Explanation
Background: Pursuant to Resolution 0183X-2005 and Resolution 0039X-2006 adopted by Council, the City approved the Big Darby Accord Plan Principles and its later revisions. Pulte Homes of Ohio, LLC and Harmony Development Group, LLC (together, the “Developers”) purchased or have options to purchase ±369.2 acres within Columbus near the intersection of Alton & Darby Creek Road and Renner Road (the “Developers’ Property”) in order to construct 525 single family homes and 220 multi-family units to the north of Renner Road valued at approximately $226 million and to construct 147 single family homes and 196 multi-family units south of Renner Road valued at approximately $100 million in addition to $70 million for public infrastructure improvements serving both areas. Consistent with the Big Darby Accord Watershed Master Plan and Ordinance 1685-2020 rezoning the Developers’ Property, the parcels are subject to the requirements of the “Big Darby Revenue Program” adopted by Council under Resolution 0216X-2008. Pursuant to Ordinance 1557-2020 passed by Council, the Director of the Department of Development entered into a Big Darby Development Agreement dated March 10, 2021 with the Developers to outline the plans and respective commitments of the City and the Developers for the fulfillment of the Big Darby Revenue Program including establishing new tax increment financing for parts of the Developers’ Property.
This Ordinance establishes two tax increment financing (“TIF”) incentive districts under Ohio Revised Code (“ORC”) Section 5709.40(C). One proposed TIF incentive district encompasses the ±256.25-acre Franklin County Tax ID Parcel No. 203-299511 to the north of Renner Road less the new ±13.886-acre parcel of real property to be split from Parcel No. 203-299511 (the remaining ±242.36-acre parcel, the “Sugar Farm 40(C) Parcel”), the boundaries of which shall be coextensive with the boundary of the Sugar Farm 40(C) Parcel as may be further modified or supplemented (the “Sugar Farm Incentive District”). The second proposed TIF incentive district encompasses Franklin County Tax ID Parcel Nos. 203-299508, 203-299509, 203-299510, 203-299512 south of Renner Road, the boundaries of which shall be coextensive with the outside boundary of said parcels as modified or supplemented (the “Renner South Incentive District”).
The Sugar Farm Incentive District and Renner South Incentive District each provide for a ninety-five percent (95%) exemption from real property taxation on improvements to the parcels within each incentive district for a period coextensive with the life of the incentive district containing such parcels for not more than thirty (30) years. Hilliard City Schools and Tolles Career & Technical Center will receive funds in the amounts that they would have received in real property taxes had the tax exemption not been granted. The City, Franklin County (the “County”), and the appropriate taxing authorities under ORC Section 5709.40(F) will receive, in the same manner as usual, five percent (5%) of the amounts that they would have received in real property taxes. Those appropriate taxing authorities will also receive, pursuant to ORC Section 5709.40(F), the amounts they would have received in real property taxes attributable to any amount by which the effective tax rate of either a renewal levy with an increase or a replacement levy exceeds the effective tax rate of the levy renewed or replaced, or that are attributable to an additional levy, for a levy authorized by the voters on or after January 1, 2006 for any applicable services as described in ORC Section 5709.40(F)(1)-(13). Annual service payments in lieu of taxes will be made by the owners of each parcel with respect to improvements to the parcels of each incentive district. The applicable portion of those service payments will be distributed directly to Hilliard City Schools and Tolles Career & Technical Center and the appropriate taxing authorities as described herein. The remaining portions of those service payments will be paid to the City for deposit into the appropriate TIF funds established in this Ordinance to be used to finance public infrastructure improvements benefiting or serving the incentive district parcels.
Emergency Justification: Emergency legislation is required to allow for the immediate effectiveness of this ordinance, which is necessary to enable the timely financing and redevelopment of the above described project already in process.
Fiscal Impact: No funding is required for this legislation. The City is foregoing ninety-five percent (95%) of the real property tax revenue that it would have received from development of the parcels of each incentive district. Instead, the portions of that revenue not owed to the schools and other taxing authorities, as described herein, will be diverted to the TIF funds.
