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HomeMy WebLinkAbout36-05 Ordinance RECORD OF ORDINANCES Dayton Legal Blank, Inc. Form No. 30043 36-OS Ordinance No. Passed Zp AN ORDINANCE AUTHORIZING THE EXECUTION OF AN ECONOMIC DEVELOPMENT AGREEMENT BETWEEN THE CITY OF DUBLIN AND 3SG CORPORATION TO INDUCE THE RETENTION AND EXPANSION OF ITS OPERATIONS WITHIN THE CITY OF DUBLIN. WHEREAS, consistent with its Economic Development Strategy (the "Strategy') approved by Dublin City Council Resolution No. 07-94 adopted on June 20, 1994, and the updated strategy approved by Dublin City Council Resolution No. 30-04 adopted on July 6, 2004, the City desires to encourage commercial office development and provide for the creation of employment opportunities within the City; and WHEREAS, 3SG Corporation and its affiliates, QuickAccountant and 3SG Insurance Co-sourcing ("3SG"), based on the results of its recent comprehensive examination of workforce and facilities needs, and induced by and in reliance on the economic development incentives provided in this Agreement, is desirous of retaining and expanding its office and workforce to the City; and WHEREAS, this Council has determined to offer certain economic development incentives, the terms of which are set forth in a substantially final form of Economic Development Agreement presently on file in the office of the Clerk of Council, to induce 3SG to retain and expand its operations and workforce to the City, thereby creating additional jobs and employment opportunities and improving the economic welfare of the people of the State of Ohio and the City, all pursuant to Section 718.08 of the Ohio Revised Code and Article VIII, Section 13 of the Ohio Constitution; and WHEREAS, this Council finds that it is in the best interest of the City to provide these economic development incentives to induce 3SG to retain and expand its operations and workforce to the City and to provide for the execution and delivery of that Economic Development Agreement with 3SG; NOW, THEREFORE, BE IT ORDAINED by the Council of the City of Dublin, Franklin, Union and Delaware Counties, Ohio, of the elected members concurring that: Section 1. The City hereby finds and determines that the provision of certain economic development incentives as described in the Economic Development Agreement (as described below) is necessary and appropriate and in the best interests of the City to provide for the creation of jobs and employment opportunities and to improve the economic welfare of the people of the State of Ohio and the City, all as authorized in Section 718.08 of the Ohio Revised Code and Article VIII, Section 13 of the Ohio Constitution. Section 2. The Economic Development Agreement by and between the City and 3SG, in the form presently on file with the Clerk of Council, providing for, among other things, the provision of economic development incentives in consideration for 3SG's agreement to retain and expand its operations and its workforce to the City, is hereby approved and authorized with changes therein not inconsistent with this Ordinance and not substantially adverse to this City and which shall be approved by the City Manager and Director of Finance. The City Manager and Director of Finance, for and in the name of this City, are hereby authorized to execute that Economic Development Agreement, provided further that the approval of changes thereto by those officials, and their character as not being substantially adverse to the City, shall be evidenced conclusively by their execution thereof. This Council further authorizes the City Manager and the Director of Finance, for and in the name of the City, to execute any amendments to the Economic Development Agreement, which amendments are not inconsistent with this Ordinance and not substantially adverse to this City. RECORD OF ORDINANCES Dayron LEI Blank. Inc. Form No. 30043 36-OS Page 2 Ordinance No. Pissed . 20 Section 3. This Council further hereby authorizes and directs the City Manager, the Director of Finance, the Director of Law, the Clerk of Council, or other appropriate officers of the City to prepare and sign all agreements and instruments and to take any other actions as maybe appropriate to implement this Ordinance. Section 4. This Council finds and determines that all formal actions of this Council concerning and relating to the passage of this Ordinance were taken in an open meeting of this Council and that all deliberations of this Council that resulted in those formal actions were in meetings open to the public in compliance with the law. Section 5. This Ordinance shall be in full force and effect on the earliest date permitted by law. Signed: Presiding Officer Attest: erk of uncil