City of Columbus - File #: 2411-2003

• File #: 2411-2003
• Version: 1
• Type: Ordinance
• Status: Passed
• File created: 10/27/2003
• In control: Development Committee
• On agenda: 12/8/2003
• Final action: 12/11/2003
• Title: To authorize the Director of Development to dissolve the Enterprise Zone Agreement and the Tax Credit Agreement with International Business Machines Corporation (IBM), and to end the related property tax exemptions and tax credit, with or without the written consent of IBM; and to declare an emergency.

Date	Ver.	Action By	Action	Result
12/11/2003	1	CITY CLERK	Attest
12/10/2003	1	ACTING MAYOR	Signed
12/8/2003	1	Columbus City Council	Approved	Pass
12/8/2003	1	COUNCIL PRESIDENT	Signed
11/24/2003	1	Dev Drafter	Sent to Clerk's Office for Council
11/21/2003	1	City Clerk's Office	Sent back for Clarification/Correction
10/27/2003	1	Dev Drafter	Sent for Approval
10/27/2003	1	DEVELOPMENT DIRECTOR	Reviewed and Approved
10/27/2003	1	Dev Drafter	Sent for Approval
10/27/2003	1	CITY ATTORNEY	Reviewed and Approved
10/27/2003	1	Dev Drafter	Sent to Clerk's Office for Council

Explanation

BACKGROUND: This legislation authorizes the Director of Development to dissolve two tax incentive agreements with International Business Machines Corporation (IBM). IBM requested that the two agreements be terminated because it will be unable to comply with the required level of job retention and creation due to the loss of a key contract.The two tax incentives, which were granted in 1999, are a 60%/10-year Enterprise Zone abatement on real and personal property and a municipal jobs creation tax credit of 50%/10-years on new jobs. Both incentives were authorized by Columbus City Council Ordinance No. 774-99, which passed on March 29, 1999. The City granted the two tax incentives in order to capture a proposed expansion by IBM at its 4499 Fisher Road facility (west side). The expansion was based on an outsourcing contract IBM was awarded to operate the Bank One data center. After the City granted the incentives, IBM invested $98.4 million in real property improvements and new personal property and ran the data center for several years. This investment amount surpassed what the Enterprise Zone Agreement required ($84 million). Bank One decided in 2002 to take its data center back in-house. As a result, IBM will not be able to attain the required level of job retention and creation and, consequently, has requested that the City terminate the tax incentive agreements. IBM has approximately 391 jobs at the project site whereas the tax incentive agreements call for 670 jobs. IBM has not utilized its municipal tax credit but has saved $939,000 due to the Enterprise Zone property tax exemptions on new investment. However, during the same time period IBM paid taxes of over $5 million on the non-abated real and personal property at the project site.

FISCAL IMPACT: No funding is required for this legislation.


Title

To authorize the Director of Development to dissolve the Enterprise Zone Agreement and the Tax Credit Agreement with Int...