Explanation
BACKGROUND: The City of Columbus (“City”) entered into a Job Creation Tax Credit Agreement (hereinafter “Agreement”) with Hirschvogel Incorporated, (also referred to as the “Grantee”) effective August 24, 2015. Columbus City Council approved the Agreement by Ordinance Number 0831-2015, adopted April 20, 2015, and granted a non-refundable tax credit allowed against the tax imposed under Section 361.09, “Net Profits” of the Columbus City Codes (the “City Tax Credit”) of sixty percent (60%) of the new income tax revenue received by the City for a calendar year from New Employees, as defined in Section 4 of the Agreement, commencing January 1, 2018 and for six (6) consecutive years thereafter (January 1, 2018 through December 31, 2023), based on capital expenditures of approximately $50.35 million, with approximately $14.7 million toward new construction and real property improvements, and approximately $35 million in acquisition of machinery and equipment to expand its existing manufacturing facility and machining space by an estimated 65,000 square feet, retain 322 full-time jobs and create 37 new full-time permanent positions with an estimated annual payroll of approximately $1.3 million at 2230 S. 3rd Street, Columbus, OH 43207, (the “Project Site”), the Grantee’s North America headquarters.
In a letter from the Grantee received by the City in July 2016, the Grantee indicated that the aforementioned expansion project was changed, restructured and realigned with the company’s new strategic growth plan. The Grantee is now proposing to invest approximately $28.88 million, with approximately $3.97 million in real property improvements and approximately $24.91 million in acquisition costs, machinery and equipment to reconfigure its manufacturing facility and to expand its machining space by an additional 30,000 square feet. In addition, the Grantee proposes to purchase a 50,000 square-foot facility at 2222 S. 3rd Street, Columbus, Ohio 43207 that is located next to its current manufacturing operation. Also, the Grantee proposes to purchase three additional parcels just north of the company’s manufacturing facility that will be used for future possible expansion opportunities; thereby, capturing an entire City corner. The Grantee’s facilities in Columbus would include their existing North America corporate headquarters at 2230 S. 3rd Street, Columbus, Ohio 43207, the proposed 50,000 square-foot facility at 2180 and 2222 S. 3rd Street, Columbus, Ohio 43207, 2166 S. 3rd Street, Columbus, Ohio 43207, 2160 S. 3rd Street, Columbus, Ohio 43207 and parcel number 010-112874 just north of the Project Site, and has requested that these additional addresses and parcel numbers be added to the description of the Project Site within the Agreement.
As such, the need exists to amend the Agreement to change the aforementioned capital expenditure investment from $50.35 million to $28.88 million, change the job creation goal from 37 new full-time permanent positions to 30, reduce of the estimated annual payroll for those new positions from $1.3 million to approximately $1.16 million, and to add the following addresses: 2180 S. 3rd Street, Columbus, Ohio 43207, 2222 S. 3rd Street, Columbus, Ohio 43207, 2166 S. 3rd Street, Columbus, Ohio 43207, 2160 S. 3rd Street Columbus, Ohio 43207 and parcel number 010-112874 further known as Kingston Avenue, Columbus, Ohio 43207 to the Project Site as described in the Agreement.
This legislation is requested to be considered as an emergency in order to amend the Grantee’s initial capital expenditure investment, to modify the initial job creation goal and to add additional addresses and parcel numbers to the Project Site as described in the Agreement in an expedient manner as possible so as to allow for the inclusion of the employees located at these additional addresses for the reporting and compliance purposes.
FISCAL IMPACT: No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to amend the Job Creation Tax Credit Agreement with Hirschvogel Incorporated to change the capital expenditure investment from $50.35 million to $28.88 million, the new job creation goal from 37 full-time permanent positons to 30, reduce the estimated annual payroll for those new positions from $1.3 million to approximately $1.16 million, and to add 2180 S. 3rd Street, 2222 S. 3rd Street, 2166 S. 3rd Street, 2160 S. 3rd Street and parcel number 010-112874 further known as Kingston Avenue, to the Project Site as described in the Agreement and to declare an emergency.