Passed: Uu~V 5 , 2005 Effective: ~uq/~Sf ' ~f , 2005 I hereby certify that copies of this Ordinance/Resolution were posted in the City of Dublin in accordance with Section 731.25 of the Ohio Revised Code. De Clerk of Council, Dub in, Ohio Office of the City Mana er 5200 Emerald Parkway • Dubin, OH 43017 Phone: 614-410-4400 • Fax: 614-410-4490 CITY OF DUBLIN Memo To: Members of the Dublin City Council From: Jane S. Brautigam, City Manager ~~,~j- . ~~,,,,,J Date: June 29, 2005 Re: ORD 36-OS -Economic Development Agreement - 3SG Corporation Initiated by: Dana McDaniel, Deputy City Manager /Director of Economic Develop nt Colleen Gilger, Economic Development Specialist Summary: Attached for your review is an Economic Development Agreement with 3SG Corporation, for the purpose of encouraging the retention and expansion of their corporate operations within the City of Dublin. 3SG provides technology co-sourcing to companies and government agencies :in order to help them lower costs and increase efficiency by providing them with high quality document imaging and management solutions, information technology staffing and professional services, software process development services and business process co- sourcing. 3SG Corp., and affiliates QuickAccountant and 3SG Insurance Co-sourcing, is headquartered in Dublin, with regional offices recently opening in Boston, MA and Chillicothe, OH. 3SG's headquarters houses 180 employees and currently is located on Cramer Creek; and their desire is to expand their existing leased space, to accommodate business growth and 3'~0 new employees. Current annual payroll for the company is $4.225 million. With the addition of the 320 new jobs, total annual payroll is expected to exceed $11 million by 2009. The attached Economic Development Agreement will provide 3SG with (1) a Performance Incentive to create the 320 new jobs by December 31, 2007, and (2) a Technology Grant to help offset the cost of additional bandwidth and fiber connectivity needed once its workforce and contract expansion is complete. The City's proposed Technology Grant to 3SG totals $7,500, payable in Year One of the agreement without forfeit, assuming a minimum five-year lease renewal (through 2012) and expansion plan into additional leased space is undertaken (or a facility acquisition occurs) no later than January 1, 2008. The City also is proposing a Job Growth Incentive, and would offer to pay to 3SG an amount equal to its Actual Withholdings minus predetermined Target Withholdings, multiplied by an Incentive Factor (18 percent) for afive- yearperiod. Should 3SG achieve all predetermined annual targets tied to job growth as set forth in the Agreement, the company could potentially receive a total incentive worth $100,204 (which includes the Technology Grant dollars). Over the term of this agreement, the City is estimated to net approximately $850,000 in income tax withholdings. The Agreement does not contain any non-financial incentives. Recommendation: Staff continues to pursue local workforce retention and new job growth initiatives within the community. Using incentives to retain jobs and encourage growth of longstanding Dublin-based companies like 3SG Corp. will result in additional income tax revenue. Staff recommends the Economic Development Agreement and Ordinance No. 36- 05 be accepted by City Council on July 5, 2005. ECONOMIC DEVELOPMENT AGREEMENT THIS ECONOMIC DEVELOPMENT AGREEMENT (the "Agreement") is made and entered into this day of , 2005, by and between the CITY of Dt1BLIN, OIIIO (the "City"), a municipal corporation duly organized and validly existing under the Constitution and the laws of the State of Ohio (the "State") and its Charter, and 3SG,. CORP./3SG INSURANCE Co-souRCnvG, INC./QuICxACCOUNTANT, INC. ("3SG"), an Ohio corporation with its offices located in Dublin, Ohio, under the circumstances summarized in the following recitals. RECITALS: WHI:REAS, consistent with its Economic Development Strategy (the "Strategy") approved by Dublin City Council Resolution No. 07-94 adopted on June 20, 1994, and the updated strategy approved by Dublin City Council Resolution No. 30-04 adopted on July 6, 2004, the City desires to encourage commercial office and retail development and provide for the retention and creation of employment opportunities within the City; and WHI:REAS, based on the results of 3SG's recent comprehensive examination of workforce needs, and induced by and in reliance on the economic development incentives provided in this Agreement, 3SG is desirous of retaining its existing workforce of 180 employees within the City; and expanding its workforce to include 320 new jobs in Dublin; and WI-IEREAS, pursuant to Ordinance No. 36-OS passed , 2005 (the "Ordinance"), the City has determined to offer economic development incentives described herein to induce 3SG to retain and expand its workforce within the City to create jobs and employment opportunities and to improve the economic welfare of the people of the State of Ohio and the City, all as authorized in Article VIII, Section 13 of the Ohio Constitution; and WHEREAS, the City and 3SG have determined to enter into this Agreement to provide these incentives to induce 3SG to locate its operations within the City; Now THI:REFORE, the City and 3SG covenant agree and obligate themselves as follows: Section 1. 