Explanation
BACKGROUND: The City of Columbus entered into a Job Creation Tax Credit ("JCTC") Agreement (hereinafter "Agreement") with Chasm Industries Ohio, Inc. effective May 22, 2006. Columbus City Council approved the Agreement by Ordinance 1587-2005, passed October 24, 2005, and granted a non-refundable tax credit allowed against the tax imposed under Article 9, Chapter 361 of the Columbus City Codes (the "City Tax Credit") of sixty-five percent (65%) of the new income tax revenue received by the City for a taxable year from new employees, as that term was defined in Section 4 of the Agreement, commencing October 24, 2005 and for ten (10) consecutive years thereafter based on the lease of a 156,641 square foot building, an investment of $3.5M, the retention of 21 employees, and the creation of 100 new permanent full-time positions.
As Chasm Industries Ohio, Inc. failed to comply with the Report Year 2008 annual reporting, prior to the mailing of the Report Year 2009 materials (which were mailed to all other JCTC projects on April 26, 2010) research was undertaken on Chasm Industries Ohio, Inc. which resulted in the finding that Chasm Industries Ohio, Inc. was listed as a "Receivership Client" of the international law firm Winston & Strawn LLP under their category of "Distressed Mergers and Acquisitions," which indicated that Winston & Strawn LLP represented First Avenue Partners, Richland Investors, Oxford BioScience Fund, and Chrysalis Partners in the purchase of the assets of Chasm Industries Ohio, Inc. along with several other entities.
As Chasm Industries Ohio, Inc. has been out of compliance with the terms of the Agreement having failed to submit reporting materials for Report Year 2008, and as Chasm Industries Ohio, Inc. has been acquired by a third party which is not party to the Agreement with the process for assignment in Section VII of the Agreement not having been followed, this lack of required reporting, the change in ownership and the status of being in receivership has led to this legislation to dissolve the Agreement between the City of Columbus and Chasm Industries Ohio, Inc.
This legislation is presented as an emergency measure so that the dissolution of the Agreement can be reported to the necessary local and state agencies in an expedient manner.
FISCAL IMPACT: No funding is required for this legislation.
Title
To dissolve the Job Creation Tax Credit Agreement between the City of Columbus and Chasm Industries Ohio, Inc.; to direct the Director of the Department of Development to notify as necessary the local and state tax authorities; and to declare an emergency.
Body
WHEREAS, Columbus City Council approved a Job Creation Tax Creation Agreement ("Agreement") with Chasm Industries Ohio, Inc. by Ordinance No. 1587-2005 on October 24, 2005; and
WHEREAS, the Agreement grants a non-refundable tax credit allowed against the tax imposed under Article 9, Chapter 361 of the Columbus City Codes (the "City Tax Credit") of sixty-five percent (65%) of the new income tax revenue received by the City for a taxable year from New Employees commencing October 24, 2005 and for ten (10) consecutive years thereafter; and
WHEREAS, the Agreement requires Chasm Industries Ohio, Inc. to lease a 156,641 square foot building, invest $3.5 million, retain 21 employees, and create 100 new permanent full-time jobs; and
WHEREAS, Chasm Industries Ohio, Inc. had failed to submit reporting materials for Report Year 2008, research was undertaken which resulted in the finding that the assets of Chasm Industries Ohio, Inc. had been sold and that the international law firm of Winston & Strawn LLP represented the interests of the new ownership and that this new ownership was categorized as a "Receivership Client;" and
WHEREAS, as Chasm Industries Ohio, Inc. is in a state of non-compliance with the terms of the Agreement having failed to submit reporting materials for Report Year 2008, and as Chasm Industries Ohio, Inc. has been acquired by a third party which is not party to the Agreement with the process for assignment in Section VII of the Agreement not having been followed, with the lack of required reporting, the continued state of non-compliance, the change in ownership and the status of being in receivership has led to this legislation to dissolve the Agreement between the City of Columbus and Chasm Industries Ohio, Inc. effective January 1, 2008; and
WHEREAS, an emergency exists in the usual daily operation of the Department of Development in that it is immediately necessary to dissolve the Job Creation Tax Credit Agreement between the City of Columbus and Chasm Industries Ohio, Inc. so that the dissolution of the Agreement can be reported to the necessary local and state agencies in an expedient manner, thereby preserving the public health, peace, safety, and welfare; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. That Columbus City Council hereby dissolves the Chasm Industries Ohio, Inc. Job Creation Tax Credit Agreement effective January 1, 2008, with 2007 as the final tax year for the incentive.
Section 2. That the Director of Development is hereby directed to notify the necessary local and state agencies of any changes to the Chasm Industries Ohio, Inc. Job Creation Tax Credit Agreement.
Section 3. 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 days after passage if the Mayor neither approves nor vetoes this Ordinance.