Explanation
Background: The purpose of this ordinance is to declare improvement to certain parcels of real property within the City of Columbus to be a public purpose and exempt from real property taxation pursuant to R.C. Section 5709.41.
Grange Mutual Casualty Company ("Grange") plans to construct a 1,050 space parking garage and approximately 15,000 square feet of office space on certain parcels of real property in the City at a cost of between $21,500,000 and $23,500,000. This parking garage and office space would be constructed on property (the "Expansion Site") on the opposite side of Sycamore Street from Grange's main office, which is located at 650 South Front Street (the "Front Street Site").
The City and Grange desire to establish, by this ordinance, a TIF for the Expansion Site pursuant to R.C. Section 5709.41, to help pay for certain costs of construction of the combined garage/office structure, while protecting the Columbus City School District from any loss of tax revenues by requiring payments in lieu of taxes to be made to the School District.
The Front Street Site is already subject to a non-school (payments in lieu of taxes are required to be made to the school district) R.C. Section 5709.41 TIF, authorized by Ordinance No. 1724-2005.
Fiscal Impact: No funding is required for this legislation.
Title
An ordinance declaring the improvement of certain real property located in the City of Columbus, Ohio to be a public purpose; declaring such property to be exempt from real property taxation; requiring annual service payments in lieu of taxes; establishing a Grange II Urban Redevelopment Tax Increment Equivalent Fund; authorizing the execution of a Tax Increment Financing Agreement; authorizing use of service payment receipts for costs of private improvements; and providing related authorizations pursuant to Ohio Revised Code Sections 5709.41, 5709.42 and 5709.43.
Body
WHEREAS, the real property shown in Exhibit A hereto and incorporated herein by reference (the "Property") is located in the State of Ohio (the "State"), County of Franklin, and the City; and
WHEREAS, provided appropriate economic development incentives are available to support the economic viability of the construction, Grange Mutual Casualty Company (the "Company") desires to construct on the Property an approximately 1,050 space parking garage, including approximately 15,000 square feet of office space, at a cost of between $21,500,000 and $23,500,000 (the "Designated Improvements", which Designated Improvements are further described on Exhibit C attached hereto and incorporated by reference herein); and
WHEREAS, the City seeks to increase employment opportunities and to encourage establishment of new jobs in the City, in order to improve the economic welfare of the City and its citizens, in furtherance of the public purposes enunciated in Article VIII, Section 13 of the Ohio Constitution; and
WHEREAS, Ohio Revised Code ("R.C.") Section 5709.41 provides that this Council may, under certain circumstances, declare improvement to parcels of real property located in the City of Columbus (the "City") to be a public purpose, thereby exempting that improvement from real property taxation, provided the City has held fee title to such real property prior to the adoption of the ordinance providing for the exemption; and
WHEREAS, pursuant to R.C. Section 5709.41, said exemption may exceed 75% of such improvement and be for a period of up to thirty (30) years when the ordinance declaring the improvement to be a public purpose specifies that payments in lieu of taxes shall be paid to the local school district in which the parcels are located in the amount of the taxes that the local school district would have received if the improvement had not been exempted from taxation; and
WHEREAS, the City, by Ordinance No. 779-85 passed April 22, 1985 and amended by Ordinance Nos. 2722-85 in 1986, 2080-89 in 1989, 1949-92, 2609-92 and 2249-92 in 1992, 1079-94 and 1228-94 in 1994, 2196-95 and 2817-95 in 1995, 533-99 in 1999, 1785-00 in 2000, 1464-02 in 2002, and 0225-03 in 2003, has designated the area specified in those ordinances as an "urban jobs and enterprise zone" pursuant to R.C. Chapter 5709 (the "Enterprise Zone") and declared that incentives for businesses offered by such zones will enhance efforts to promote the viable and diverse economic activity necessary for rejuvenation of the Enterprise Zone; and
WHEREAS, the City, pursuant to R.C. Section 5709.61 et seq. (the "Enterprise Zone Statutes"), has executed an Ohio Enterprise Zone Agreement with the Company dated November 22, 2005; and the City and the Company, in accordance with the Enterprise Zone Statutes, have negotiated and will execute a First Amendment to that agreement (that agreement as so amended is referred to herein as the "Enterprise Zone Agreement"), exempting from real property taxation 75% of the increase in the assessed value of real property for 10 years; with respect to the Property, the portion of each qualifying increase in assessed value of real property that is exempted under the Enterprise Zone Statutes for so long as the portion is exempted under the Enterprise Zone Agreement is referred to herein as an "Enterprise Zone Exempted Improvement"; and
