Explanation
BACKGROUND:
The City of Columbus currently has an excessive amount of vacant office space in our downtown market. This high vacancy rate is having a negative impact on all business activity downtown and throughout the city. OhioHealth is currently in negotiation with Continental Real Estate for office space at 180 East Broad Street (the Borden Building) for the relocation of their corporate headquarters. OhioHealth is a leading provider of healthcare in Central Ohio employing over 12,000 employees with a payroll in excess of $443 million in the City of Columbus. OhioHealth has sold their corporate headquarters at 1087 Dennison Avenue and have explored potential sites outside the city of Columbus as they must move by year-end.
With the benefit of this incentive they anticipate moving 310 employees from their current location on Dennison Avenue to 180 East Broad Street downtown. Over the next five years they expect that number to grow to 350. This job retention and expansion is estimated to retain $22,130,000 of payroll and $442,600 annually in City income tax revenue and generate an additional $2.8 million in payroll and $57,000 in City income tax revenue annually after 5 years. Thus the Downtown Development Office recommends granting a financial incentive based on the future growth of this employment base not only to retain these jobs in Columbus but also relocate them to Downtown.
FISCAL IMPACT:
No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to enter into an incentive agreement based on payroll growth with OhioHealth. (AMENDED BY ORD. 0702-2007 PASSED 5/9/2007)
Body
WHEREAS, the City desires to retain and increase employment opportunities and encourage establishment of new jobs in the City in order to improve the overall economic climate of the City and its citizens; and
WHEREAS, OhioHealth is a leader in healthcare for Central Ohio and a prominent member of our business community and we desire to attract their corporate to headquarters Downtown; and
WHEREAS, the Department of Development has received a completed incentive application from OhioHealth; and
WHEREAS, OhioHealth estimates they will retain 310 jobs and create 40 new positions over the next five years at 180 East Broad Street, with a projected payroll of $22,130,000 generating estimated City of Columbus income tax revenue of $442,600 annually and generate an additional $2.8 million in payroll and $57,000 in City income tax revenue annually after 5 years; 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 enter into a financial incentive agreement based on payroll growth with OhioHealth structured as follows:
This incentive is an eight-year cash incentive for job retention and creation, based on:
1. 100 % of the growth in the income tax withholding paid by the 310 current OhioHealth employees located in the Corporate Headquarters at 1087 Dennison Avenue, Columbus, Ohio with a payroll of $22,132.694 relocated to the Borden Building at 180 East Broad Street.
2. 100% of the income tax withholding paid by new OhioHealth employees or existing OhioHealth employees relocated from outside the City of Columbus to the Borden Building at 180 East Broad Street.
3. The incentive is limited to a maximum of $250,000 each year in years one through four of the incentive period and up to $350,000 each year in years five through eight.
The value of the incentive is based on an amount equal to 100% of the inflationary growth in their existing payroll tax withholding (as defined in item 1 above) as well as 100% of the growth from the additional withholding tax paid from new employees located at the Borden Building, 180 East Broad Street, (as defined in item 2 above) using 2004 tax information as the base. This incentive is a cash payment paid at the end of the tax year based on actual taxes collected from the eligible employees.
Section 2. This employment at OhioHealth is the result of retaining 310 jobs from their corporate headquarters and the creation of 40 new positions to the Downtown as defined in Columbus City Code Title 33 Section 3359.03 downtown district boundary and further defined as the Borden Building located at 180 East Broad Street.
Section 3. The incentive term begins in calendar year 2005, with the incentive payment made in the following year based on actual City of Columbus income tax withholding paid by employees for the preceding year.
Section 4. Each year of the term of the agreement with OhioHealth that a payment is due, the City's obligation to pay the incentive is expressly contingent upon the passing of an ordinance appropriating and authorizing the expenditure of monies sufficient to make such payment and the certification of the City Auditor pursuant to Section 159 of the Columbus City Charter.
Section 5. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.