3SG Agreement to Retain Current Workforce at its Dublin Facility and Create Jobs. 3SG presently employs 180 employees at its site located at 344 Cramer Creek Court in the City of Dublin. The aggregate annual payroll of those employees is approximately $4,225,000. For consideration of the economic development incentives to be provided by the City herein, 3SG agrees that it will retain its current workforce of 180 fizlltime employees in the City; and create an expanded workforce of 320 new employees in Dublin no later than December 31, 2007. 3SG estimates that the average annual wage of those employees will be approximately $20,000. 3SG also expects that the total estimated City payroll withholdings for all of its employees in Dublin for the period 2005 through 2009 will equal or exceed $950,123. 3SG's lease at its current location expires in January 2008. Once the renewal or extension of such Lease at that location is completed, or the acquisition of a new facility located within the City occurs, 3SG agrees to provide written evidence of a renewal or extension lease agreement or acquisition of a new facility within the City obligating 3SG through at least December 31, 2012, to the City which shall be in a form which is reasonably acceptable to the City. 3SG agrees that the City shall not be required to make any payments after December 31, 2007 which may otherwise be required by this Agreement until such written evidence of such new or extended lease or acquisition of a new facility within the City has been delivered to and accepted by the City. Section 2. Cit~greement to Provide Incentives. (a) General. In consideration for 3SG's agreement to expand its operations, workforce and associated payroll within the City, the City agrees to provide economic development incentives to 3SG in accordance with this Section. (b) Technolog_~rant. 3SG will update its equipment and bandwidth fiber to support its expansion in Dublin. In consideration of that agreement to upgrade such equipment and retain and expand its workforce within the City, the City agrees to provide a grant in the amount of $7,500 to 3SG to be used for the purpose of upgrading equipment and bandwidth/fiber. The City agrees that it will remit payment in the amount of the grant no later than thirty (30) days following the execution of the agreement. (c) Workforce Relocation Incentive. (i) Calculation of Actual Withholdings. On or before March 15 of each of the years 2006 thru 2010 the City shall determine whether the actual payroll withholding taxes collected during the preceding calendar year by the City from all Employees (the "Actual Withholdings") meet or exceed the Target Withholdings for that preceding calendar year, all in accordance with the schedule set forth below. For purposes of this Section 2, "Employees" shall include only the following: (A) All individuals employed by 3SG working at any 3SG facility located within the City ("3SG Employees"); and (B) All independent contractors (excluding construction contractors and tradesmen), consultants and temporary employees working at any 3SG facility located within the City (each a "Contract Employee"). (ii) Information Relating to 3SG Employees. 3SG agrees that, in accordance with the Dublin City Code, the annual payroll reconciliation and related W-2 forms relating to 3SG Employees will be provided to the City prior to February 28 of each calendar year. (iii) Information Relating to Contract Employees. 3SG agrees that documentation will be provided to the City prior to each April 15 determination date identifying Contract Employees and their respective income tax withholdings which 3SG requests be included in the calculation of Actual Withholdings. 3SG also agrees that such -2- documentation shall include but not be limited to Form 1099 reports, other reports representing the actual amount of compensation and related payroll withholding taxes that relate solely to work by each Contract Employee undertaken on behalf of 3SG and affidavits affirming the veracity of such representations. 