Explanation
BACKGROUND: The Tax Incentive Review Council (the "TIRC") recommended on August 25, 2006, that the City should amend the Community Reinvestment Area Agreement with Schmidt Development LLC (the "CRA Agreement") to reduce the real property investment requirement to $13,446,000, to change the job requirement to 210 jobs retained and 65 jobs created, and to clarify that jobs in the building at 515 E. Main Street may be applied to satisfy the CRA Agreement to the extent that those jobs are in excess of the jobs needed to satisfy the requirements of the 515 Partners, LLC Enterprise Zone Agreement. The City concurs with the TIRC recommendation to amend the CRA Agreement.
Columbus City Council approved an expansion of the South Washington Community Reinvestment Area (the "CRA") by Ord. No. 1661-00, adopted July 10, 2000 and in the same ordinance authorized the CRA Agreement. Schmidt Development LLC (J. Daniel Schmidt) proposed to invest $20 million to renovate and construct buildings along several blocks of E. Main Street, just the west of the I-71 underpass. The area is known today as the Market Exchange District. Tenants were to fulfill the job retention and creation, estimated to total at least 275, of which 65 would be retained/existing jobs and 210 would be new jobs. A year earlier, the same developer had entered into an Enterprise Zone Agreement to construct a building at 515 E. Main Street. That location was not initially part of the CRA territory but was added in the CRA expansion of July 2000.
It has been determined that the $20 million investment figure stated in the CRA Agreement was inclusive of $6,554,000 being invested at the time to construct the 515 E. Main building. This same $6,554,000 is the commitment in the Enterprise Zone Agreement with 515 Partners, LLC (the "EZA"), in which J. Daniel Schmidt is a Member. This legislation will correct the investment figure in the CRA Agreement to $13,446,000, by subtracting the $6,554,000, which is monitored separately as part the Enterprise Zone Agreement. As of December 2005, approximately $13 million had been invested in real property improvements in the CRA, not including the $6.9 million invested in the 515 E. Main St. building, which was used to satisfy the requirements of the Enterprise Zone Agreement.
This legislation will also amend the job goal in the CRA Agreement to 65 jobs created and 210 jobs retained and allow some of the jobs in the 515 E. Main building to count towards the job goal of the CRA Agreement job goal. As the project has developed and tenants have been added, a higher proportion of the tenant jobs turned out to be retained/existing than initially projected by the developer. Approximately 35 tenants, many of them small, occupy the facilities that pertain to the CRA Agreement. The property owner reported an estimated total of 186 tenant jobs as of December 31, 2005, the majority being retained rather than new. At the same time, the 515 E. Main Street building has produced more jobs than required for compliance with the EZA. Allowing the "surplus" job numbers from 515 E. Main would help to satisfy the job requirements of the CRA Agreement. The jobs are actually located in the CRA district, and are there due to the efforts of the developer who is party to both the CRA Agreement and the EZA. Only the "surplus" jobs at 515 E. Main will be used to help fulfill compliance with the CRA Agreement. There will be no double counting of jobs. The proposed amendment will also clarify that it is Schmidt Development LLC's responsibility to provide the City with annual information on tenant jobs and payroll.
FISCAL IMPACT: No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to amend the Community Reinvestment Area Agreement with Schmidt Development LLC (the "CRA Agreement") to modify the real property investment requirement and the job creation and retention requirements and to allow jobs at 515 E. Main Street to count toward the CRA Agreement to the extent they are not needed for compliance with the 515 Partners, LLC Enterprise Zone Agreement; and to declare an emergency.
Body
WHEREAS, by Ord. No. 1661-00, adopted July 10, 2000, the Columbus City Council approved an expansion of the South Washington Community Reinvestment Area (the "CRA") and also authorized a Community Reinvestment Area Agreement with Schmidt Development LLC (the "CRA Agreement"); and
WHEREAS, the CRA Agreement was entered into effective September 27, 2000 and provided a 50%/10-yr tax exemption on real property improvements made by December 31, 2005 and required the investment of approximately $20 million by Schmidt Development LLC, of which J. Daniel Schmidt is a Member, and the retention of 65 jobs and the creation of 210 jobs by the end of October 2005 (275 jobs in total); and
WHEREAS, it has been determined that the $20 million investment commitment in the CRA Agreement is inclusive of a $6,554,000 investment projected for development of the 515 East Main Street building, which is located within the boundaries of the CRA; and
WHEREAS, construction of the 515 E. Main Street building is the project commitment in an Enterprise Zone Agreement executed in 1999 with 515 Partners, LLC (the "EZA"), with J. Daniel Schmidt as a Member of the LLC, and requiring the investment of $6,554,000 for construction of the project; and
WHEREAS, the $20 million investment requirement of the CRA Agreement should be reduced by $6,554,000 since otherwise there is duplication with the $6,554,000 investment required by the EZA; and
WHEREAS, as the CRA Agreement project developed over the last five years and the new and renovated facilities were populated with tenants (approximately 35), the number of retained/existing jobs has turned out to be greater than number of new/created jobs, the reverse of what had been initially projected; and
WHEREAS, the 515 E. Main Street building has some large tenants and these produce more than enough jobs to satisfy compliance with the EZA, and currently the surplus jobs are not being counted towards compliance with the CRA Agreement; and
WHEREAS, the CRA Agreement project was apparently short of jobs as of December 2005, with an estimated total 186 jobs reported, thus compliance for the CRA Agreement would be assisted if the surplus jobs from the 515 E. Main Street building could be included in the job count; and
WHEREAS, the Tax Incentive Review Council (the "TIRC") recommended that the City should amend the CRA Agreement to reduce the real property investment requirement to $13,446,000, to change the job requirement to 210 jobs retained and 65 jobs created and to allow the jobs in the building at 515 E. Main Street to count towards satisfying the CRA Agreement to the extent that those jobs are in excess of the jobs needed to satisfy the requirements of the 515 Partners, LLC Enterprise Zone Agreement; and
WHEREAS, the City concurs with the TIRC's recommendation and desires to amend the CRA Agreement accordingly; and
WHEREAS, the City also desires Schmidt Development LLC to improve its annual reporting of tenant jobs and payroll; 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 and to preserve the public health, property, safety and welfare; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. To authorize the Director of the Department of Development to amend the Community Reinvestment Area Agreement with Schmidt Development LLC (the "CRA Agreement") to reduce the real property investment requirement to $13,446,000, to change the job requirement to 210 jobs retained and 65 jobs created, to allow the jobs in the building at 515 E. Main Street to count towards satisfying the requirements of the CRA Agreement to the extent that those jobs are in excess of the jobs needed to satisfy the requirements of the 515 Partners, LLC Enterprise Zone Agreement and to clarify that it is Schmidt Development LLC's responsibility to provide the City with annual information on 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.