Title
To create the Sugar Farm Incentive District and the Renner South Incentive District encompassing property on the far west side of Columbus; to declare improvements to those parcels to be a public purpose and exempt from real property taxation; to require the owners of those parcels to make service payments in lieu of taxes; to require the distribution of the applicable portion of those service payments to Hilliard City Schools and Tolles Career & Technical Center and the appropriate taxing authorities; to establish municipal public improvement tax increment equivalent funds for the deposit of the remainder of those service payments distributed to the City; and to declare an emergency.
Body
WHEREAS, pursuant to Ordinance 0627-2005 adopted by Council on April 4, 2005 and Ordinance 0527-2006 adopted on March 13, 2006, the Director of the Department of Development, on behalf of the City, entered into the Big Darby Accord Participation Agreement (the "Big Darby Accord") and its amendment with Grove City, Hilliard, Harrisburg, Franklin County, and Prairie, Brown, Pleasant, Norwich, and Washington Townships to secure their funding commitments to the Big Darby Accord Watershed Master Plan; and
WHEREAS, pursuant to Ordinance 1662-2008, adopted on October 27, 2008, Council adopted and approved the Economic Development Plan for the Big Darby Planning Area (the “Development Plan”), and the Department of Development and all departments and divisions of the City administration were thereby authorized and directed to consult and use the Development Plan as guidance in establishing tax increment financing (“TIF”) incentive districts and providing financing for public infrastructure improvements within the planning area; and
WHEREAS, Pulte Homes of Ohio, LLC and Harmony Development Group, LLC (together, the “Developers”) plan to develop an approximately ±369.2 acre site within Columbus near the intersection of Alton & Darby Creek Road and Renner Road (the “Developers’ Property”) to construct 525 single family homes and 220 multi-family units to the north of Renner valued at approximately $226 million (“Sugar Farm”) and to construct 147 single family homes and 196 multi-family units south of Renner valued at approximately $100 million (“Renner South”) along with appropriate associated amenities and parking necessary to support those uses (collectively, the “Project”); and
WHEREAS, consistent with the Big Darby Accord Watershed Master Plan and Ordinance 1685-2020 rezoning the Developers’ Property, the Director of the Department of Development entered into an agreement dated March 10, 2021 with the Developers authorized by Ordinance 1557-2020 (the “Big Darby Development Agreement”) to outline the plans and respective commitments of the City and the Developers for the fulfillment of the Big Darby Accord revenue program requirements (the “Big Darby Revenue Program”) as established by Resolution 0216X-2008 adopted by Columbus City Council on April 20, 2009, including establishing new tax increment financing for parts of the Developers’ Property; and
WHEREAS, Ohio Revised Code (“ORC”) Sections 5709.40, 5709.42, and 5709.43 (collectively, the “TIF Statutes”) authorize this Council, by ordinance, to create one or more incentive districts, declare the improvement to parcels of real property located within each incentive district to be a public purpose and exempt from taxation, require the owner of each parcel to make service payments in lieu of taxes, provide for the distribution of the applicable portion of such service payments to the subjected school districts, the appropriate taxing authorities, and the City, establish one or more municipal public improvement tax increment equivalent funds for the deposit of those non-school and non-taxing authority service payments, and specify the purposes for which money in those funds will be expended; and
WHEREAS, this Council has determined that it is necessary and appropriate and in the best interest of the City to establish two incentive districts known as the “Sugar Farm Incentive District” and the “Renner-South Incentive District” (each individually, an “Incentive District” and together, the “Incentive Districts”) whose boundaries shall be coextensive with the boundaries of, and shall include, the parcels of real property specifically identified and depicted in Exhibit A attached hereto but less the new ±13.886- acre parcel of real property to be split from Franklin County Tax ID Parcel No. 203-299511 specifically identified and depicted on Exhibit A-1 also attached hereto (each individually, a “Parcel” and collectively, the “Parcels”) in order to properly facilitate the desired development of the far west side of Columbus within the Development Plan area and to pay costs of the public infrastructure improvements described in Exhibit B attached hereto (the “Public Infrastructure Improvements”); and