3SG acknowledges and further agrees that the City shall in its sole, reasonable discretion and based on the provided documentation, determine whether the payroll withholding taxes of a particular Contract Employee will be included in the calculation of Actual Withholdings. (d) Payments to 3SG. If the actual payroll withholding taxes collected during the preceding calendar year by the City from all employees, net of refunds ("Actual Withholdings"), exceed the Target Withholdings for the preceding calendar. year, the City shall, on or before April 15 of the then current calendar year, pay to 3SG, solely from nontax revenues, an amount equal to the product of (A) an amount equal to the Actual Withholdings minus the Target Withholdings, multiplied by (B) the Incentive Factor (as defined below) ("Incentive Payment"). (e) Withholdings and Incentive Payments. With respect to the Actual Withholdings collected during each of the calendar years 2005 through 2009, inclusive, the Incentive Factor shall be eighteen percent (18%). The Target Withholdings for each of those calendar years shall be: Calendar Year Target Withholdings 2005 $84,448 2006 $85,715 2007 $87,000 2008 $88,305 2009 $89,630 The payments provided for in this Section 2 shall be made by the City to 3SG by electronic funds transfer or by such other manner as is mutually agreed to by the City and 3SG. (f) Additional Incentives. The City and 3SG agree that if 3SG's exceeds its job relocation targets described herein, the City and 3SG may enter in negotiations for additional incentives not otherwise provided by this Agreement. (g) Forfeiture of Incentive Pa~rnent(s) and 'Technology Grant. 3SG agrees and acknowledges that Incentive Payments provided for in Section 2(d) are being made by the City to 3SG in consideration for 3SG's agreement to expand its workforce within the City. 3SG further agrees that if the Target Withholding is not met for any given year, as set forth in Section 2(d) above, the City shall not be obligated to make any incentive payment to 3SG for the year in which the Target Withholding was not met. Failure to meet the 'Target Withholding in any one incentive year does not prohibit 3SG from receiving an Incentive Payment for any subsequent year in which the Target Withholding is met. 3SG also agrees that if by December 31, 2009 total annual payroll has not reached or exceeded $11,124,813, the $7,500 Technology Grant set forth in Section 2(b) above, must be forfeited and repaid in full no later than December 31, 2010. -3- (h) Cites Obligation to Make Payments Not Debt• Payments Limited to Nontax Revenues. Notwithstanding anything to the contrary herein, the obligations of the City pursuant to this Agreement shall not be a general obligation debt or bonded indebtedness, or a pledge of the general credit or taxes levied by the City, and 3SG shall have no right to have excises or taxes levied by the City, the State or any other political subdivision of the State for the performance of any obligations of the City herein. Consistent with Section 13 of Article VIII, Ohio Constitution, any payments or advances required to be made by the City pursuant to this Section 2 shall be payable solely from the City's non-tax revenues. Further, since Ohio law limits the City to appropriating monies for such expenditures only on an annual basis, the obligation of the City to make payments pursuant to this Section 2 shall be subject to annual appropriations by the City Council and certification by the Director of Finance of the City as to the availability of such non- tax revenues. (i) Applicable City Payroll Tax Rate. For purposes of calculating the Actual Withholdings in each calendar year under this Section 2, the City's payroll tax rate shall be assumed to be two percent (2%). Section 3. Miscellaneous. (a) Notices. Except as otherwise specifically set forth in this Agreement, all notices, demands, requests, consents or approvals given, required or permitted to be given hereunder shall be in writing and shall be deemed sufficiently given if actually received or ifhand-delivered or sent by recognized, overnight delivery service or by certified mail, postage prepaid and return receipt requested, addressed to the other party at the address set forth in this Agreement or any addendum to or counterpart of this Agreement, or to such other address as the recipient shall have previously notified the sender of in writing, and shall be deemed received upon actual receipt, unless sent by certified mail, in which event such notice shall be deemed to have been received when the return receipt is signed or refused. For purposes of this agreement, notices shall be addressed to: (i) the City at: City of Dublin, Ohio 5800 Shier Rings Road Dublin, Ohio 43016-7295 Attention: Economic