Body
WHEREAS, Columbus City Council approved a Job Creation Tax Credit Agreement (the “Agreement”) with Hirschvogel Incorporated (also referred to as the “Grantee”) by Ordinance No. 0831-2015 on April 20, 2015 with the Agreement having been made and entered into effective August 24, 2015; and
WHEREAS, the Agreement granted a non-refundable tax credit allowed against the tax imposed under Section 361.09, “Net Profits” of the Columbus City Codes (the “City Tax Credit”) of sixty percent (60%) of the new income tax revenue received by the CITY for a calendar year from New Employees, as defined in Section 4 of the Agreement, commencing January 1, 2018 and for six (6) consecutive years thereafter, January 1, 2018 through December 31, 2023; and
WHEREAS, in the Agreement, Grantee committed to investing approximately $50.35 million, with approximately $14.7 million toward new construction and real property improvements, and approximately $35 million in acquisition of machinery and equipment to expand its manufacturing facility and machining operation, retain 322 full-time jobs and create 37 new full-time permanent positions with an estimated annual payroll of approximately $1.3 million at 2230 S. 3rd Street, Columbus, OH 43207 the Project Site, which is the Grantee’s North America corporate headquarters; and
WHEREAS, in a letter from the Grantee received by the City in July 2016, the Grantee indicated that company’s expansion plans were realigned and restructured with a new strategic growth plan; therefore, the aforementioned capital expenditure investment along with the proposed new job creation were readjusted to correspond with this new strategic growth plan. The Grantee indicated that the expansion will move forward, but with the following parameters: the capital expenditures investment will be reduced from $50.35 million to $28.88 million; the proposed job creation goal reduced from 37 full-time permanent positions to 30, the estimated annual payroll for those new positions reduced from $1.3 million to $1.16 million and retain the 322 jobs. In addition, the Grantee requested that the following addresses: 2180 S. 3rd Street, Columbus, Ohio 43207, 2222 S. 3rd Street, Columbus, Ohio 43207, 2166 S. 3rd Columbus, Ohio, 2160 S. 3rd Street, Columbus, Ohio 43207 and parcel number 010-112874 further known as Kingston Avenue be added to the description of the Project Site within the Agreement; and
WHEREAS, an amendment to the Agreement is now needed to change the proposed capital expenditure investment from $50.35 million to $28.88 million, reduce the proposed job creation goal from 37 new full-time permanent positions to 30, reduce the estimated annual payroll for those new positions from $1.3 million to $1.16 million, and to add 2180 S. 3rd Street, Columbus, Ohio 43207, 2222 S. 3rd Street, Columbus, Ohio 2166 S. 3rd Street, Columbus, Ohio 43207, 2160 S. 3rd Street, Columbus, Ohio 43207 and parcel number 010-112874 as additional addresses and parcel numbers to the Project Site as described in the Agreement; and
WHEREAS, an emergency exists in the usual daily operation of the Columbus Department of Development in that it is immediately necessary to seek an amendment to the Agreement with Hirschvogel Incorporated and to revise the project scope related to the Enterprise's capital expenditure investment, job creation goal, and to add additional addresses and parcel numbers to the Project Site as described in the Agreement; thereby preserving the public health, peace, property and safety, NOW, THEREFORE
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That the Director of the Department of Development is hereby authorized to amend the Job Creation Tax Credit Agreement with Hirschvogel Incorporated to change the estimated capital expenditure investment from $50.35 million to $28.88 million, the proposed job creation goal from 37 new full-time permanent positions to 30, the estimated annual payroll for those new positions from $1.3 million to $1.16 million, and to add 2180 S. 3rd Street, Columbus, Ohio 43207, 2222 S. 3rd Street, Columbus, Ohio 43207, 2166 S. 3rd Street Columbus, Ohio 43207, 2160 S. 3rd Street, Columbus, Ohio 43207 and parcel number 010-112874 further known as Kingston Avenue to the Project Site as described in the Agreement.
SECTION 2. That the amendment to the City of Columbus Job Creation Tax Credit Agreement be signed by Hirschvogel Incorporated within ninety (90) days of passage of this ordinance, or this ordinance and the incentive authorized herein shall be null and void.
SECTION 3. That for reasons stated in the preamble hereto, which is hereby made a part hereof, the 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.