Explanation
BACKGROUND:
This legislation authorizes the Director of the Department of Development to amend the existing Enterprise Zone Agreement (EZA) with Northland Associates LLC, Retail Ventures, Inc. and three of its subsidiaries, including, Value City Department Stores LLC (fka Value City Department Stores, Inc.,) Retail Ventures Services, Inc., and DSW, Inc. (fka Shonac Corporation) (collectively the "Retail Ventures Entities").
Columbus City Council approved an EZA and a Jobs Creation Tax Credit Agreement (JCTCA) by Ordinance No. 2237-2003 on October 6, 2003. The legislation authorized the Director of the Department of Development to enter into an EZA with Value City Department Stores, Inc. and Northland Associates LLC for a tax abatement of 75% for a period of ten years on real property improvements and personal property as well as a JCTCA of 60% for a period of 15 years with Value City Department Stores, Inc. in consideration of a proposed $19.5 million investment, the retention of 548 full-time jobs and the creation of 110 new full-time positions. Subsequent to the authorization by Columbus City Council, an amendment was approved on January 12, 2004 by Ordinance No. 0053-2004 to change the name of Value City Department Stores, Inc. to reflect the new parent company, Retail Ventures, Inc. and three of its subsidiaries including Value City Department Stores, Inc., Shonac Corporation and Retail Ventures Services, Inc.
Due to economic conditions, Retail Ventures Entities did not invest in personal property, nor retain 548 jobs nor create 110 jobs. Therefore, City of Columbus did not enter into a JCTCA with Retail Ventures Entities because of the lack of job creation.
However, Retail Ventures did create two jobs (making them eligible for an incentive) instead of 110 jobs they had hoped would have been created under the original deal. Under the new deal, Retail Ventures Entities has subleased the project space to the State of Ohio. The State has located and retained 790 jobs with an estimated annual payroll of $32 million providing $632,000 in income tax. The original proposed employment of 548 jobs would have had an estimated payroll of $22 million and $438,000 in income tax. Therefore, the new deal results in approximately $194,000 of additional income tax to the City.
FISCAL IMPACT:
No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to amend the existing Enterprise Zone Agreement with Retail Ventures Entities and Northland Associates, LLC. to reflect a change in investment from $19 million to $16.6 million, the creation of two full time jobs, and the retention of 790 jobs from the State of Ohio; and to declare an emergency.
Body
WHEREAS, the Columbus City Council approved an Enterprise Zone Agreement (EZA) and Jobs Creation Tax Credit Agreement (JCTCA) with Value City Department Stores, Inc. and Northland Associates, LLC. on October 6, 2003 by Ordinance No. 2237-2003; and
WHEREAS, the EZA granted a 75%/10 year incentive on real property improvements and personal property to Value City Department Stores, Inc. and Northland Associates, LLC and the JCTCA granted a 60%/15 year incentive to Value City Department Stores, Inc.; and
WHEREAS, the EZA required Value City Department Stores, Inc. and Northland Associates, LLC to invest $19.5 million, retain 548 full-time jobs and create 110 new full-time jobs; and
WHEREAS, DSW created sixty two (62) jobs as a result of the Retail Ventures project but the jobs were not created at the project site; and
WHEREAS, the EZA and JCTCA was amended on January 12, 2004 by Ordinance No. 0053-2004 to reflect the new parent holding company of Value City Department Stores, Inc. now known as Retail Ventures, Inc. and three of its subsidiaries which include Value City Department Stores LLC (fka Value City Department Stores, Inc.) DSW, Inc. (fka Shonac Corporation) and Retail Ventures Services, Inc. (collectively, the "Retail Ventures Entities"); and
WHEREAS, the City did not enter into a JCTCA with Retail Ventures Entities because Retail Ventures Entities will not create 110 jobs; and
WHEREAS, a need exists to amend the EZA because: (1) current economic conditions have forced the Retail Ventures Entities to reassess their decision to occupy the Project Site (as defined in the EZA and incorporated herein); (2) the Retail Ventures Entities are unlikely to invest in any tangible personal property at the Project Site and (3) the Retail Ventures Entities are unlikely to create the 110 new full-time permanent jobs at the Project Site required by the EZA; and
WHEREAS, Retail Ventures, Inc has entered into an agreement with the State of Ohio effective April 1, 2005, under which Retail Ventures, Inc. agreed to sublease its portion of the Project Site to the Department of Administrative Services for occupancy by the Ohio Department of Taxation; and
WHEREAS, an emergency exists in the usual daily operations of the Department of Development in that it is immediately necessary to amend the Enterprise Zone Agreement in order to preserve the public health, peace, property, safety and welfare; 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 Enterprise Zone Agreement with Retail Ventures Entities and Northland Associates, LLC to reflect a change in investment from $19 million to $16.6 million, the creation of two full time jobs and the retention of 790 jobs by the State of Ohio.
Section 2. That for reasons stated in the preamble hereto, which is hereby made a part hereof, this ordinance is declared to be an emergency measure and shall take effect and be in force from and after passage and approval by the Mayor or ten days after passage if the Mayor neither approves nor vetoes the same.