Development Director (ii) 3SG at: 344 Cramer Creek Court Dublin, Ohio 43016 Attention: The parties, by notice given hereunder, may designate any further or different addresses to which subsequent notices; certificates, requests or other communications shall be sent. (b) Extent of Provisions; No Personal Liability. All rights, remedies, representations, warranties, covenants, agreements and obligations of the City under this Agreement shall be effective to the extent authorized and permitted by applicable law. No representation, warranty, -4- covenant, agreement, obligation or stipulation contained in this Agreement shall be deemed to constitute a representation, warranty, covenant, agreement, obligation or stipulation of any present or future trustee, member, officer, agent or employee of the City or 3SG in other than his or her official capacity. No official executing or approving the City's or 3SG's participation in this Agreement shall be liable personally under this Agreement or be subject to any personal liability or accountability by reason of the issuance thereof. (c) Successors. This Agreement shall be binding upon and inure to the benefit of 3SG and its successors and assigns. (d) Recitals. 'The City and 3SG acknowledge and agree that the facts and circumstances as described in the Recitals hereto are an integral part of this .Agreement and as such are incorporated herein by reference. (e) Amendments. This Agreement may only be amended by written instrument executed by the City and 3SG. (f) Executed Counterparts. This Agreement maybe executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute but one and the same agreement. It shall not be necessary in proving this Agreement to produce or account for more than one of those counterparts. (g) Severability. In case any section or provisian of this Agreement, or any covenant, agreement, obligation or action, or part thereof, made, assumed, entered into or taken, or any application thereof, is held to be illegal or invalid for any reason, (i) that illegality or invalidity shall not affect the remainder hereof or thereof, any other section or provision hereof, or any other covenant, agreement, obligation or action, or part thereof, made, assumed, entered into or taken, all of which shall be construed and enforced as if the illegal or invalid portion were not contained herein or therein, (ii) the illegality or invalidity of any application hereof or thereof shall not affect any legal and valid application hereof or thereof, and (iii) each section, provision, covenant, agreement, obligation or action, or part thereof, shall be deemed to be effective, operative, made, assumed, entered into or taken in the manner and to the full extent permitted bylaw. (h) Captions. The captions and headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. (i) Governing Law and Choice of Forum. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio or applicable federal law. All claims, counterclaims, disputes and other matters in question between the City, its agents and employees, and 3SG, its employees and agents, arising out of or relating to this Agreement or its breach will be decided in a court of competent jurisdiction within Franklin County, Ohio. -5- (j) Survival of Representations and Warranties. All representations and warranties of 3SG and the City in this Agreement shall survive the execution and delivery of this Agreement. (k) Notwithstanding any clause or provision of this Agreement to the contrary, in no event shall City or 3SG be liable to each other for punitive, special, consequential, or indirect damages of any type and regardless of whether such damages are claimed under contract, tort (including negligence and strict liability) or any other theory of law. -6- IN Wrr1vESS WHEREOF, the City and 3SG have caused this Agreement to be executed in their respective names by their duly authorized representatives, all as of the date first written above. CITY OF DUBLIN OHIO By: Printed: Jane Brautigam Title: Cit~Manager Approved as to Form: By: Printed: Stephen J. Smith Title: Director of Law 3SG COIti'. By: Printed: Title: -7- FISCAL OFFICER'S CERTIFICATE The undersigned, Director of Finance of the City under the foregoing Agreement, certifies hereby that the moneys required to meet the obligations of the City under the foregoing Agreement have been appropriated lawfully for that purpose, and are in the Treasury of the City or in the process of collection to the credit of an appropriate fund, free from any previous encumbrances. This Certificate is given in compliance with Sections 5705.41 and 5705.44, Ohio Revised Code. Dated: , 2005 Marsha I. Grigsby Deputy City Manager/Director of Finance City of Dublin, Ohio -8-