WHEREAS, as authorized by Ordinance 1107-2007, passed July 9, 2007, the City acquired from the Company fee title to the Property, pursuant to a Quitclaim Deed recorded with the Franklin County Recorder's Office, and, pursuant to a Quitclaim Deed, has conveyed or will convey said Property back to the Company; and
WHEREAS, this Council has determined that it is necessary and appropriate and in the best interests of the City to provide for service payments in lieu of real property taxes ("Service Payments," as further defined below) pursuant to R.C. Section 5709.42 with respect to the portion of the Property improvement exempt pursuant to this Ordinance; and
WHEREAS, this Council has determined that, with respect to the portion of the Property improvement exempt pursuant to this Ordinance, payments in lieu of taxes shall be paid to the Columbus City School District (the "School District") pursuant to R.C. Section 5709.42 in the amount of the real property taxes that the School District would have received if such increase in the assessed value of the Property had not been exempted from real property taxes pursuant to this Ordinance; and
WHEREAS, this Council has determined that service payments in lieu of taxes received by the City shall be used, pursuant to the authority of Article VIII, Section 13 of the Ohio Constitution, to pay for costs or a portion of costs of construction of the Designated Improvements to be constructed by the Company on the Property; and
WHEREAS, notice of this proposed Ordinance has been delivered to the Board of Education of the School District in accordance with and within the time period prescribed in R.C. Section 5709.41 and R.C. Section 5709.83; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. One hundred percent (100%) of the increase in the assessed value of the Property, including both land and structures, subsequent to the acquisition of the Property by the City (which increase in assessed value is an "Improvement" as defined in R.C. Section 5709.41 and which Improvement is described on Exhibit B attached hereto and incorporated by reference herein, but which Improvement shall not include any Enterprise Zone Exempted Improvement located on the Property) shall be a public purpose and shall be exempt from real property taxation for a period commencing on the effective date of this Ordinance and ending thirty (30) years after such date. (Thus, with respect to any period for which an exemption is in effect pursuant to both the Enterprise Zone Agreement and this Ordinance, (i) 75% of the increase in the assessed value of the Property shall be an Enterprise Zone Exempted Improvement for which no service payments in lieu of taxes are required and (ii) the remaining 25% of the increase in the assessed value of the Property shall be exempt pursuant to this Ordinance and service payments in lieu of taxes shall be required for that percentage pursuant to Section 3 of this Ordinance.)
Section 2. The Designated Improvements are hereby designated as those improvements that benefit or serve, or that once made will benefit or serve the Property.
Section 3. As provided in R.C. Section 5709.42, the current and future owners of the Property (the "Owners") are required hereby to make annual service payments in lieu of taxes to the Franklin County Treasurer (the "County Treasurer") with respect to the period in which the Improvement (or any part thereof) is exempt from real property taxation pursuant to this Ordinance, on or before the final dates for payment of real property taxes. Each such payment (including interest and penalties) shall be charged and collected in the same manner and in the same amount as the real property taxes that would have been charged and payable against the Improvement if it were not exempt from taxation pursuant to this Ordinance (the service payments in lieu of taxes, including any penalties and interest, are referred to herein as the "Payments in Lieu of Taxes"). Any late payments shall be subject to penalty and bear interest at the then current rate established under R.C. Sections 323.121 and 5703.47, as may be amended from time to time, or any successor provisions thereto, as the same may be amended from time to time. The County Treasurer shall remit all Payments in Lieu of Taxes, together with any associated roll back payments received in accordance with R.C. Section 319.302 (the "Property Tax Rollback Payments") in respect of the Improvement, but less payments made to the School District pursuant to Section 5 of this Ordinance, to the City for deposit in the Grange II Urban Redevelopment Tax Increment Equivalent Fund established in Section 4 hereof. Payments in Lieu of Taxes and Property Tax Rollback Payments are collectively referred to herein as the "Service Payments." This Council hereby authorizes the Director of the Department of Development (the "Director") or other appropriate officers of the City to provide such information and certifications and execute and deliver, or accept delivery of, such instruments as are necessary and incidental to collect the Service Payments and to make such arrangements as are necessary and proper for payment of the Service Payments. The Service Payments shall be allocated, deposited and paid in accordance with Sections 4 and 5 of this Ordinance.