WHEREAS, pursuant to ORC Section 5709.40(C)(1), the City, having a population over 25,000 residents for the 2020 U.S. Census, determines that the sum of the taxable value of real property in each Incentive District for the preceding tax year plus the taxable value of all real property in the City that would have been taxable in the preceding year were it not for the fact that the property was in an existing incentive district and therefore exempt from taxation does not exceed twenty-five percent (25%) of the taxable value of real property in the City for the preceding tax year; and
WHEREAS, no Parcel is or has been exempt from taxation under ORC Section 5709.40(B) or another incentive district under ORC Section 5709.40(C); and
WHEREAS, pursuant to ORC Sections 5709.40(A)(5) and 5709.40(C)(3)(a), each Incentive District is an area not more than three hundred acres in size enclosed by a continuous boundary and includes portions of the Project being or to be undertaken that places additional demand on the Public Infrastructure Improvements; and
WHEREAS, pursuant to ORC Section 5709.40(5)(f), the engineer for the City has certified the public infrastructure serving each Incentive District is inadequate to meet the development needs of each Incentive District as evidenced by the Development Plan (a copy of the engineer’s certification and Development Plan attached together hereto as Exhibit C); and
WHEREAS, each Incentive District exempts from taxation ninety-five percent (95%) of the improvements to each Parcel as permitted and provided in ORC Section 5709.40(C), as applicable, for up to a thirty (30) year period coextensive with the life of the incentive district containing such Parcel, and to simultaneously direct and require the current and future owners of each Parcel (each individually an “Owner” and collectively the “Owners”) to make annual payments in lieu of taxes (the “Service Payments”), in the same amount as they would have made real property tax payments but for the exemptions provided by this Ordinance; and
WHEREAS, the appropriate taxing authorities under ORC Section 5709.40(F), including the Norwich Township Fire Department and Emergency Medical Services (the “Fire Department”), will also receive the amounts they would have received in real property taxes attributable to any amount by which the effective tax rate of either a renewal levy with an increase or a replacement levy exceeds the effective tax rate of the levy renewed or replaced, or that are attributable to an additional levy, for a levy authorized by the voters on or after January 1, 2006 for any applicable services as described in ORC Section 5709.40(F)(1)-(13); and
WHEREAS, the City has determined that the applicable portion of the Service Payments shall be paid directly to the Hilliard City Schools and Tolles Career & Technical Center (the “School Districts”) in an amount equal to the real property taxes that the School Districts would have been paid if the improvement to each Parcel located within the Incentive Districts and the School Districts had not been exempt from taxation pursuant to this Ordinance; and
WHEREAS, in accordance with the Big Darby Revenue Program, the five percent (5%) of the real property taxes of the improvements to each Parcel not exempted from taxation pursuant to this Ordinance will be distributed directly to the appropriate taxing authorities under ORC Section 5709.40(F) including the Fire Department; and
WHEREAS, in furtherance of the Big Darby Revenue Program’s requirements to have twenty percent (20%) of the City’s Service Payments used for regional purposes and seventy-five percent (75%) for Big Darby Accord purposes, after providing payment to the Fire Department as described herein, the remaining ninety-five percent (95%) that becomes the Service Payments distributed to the City will be split so that cumulatively approximately 21.05% of the 95% is used for the City’s priority regional purposes and 78.95% of the 95% is used for Big Darby Accord purposes; and
WHEREAS, notices of this proposed ordinance have been delivered to the Owners, Council conducted a public hearing on this Ordinance, notice has been delivered to the Board of County Commissioners of Franklin County, Ohio (the “Commissioners”), and notice of this proposed ordinance has been delivered to the Board of Education of the School Districts in accordance with and within the time periods prescribed in ORC Sections 5709.40 and 5709.83, respectively; and
WHEREAS, pursuant to ORC Section 5709.40(E) and the Commissioners’ Resolution Nos. 0834-21 and 0835-21, the Commissioners formally objected to the exemption for the number of years in excess of ten (10) until such time as either the Commissioners negotiate a mutually acceptable compensation agreement with the City (the “Compensation Agreement”) or the City proceeds to create the Sugar Farm Incentive District and Renner South Incentive District providing for compensation to the County at the default rate as set forth in ORC Section 5709.40(E)(2); and
