Explanation
BACKGROUND: With this legislation, City Council reduces to 50% the rate of tax abatement granted under the Enterprise Zone Agreement with Océ Imagistics (the "EZA") as of tax year 2007, unless Océ Imagistics converts some of the temporary jobs at the project site to permanent jobs such that the EZA job goal (73 jobs) is met by December 31, 2006. The current existing rate of tax exemption under the EZA is 75%. This legislation is consistent with the August 25, 2006 recommendation by the Tax Incentive Review Council (the "TIRC").
Columbus City Council approved the EZA with Imagistics International Inc., renamed Océ Imagistics in October 2005, by Ord. No. 324-03, adopted on March 10, 2003. Imagistics International Inc. was a distributor of document imaging equipment and supplies. The EZ project site is a distribution facility located in the Ricenbacker area, at 2525 Rohr Road. The EZA provides for a 75%/10-yr tax abatement (2004-2014) on new machinery & equipment and inventory, and requires an investment of $650,000 in real property improvements, $2.7 million in machinery & equipment and $28 million in new average value of inventory, the retention of 57 existing jobs, and the creation of 16 new full-time permanent jobs by December 31, 2004 (i.e., a total of 73 jobs). Océ Imagistics has satisfied the real and personal property investment goals and the job retention goal of 57 jobs. But as of December 2005 and August 2006, the company had created only 3 out of the 16 new jobs required by the EZA (19% attainment). The City warned the company in January 2006 about the shortfall in job creation.
Océ is a Dutch company that supplies high-end products and services for professional printing and document management. Océ acquired Imagistics in Fall 2005 and is integrating the two companies under the name Océ Imagistics. The company reported that it has decided to relocate some of Océ's warehouse operations from Chicago to Columbus. Improvements estimated at $400,000 have been made to the Columbus facility to accommodate the consolidation. In July of 2005, the company reported that it was evaluating its 15 temporary positions for conversion to permanent status. By August of 2006, there were 22 temporary positions at the project site. The company reported in August 2006 that it intends to convert some of the temporary jobs to permanent jobs, with the target of a total of 73 full-time associates on payroll no later November 30, 2006. This legislation will allow the existing 75% tax exemption rate to continue if the project attains the EZA job goal of 73 full-time permanent jobs by December 31, 2006. Otherwise, the tax exemption rate will be reduced to 50% as of tax year 2007.
FISCAL IMPACT: No funding is required for this legislation.
Title
To reduce the rate of tax exemption under the Océ Imagistics Enterprise Zone Agreement to 50% as of the 2007 tax year unless the planned conversion of temporary jobs to permanent jobs occurs as Océ Imagistics reports it anticipates, such that the EZA job goals are met by December 31, 2006; and to declare an emergency.
Body
WHEREAS, the Columbus City Council authorized an Enterprise Zone Agreement with Imagistics International Inc., renamed Océ Imagistics in October 2005, by Ord. No. 324-03, adopted on March 10, 2003 (the "EZA"); and
WHEREAS, the EZA, which was entered into effective October 22, 2003, grants a 75%/10-yr tax abatement on new machinery & equipment and inventory and requires an investment of $650,000 in real property improvements, $2.7 million in machinery & equipment and $28 million in new average value of inventory, the retention of 57 existing jobs, and the creation of 16 new full-time permanent jobs by December 31, 2004 (i.e., a total of 73 jobs); and
WHEREAS, as of December 31, 2005, the project had attained the real and personal property investments levels required by the EZA; and
WHEREAS, as of August 2006, Océ Imagistics had retained 57 jobs but had created only 3 new full-time permanent jobs (19% attainment in the job creation), though the company reported it anticipates converting some of the temporary jobs at the project site to permanent jobs with the target of a total of 73 full-time associates on payroll no later November 30, 2006; and
WHEREAS, the Tax Incentive Review Council (TIRC) recommended on August 25, 2006, that unless Océ Imagistics converts some of the temporary jobs at the project site to permanent jobs such that the EZA job goal (73 jobs) is met by December 31, 2006, the City should reduce the rate of tax exemption to 50% as of tax year 2007; and
WHEREAS, the City concurs with the TIRC recommendation to reduce the rate of tax exemption to 50% as of tax year 2007 unless the temporary jobs are converted to permanent jobs such that the EZA job goal is met by December 31, 2006; 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 the TIRC's recommendations to comply with the sixty (60) day deadline for City Council action imposed by imposed by R.C. Section 5709.85 and to preserve the public health, property, safety and welfare; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. That Columbus City Council hereby reduces the rate of tax exemption under the Océ Imagistics Enterprise Zone Agreement (the "EZA") to 50% as of the 2007 tax year, provided, however, that the EZA will continue with the existing 75% rate of tax exemption if the planned conversion of temporary jobs to permanent jobs occurs as Océ Imagistics reports that it anticipates, such that the EZA job goals are met by December 31, 2006.
Section 2. That the Director of Development is hereby directed to notify the necessary local and state agencies of any reduction in the rate of tax exemption under the EZA.
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.