No Owner shall, under any circumstances, be required in any tax year to both pay Service Payments with respect to an Improvement and reimburse local taxing authorities for the amount of real property taxes that would have been payable to local taxing authorities had the Improvement not been exempted from taxation pursuant to this Ordinance.
Section 4. This Council hereby establishes, pursuant to and in accordance with the provisions of R.C. Section 5709.43, the Grange II Urban Redevelopment Tax Increment Equivalent Fund (the "Fund"), into which shall be deposited all of the Service Payments distributed to the City (that is, after amounts are paid to the School District as described in Section 5 hereof) with respect to the Improvement to the Property by or on behalf of the County Treasurer, as provided in R.C. Section 5709.42, and hereby appropriates all of the moneys deposited in the Fund from time to time for payment of costs associated with the construction of the Designated Improvements.
The Fund shall remain in existence so long as Service Payments are collected and used for the aforesaid purposes, after which said Fund shall be dissolved in accordance with R.C. Section 5709.43(D). Upon dissolution, any incidental surplus money remaining in the Fund shall be disposed of as provided in R.C. Section 5709.43(D).
Section 5. The County Treasurer shall make payments to the School District from Service Payments received, in the amount equal to the real property tax payments that would have been payable to the School District from the Improvement exempted pursuant to this Ordinance had such Improvement not been exempted pursuant to this Ordinance, in accordance with R.C. Sections 5709.42 and 5709.43(C). No such payments to the School District shall be made with respect to the Enterprise Zone Exempted Improvement.
Section 6. The Mayor and the Director, or either of them individually, are hereby authorized to execute on behalf of the City a Tax Increment Financing Agreement (the "TIF Agreement") between the City and the Company, which shall provide for: (i) the payment of such annual Payments in Lieu of Taxes by the Company and the other Owners of the Property; (ii) the payment of the amounts due to the School District from the Service Payments; and (iii) the payment by the City to the Company, solely from the Fund, of the amounts remaining after the payments to the School District, described in (ii) above, for the Company's use for any Designated Improvement, but which payments shall not exceed the cost to the Company to construct the Designated Improvement. The TIF Agreement shall be in such form as is acceptable to such officials, approved by the City Attorney, and not substantially inconsistent with the terms of this Ordinance.
Section 7. This Council hereby authorizes the Director or other appropriate officers of the City, to take such actions as are necessary or appropriate to implement the transactions contemplated by this Ordinance, including the filing of one or more applications for exemption as provided in R.C. Section 5709.911.
Section 8. The Director, or any other official, as appropriate, are each authorized and directed to sign any other documents, instruments or certificates and to take such actions as are necessary or appropriate to consummate or implement the actions described herein, or contemplated by this Ordinance and the TIF Agreement.
Section 9. Pursuant to R.C. Section 5709.41, the Director is hereby directed to deliver a copy of this Ordinance to the Director of the Department of Development of the State of Ohio within fifteen days after its passage. On or before March 31 of each year that the exemption set forth in Section 1 hereof remains in effect, the Mayor, the Director or other authorized officer of this City shall prepare and submit to the Director of the Department of Development of the State of Ohio the status report required under R.C. Section 5709.41(E).
Section 10. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.