Explanation
BACKGROUND: Columbus City Council (COUNCIL), by Ordinance No. 0492-2020, passed March 16, 2020, authorized the City of Columbus (CITY) to enter into an Enterprise Zone Agreement (the AGREEMENT) with Upgrade Equity, LLC and Taggart Texas, LTD (ENTERPRISE) for a tax abatement of seventy-five percent (75%) for a period of ten (10) years in consideration of a proposed capital investment of $2,291,656 investment in real property improvements and the creation of twenty-seven (27) new full-time permanent positions with an estimated annual payroll of approximately $1,254,341 related to the renovation of an approximately 389,599 square foot existing warehouse and office facility at 711 Southwood Avenue on parcel number 010-113409 (the PROJECT SITE), in Columbus Ohio, within the Columbus City School District and within the City of Columbus Enterprise Zone. The AGREEMENT was made and entered into effective August 13, 2020 (EZA #023-20-05). The AGREEMENT stated that construction on the improvements (the PROJECT) was expected to begin March 2020 with all real property improvements expected to be completed by December 2021, and that no real property exemption was to commence after January 1, 2022 nor extend beyond December 31, 2031. Per the Franklin County Auditor as of February 2, 2022, a DTE-24 has been filed by the ENTERPRISE, the status of which is currently pending.
The CITY reported the status of the PROJECT to the 2021 Tax Incentive Review Council (the “TIRC”) on August 20, 2021, in that ENTERPRISE missed the reporting deadlines set by the City and by the Ohio Department of Development (i.e. the Ohio Revised Code). Following these missed deadlines but prior to the TIRC, the City sent a second set of reporting documents to the consultant for ENTERPRISE. At the time of the TIRC, ENTERPRISE had yet to submit their annual report. The recommendation of the TIRC was to continue the AGREEMENT, send ENTERPRISE a letter (the “TIRC LETTER”) requesting full reporting within 60 days of receipt of the letter and should the request not be fulfilled within that timeframe then the AGREEMENT would be dissolved.
COUNCIL, by Resolution 0145X-2021 (the “RESOLUTION”), passed September 20, 2021, accepted the written recommendations presented by the 2021 TIRC.
Following passage of the RESOLUTION, the aforementioned TIRC LETTER was sent by Certified Mail to ENTERPRISE and also by email to ENTERPRISE and their consultant on October 5, 2021, with confirmation of email delivery received same day and the Certified Mail letter confirmed to have been received on October 12, 2021. These delivery dates set the reporting window per the TIRC to be by December 4, 2021 (or December 10 at the latest). On November 21, 2021, an email was received from the consultant indicating they were working on submitting the report by the end of the week. On December 24, 2021 (twenty days past the deadline), an email was received from the consultant with an incomplete annual report attached. On January 26, 2022, a letter was sent via Certified Mail to ENTERPRISE and also by email to ENTERPRISE and their consultant advising of the intention of the CITY to dissolve the AGREEMENT per the recommendation of the TIRC.
This legislation is presented as an emergency measure in order for this dissolution to be legislated in the most expedient manner as possible so that this dissolution of the AGREEMENT can be reported to the necessary local and state agencies prior to the issuance of the Final Determination (related to the filing of the DTE-24) by the Ohio Department of Taxation.
FISCAL IMPACT: No funding is required for this legislation.
Title
To dissolve the Enterprise Zone Agreement with Upgrade Equity, LLC and Taggart Texas, LTD (ENTERPRISE), and 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, the City of Columbus (CITY) entered into an Enterprise Zone Agreement (the “AGREEMENT”) with Upgrade Equity, LLC and Taggart Texas, LTD (ENTERPRISE), approved by Columbus City Council (COUNCIL) on March 16, 2020 by Ordinance No. 0492-2020 with this AGREEMENT made and entered into effective August 13, 2020 (EZA #023-20-05); and
WHEREAS, the AGREEMENT granted a 75%/10-Year abatement on real property improvements; and
WHEREAS, the incentive was granted in consideration of a proposed capital investment of $2,291,656 million in real property improvements, and the creation of twenty-seven (27) new full-time permanent positions with an estimated annual payroll of approximately $1,254,341 related to the renovation of an approximately 389,599 square foot existing warehouse and office facility at 711 Southwood Avenue on parcel number 010-113409 (the PROJECT SITE), in Columbus Ohio, within the Columbus City School District and within the City of Columbus Enterprise Zone; and
WHEREAS, the AGREEMENT stated that construction on the improvements (the PROJECT) was expected to begin March 2020 with all real property improvements expected to be completed by December 2021, and that no real property exemption was to commence after January 1, 2022 nor extend beyond December 31, 2031; and
WHEREAS, per the Franklin County Auditor as of February 2, 2022, a DTE-24 has been filed by the ENTERPRISE, the status of which is currently pending; and
WHEREAS, the CITY reported the status of the PROJECT to the 2021 Tax Incentive Review Council (the “TIRC”) on August 20, 2021, in that ENTERPRISE missed the reporting deadlines set by the City and by the Ohio Department of Development (i.e. the Ohio Revised Code). Following these missed deadlines but prior to the TIRC, the City sent a second set of reporting documents to the consultant for ENTERPRISE. At the time of the TIRC, ENTERPRISE had yet to submit their annual report. The recommendation of the TIRC was to continue the AGREEMENT, send ENTERPRISE a letter (the “TIRC LETTER”) requesting full reporting within 60 days of receipt of the letter and should the request not be fulfilled within that timeframe then the AGREEMENT would be dissolved; and
WHEREAS, COUNCIL, by Resolution 0145X-2021, passed September 20, 2021, accepted the written recommendations presented by the 2021 TIRC; and
WHEREAS, following passage of the RESOLUTION, the aforementioned TIRC LETTER was sent by Certified Mail to ENTERPRISE and also by email to ENTERPRISE and their consultant on October 5, 2021, with confirmation of email delivery received same day and the Certified Mail letter confirmed to have been received on October 12, 2021. These delivery dates set the reporting window per the TIRC to be by December 4, 2021 (or December 10 at the latest). On November 21, 2021, an email was received from the consultant indicating they were working on submitting the report by the end of the week. On December 24, 2021 (twenty days past the deadline), an email was received from the consultant with an incomplete annual report attached. On January 26, 2022, a letter was sent via Certified Mail to ENTERPRISE and also by email to ENTERPRISE and their consultant advising of the intention of the CITY to dissolve the AGREEMENT per the recommendation of the TIRC; 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 this agreement in order for this dissolution to be legislated in the most expedient manner as possible so that this dissolution of the AGREEMENT can be reported to the necessary local and state agencies prior to the issuance of the Final Determination (related to the filing of the DTE-24) by the Ohio Department of Taxation, and to preserve the public health, property, safety and welfare;
NOW, THEREFORE
BE IT ORDAINED BY THE COUNCIL OF COLUMBUS
SECTION 1. That Columbus City Council hereby dissolves the Upgrade Equity, LLC and Taggart Texas, LTD Enterprise Zone Agreement (EZA# 023-20-05) as of January 1, 2021, which was to apply a 75%/10-year real property tax abatement to the value of real property improvements made to parcel number 010-113409 within the City of Columbus Enterprise Zone.
SECTION 2. That the Director of Development is hereby directed to notify the necessary local and state agencies of any changes to the Upgrade Equity, LLC and Taggart Texas, LTD Enterprise Zone 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 (10) days after passage if the Mayor neither approves nor vetoes this Ordinance.