Explanation
BACKGROUND: This legislation authorizes the Director of Development to amend the existing C.O.W. Industries Inc. Enterprise Zone Agreement (EZA). C.O.W. Industries Inc. (COW) is located at 1875 Progress Avenue in the city's Southside. In 1999, COW wanted to increase its production capabilities for its primary customer, Lucent, which had promised COW 2-3 times more business if COW would expand and improve its paint line. COW committed to invest $550,000 in its facility, $850,000 for M & E (a state-of-the-art "green" paint line, i.e., environmentally-friendly) and $450,000 in new inventory. Columbus City Council approved an Enterprise Zone tax abatement of 50%/5-year on real property, M & E and inventory by Ordinance No. 35-00, passed on January 10, 2000. Several months later Lucent began to cancel contracts and a collapse was underway of the cellular telecommunications equipment manufacturing industry in the U.S. This industry has since migrated offshore. In 2003, City Council approved a first amendment to the EZA based on the Tax Incentive Review Council's (TIRC) recommendation to reduce the number of required jobs and extend the time to attain the jobs.
As a survival measure, COW attempted to sell its $1.5 million new paint line as well as other M & E. The paint line did not attract a single offer. The current fair market value of the paint line was determined to be far less that its $1.5 million acquisition cost since the market for such equipment simply disappeared. COW kept the paint line and for personal property tax purposes now reports its value as current fair market value rather than acquisition cost, and this is acceptable to the Ohio Department of Taxation. The TIRC recommended on August 11, 2004 that the City amend the EZA to acknowledge and accept that the company uses current fair market value for tax purposes while using the acquisition cost of the M & E to represent the Enterprise Zone project investment. The acqui...
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