WHEREAS, pursuant to ORC Section 5709.40(E), the City, by Ordinance 3319-2021 and the Commissioners, by Resolution 0970-21, have authorized the Compensation Agreement and therein the City has also committed to entering into an agreement with the Fire Department; and
WHEREAS, in lieu of direct compensation from the City, under the Compensation Agreement, the County shall receive, in the same manner as usual, an amount equal to five percent (5%) of the real property taxes that the County would have been paid for the improvements to each Parcel located within the Incentive Districts; and
WHEREAS, the City and the Commissioners have additionally agreed, pursuant to the Compensation Agreement, to allocate the real property taxes and the Service Payments pursuant to the recommendations of the Big Darby Revenue Program as described herein including, but not limited to, the City providing a portion of its Service Payments to the Fire Department; and
WHEREAS, pursuant to ORC Section 5709.43(A), this Council has determined to establish two municipal public improvement tax increment equivalent funds in which there shall be deposited the appropriate remaining non-school and non-taxing authority Service Payments distributed to the City as provided herein; and
WHEREAS, an emergency exists in the daily operations of the Department of Development such that it is immediately necessary to enable the timely financing and redevelopment of the Parcels already in process for the preservation of the public health, peace, property and safety; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. Parcels and Creation of Incentive Districts. The real property subject to this ordinance is identified and depicted in Exhibit A but does not include the real property identified and depicted in Exhibit A-1 (as currently or subsequently configured, the “Parcels”, with each individual parcel, a “Parcel”). Pursuant to the TIF Statutes, this Council hereby creates the “Sugar Farm Incentive District” and the “Renner South Incentive District” (individually, an “Incentive District” and together, the “Incentive Districts”), the boundaries of each shall be coextensive with the boundary of, and shall include, the Parcels.
Section 2. Public Infrastructure Improvements. This Council hereby designates the public infrastructure improvements described in Exhibit B (the “Public Infrastructure Improvements”) and any other public infrastructure improvements hereafter designated by ordinance as public infrastructure improvements made, to be made or in the process of being made by the City that benefit or serve, or that once made will benefit or serve the Parcels.
Section 3. Exemptions. Pursuant to ORC Section 5709.40(C), this Council hereby finds and determines that ninety-five percent (95%) of the increase in assessed value of each Parcel subsequent to the effective date of this ordinance (which increase in assessed value is hereinafter referred to as the “Improvement” as defined in ORC Section 5709.40(A)) is hereby declared to be a public purpose and exempt from taxation for a period coextensive with the life of the Incentive District containing such Parcel, which commences for each Incentive District separately with the first tax year that begins after the effective date of this Ordinance and in which an Improvement first appears on the tax list and duplicate of real and public utility property for a Parcel in that Incentive District and ending on the earlier of: (a) thirty (30) years after such commencement; or (b) the date on which the City can no longer require service payments in lieu of taxes, all in accordance with the requirements of the TIF Statutes. The exemption provided by this ordinance is subordinate to any exemption for a Parcel granted pursuant to ORC Section 3735.65 et. seq. (community reinvestment area), ORC Section 5709.61 et. seq. (enterprise zone) and ORC Section 5709.08 (government and public property).
Section 4. Service Payments and Property Tax Rollback Payments. As provided in ORC Section 5709.42, the current and future owners of each Parcel (each individually an “Owner” and collectively the “Owners”) are hereby required to make service payments in lieu of taxes with respect to the Improvement allocable to each Parcel to the Franklin County Treasurer on or before the final dates for payment of real property taxes. The service payments in lieu of taxes will be charged and collected in the same manner and in the same amount as the real property taxes that would have been charged and collected against that Improvement if it were not exempt from taxation pursuant to this Ordinance, including any penalties and interest (collectively, the “Service Payments”). The Service Payments, and any other payments with respect to each Improvement that are received in connection with the reduction required by ORC Sections 319.302, 321.24, 323.152 and 323.156, as the same may be amended from time to time, or any successor provisions thereto as the same may be amended from time to time (the “Property Tax Rollback Payments”), will be deposited and distributed in accordance with this Ordinance.
