives for West-Ward Columbus Inc. and Hikma Pharmaceuticals USA Inc., the Enterprise hereunder, to go forward with constructing the Project.
SECTION 3. Based on this determination, City Council approves and authorizes a 10-year, 75% abatement on the increase in assessed valuation of real property on the Project Site, contingent upon the Enterprise investing approximately $92,000,000.00 in real property for the construction of a new 131,000 square foot pharmaceutical storage and distribution facility and the expansion of an existing facility consisting of approximately 40,000 square feet at 1809 Wilson Rd. Columbus, OH 43228, Parcel No. 560-138818 (the “Project Site”). Additionally, Hikma will create fifty (50) net new full-time permanent positions with an associated annual payroll of approximately $3,000,000.00 (“New Employees”) and retain one-thousand two hundred twenty-four (1,224) full-time permanent positions with an associated estimated annual payroll of approximately $93,627,177.00 at the proposed Project Site.
SECTION 4. That the City and the Enterprise must execute the attached Enterprise Zone Agreement within ninety (90) days of this Ordinance’s passage, or this Ordinance, and the authorization to enter into the tax abatement agreement, is null and void.
SECTION 5. That this Ordinance shall take effect and be in force from and after the earliest period allowed by law.