Section 5. TIF Funds. This Council establishes, pursuant to and in accordance with the provisions of ORC Section 5709.43, the Sugar Farm Municipal Public Improvement Tax Increment Equivalent Fund and the Renner South Municipal Public Improvement Tax Increment Equivalent Fund (individually, a “TIF Fund” and together, the “TIF Funds”), into which the appropriate Service Payments and Property Tax Rollback Payments collected with respect to the Parcels of each Incentive District and not required pursuant to this Ordinance to be distributed to Hilliard City Schools and Tolles Career & Technical Center (the “School Districts”) and any other appropriate taxing authority under ORC Section 5709.40(F) (the “Taxing Authorities”) will be deposited. The TIF Funds will be maintained in the custody of the City. The City may use amounts deposited into the TIF Funds only for the purposes authorized in the TIF Statutes and this Ordinance (as it may be amended). The TIF Funds will remain in existence so long as the Service Payments and Property Tax Rollback Payments are collected and used for the aforesaid purposes, after which time the TIF Funds will be dissolved and any surplus funds remaining therein transferred to the City's General Fund, all in accordance with ORC Section 5709.43.
Section 6. Distributions; Payment of Costs. Pursuant to the TIF Statutes, the County Treasurer is requested to distribute the Service Payments and Property Tax Rollback Payments as follows:
a. To the School Districts, an amount equal to the amount the School Districts would otherwise receive as real property tax payments (including the applicable portion of any Property Tax Rollback Payments) derived from the Improvement to each Parcel if the Improvement had not been exempt from taxation pursuant to this Ordinance.
b. To the Taxing Authorities, an amount equal to the amounts they would have received in real property taxes attributable to any amount by which the effective tax rate of either a renewal levy with an increase or a replacement levy exceeds the effective tax rate of the levy renewed or replaced, or that are attributable to an additional levy, for a levy authorized by the voters on or after January 1, 2006 for any applicable services as described in ORC Section 5709.40(F)(1)-(13).
d. To the City, all remaining amounts for further deposit into the appropriate TIF Funds for payment of costs of the Public Infrastructure Improvements, including, without limitation, debt charges on any notes or bonds issued to pay or reimburse finance costs or costs of those Public Infrastructure Improvements. Pursuant to the Compensation Agreement and a subsequent to be authorized agreement with the Fire Department, the City will provide to the Fire Department from the amounts received by the City described in this Section 6.d. an amount equal to the real property taxes the Fire Department would have received if not for the ninety-five percent (95%) exemption provided to the Improvements within the Incentive Districts less the amount the Fire Department receives pursuant to ORC 5709.40(F)(13). In furtherance of the Big Darby Revenue Program’s requirements, twenty percent (20%) of the City’s Service Payments and Property Tax Rollback Payments will be used for regional purposes and seventy-five percent (75%) for Big Darby Accord purposes; after the City provides amounts to the Fire Departments as described in this Section 6.d., the remainder of the ninety-five percent (95%) that becomes the Service Payments and Property Tax Rollback Payments distributed to the City will be split so that cumulatively approximately 21.05% of the remaining 95% is used for the City’s priority regional purposes and 78.95% of the remaining 95% is used for Big Darby Accord purposes as further determined in a tax increment financing agreement to be submitted for City Council consideration.
All distributions required under this Section are requested to be made, unless required by the TIF Statutes to be made, at the same time and in the same manner as real property tax distributions.
Section 7. Further Authorizations. This Council hereby authorizes the Director of the Department of Development, the City Clerk or other appropriate officers of the City to deliver a copy of this ordinance to the Ohio Department of Development and to make such arrangements as are necessary and proper for collection of the Service Payments. This Council further authorizes the Director of the Department of Development, the City Clerk, the City Attorney or other appropriate officers of the City to prepare and sign all agreements and instruments and to take any other actions as may be appropriate to implement this Ordinance.
Section 8. TIRC. The City’s Tax Incentive Review Council (TIRC) shall review annually all exemptions from taxation resulting from the declarations set forth in this Ordinance and any other matters as may properly come before the TIRC, all in accordance with Section 5709.85 of the Ohio Revised Code.
Section 9. Severability. If any provision of this Ordinance, or any covenant, obligation or agreement authorized herein is determined by a court to be invalid or unenforceable, that determination shall not affect any other provision, covenant, obligation or agreement, each of which shall be construed and enforced as if the invalid or unenforceable portion were not contained herein. That invalidity or unenforceability shall not affect any valid and enforceable application thereof, and each such provision, covenant, obligation or agreement shall be deemed to be effective, operative, made, entered into or taken in the manner and to the full extent permitted by law.
Section 10. Effective Date. For the reasons stated in the Preamble hereto, which is hereby made a part hereof, this Ordinance is hereby 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 the passage if the Mayor neither approves nor vetoes the same.