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HomeMy WebLinkAbout40-05 Ordinance RECORD OF ORDINANCES Dayton Legal Blank, [nc. Form No. 30043 40-OS Ordinance No. Passed 20 AUTHORIZING THE EXECUTION OF AN ECONOMIC DEVELOPMENT AGREEMENT BETWEEN THE CITY OF DUBLIN AND OHIO HEALTH TO INDUCE THE LOCATION AND EXPANSION OF ITS REVENUE CYCLE OPERATIONS AND WORKFORCE IN THE CITY OF DUBLIN. WHEREAS, consistent with its Economic Development Strategy (the "Strategy") approved by Dublin City Council by 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, Ohio Health ("Ohio Health"), based on the results of its examination of workforce and facilities needs, and induced by and in reliance on the economic development incentives provided in this Agreement, is desirous of locating its Revenue Cycle/Central Business operations and expanding its related workforce in 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 Ohio Health to locate and expand its Revenue Cycle/Central Business operation 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 Ohio Health to establish its Revenue Cycle/Central Business operation and expand its workforce to the City and to provide for the execution and delivery of that Economic Development Agreement with Ohio Health; 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 ' Ohio Health, 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 Ohio Health's agreement to establish its Central Business operation and create and expand its workforce in 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 the 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, RECORD OF ORDINANCES Dayton Lemma] Blank, Inc. Form No. 30043 - _ _ _ - - _ _ 40-OS Page 2 Ordinance No. Passed 20 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. 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: Mayor -Presiding Officer Attest: Clerk of Council Passed: ' , 2005 Effective: ~-t~L ~ , 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. D ty Clerk of Council, Dublin, 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 Date: August 11, 2005 Re: ORD. 40-OS -Economic Development Agreement -Ohio Health Central Business Office Initiated by: Dana McDaniel, Deputy City Manager /Director of Economic Developm~ jc~~'~'~/~- Colleen Gilger, Economic Development Specialist(~~ Summary: yy~v/ Attached for your review is an Economic Development Agreement with Ohio Health, for the purpose of encouraging the location and expansion of their Central Business Office operation within the City of Dublin. Ohio Health already has a significant presence in Dublin with its medical office building and urgent care facility located along Perimeter Loop Drive, and has recently begun construction of Dublin Methodist Hospital. The Ohio Health Central Business Office plans to establish its headquarters in the City of Dublin with 321 fulltime employees. The attached Economic Development Agreement will provide the Ohio Health Revenue Cycle Office with (1) a Job Growth/Performance Incentive to entice the creation of new jobs and annual payroll growth, and (2) a Location Grant tied to the new headquarters. As Mr. McDaniel stated at the August 1, 2005, Council meeting (first reading), Ohio Health did request some minor text modifications to the agreement, which are reflected in the attached EDA document. The City is proposing a Job Growth/Performance Incentive, and would offer to pay to Ohio Health an amount equal to its Actual Withholdings, multiplied by an Incentive Factor (25% for five years, 20% from for five years, and 15% for four years), should the company meet or exceed predetermined payroll withholding targets and commit to at least a 10-year lease (with at least two five-year extension options) in Dublin. The Location Grant of $300,000 would be payable in two payments: $150,000 within 30 days of building occupancy and proof of a 10-year lease agreement (with at least two five-year extension options); and another $150,000 no sooner than nine months after the initial grant payment. This incentive package provides fora 28 percent financial return to Ohio Health over the term of the agreement. The City also proposes to Ohio Health the use of its optical fiber for the purpose of connecting all Ohio Health facilities to the Central Business Office once located in Dublin. At this time, Ohio Health is still in lease negotiations. As soon as a lease is finalized, staff will inform Council of the location selected to be the new home for this operation. Should Ohio Health achieve all predetermined annual targets tied to job growth as set forth in the Agreement, the company could potentially receive a total incentive worth approximately $1 million (including the Location Grant). Over the term of this agreement, the City is estimated to net approximately $3.67 million in new income tax withholdings. Recommendation: Staff continues to pursue new job growth initiatives within the community. Using incentives to encourage establishing new operations and workforce to our community and local economy will result in additional income tax revenue. Staff recommends the Economic Development Agreement and Ordinance No. 40-OS be accepted by City Council on August 15, 2005. Draft 3, August 10, 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 DUBLIN, OHIO (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 Ohio Health an Ohio corporation, under the circumstances summarized in the following recitals. RECITALS: WHEREAS, consistent with its Economic Development 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, Ohio Health desires to locate its Revenue Cycle/Central Business Office and related workforce of 321 employees within the City of Dublin; and WIIEREAS, the City has determined to offer economic development incentives described herein to induce Ohio Health to locate and establish its Revenue Cycle/Central Business Office operations 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, Ohio Health will also construct and operate a hospital within the City of Dublin creating additional jobs and employment opportunities within the City of Dublin to the benefit of the entire Central Ohio region; and WIIEREAS, the City and Ohio Health have determined to enter into this Agreement to provide these incentives to induce Ohio Health to locate its Revenue Cycle Office within the City. Now Z~REFORE, the City and Ohio Health covenant agree and obligate themselves as follows: Section 1. Ohio Health Agreement to Locate Jobs. Ohio Health will establish its Revenue Cycle/Central Business Office in the City of Dublin; and will employ and maintain at least 321 fizlltime employees within the City of Dublin as part of its Revenue Cycle/Central Business operations. The average annual wage of these employees for this period is estimated to be $34,216 with a total aggregate estimated payroll withholdings of $4,718,280 over a fifteen (15) year period. Ohio Health will execute a ten (10) year lease, with option to extend for two consecutive five-year periods, for the Dublin facility. Proof of such lease will be presented to the City of Dublin as soon as practical after execution and prior to receiving any incentive or grant from the City of Dublin. Draft 3, August 10, 2005 Ohio Health also agrees to work with the City of Dublin Division of Taxation to set up a unique coding system for City income tax payments relating to the Revenue Cycle operation, in order to provide evidence of the differentiation between the Revenue Cycle operation, Dublin Methodist Hospital and other Ohio Health facilities within Dublin. This will ensure the City's annual target withholdings calculations for the Revenue Cycle operation can be tallied and analyzed separately to determine if target withholdings are met. Section 2. City Agreement to Provide Incentives. (a) General. In consideration for Ohio Health's agreement to locate its Revenue Cycle workforce and associated payroll within the City, the City agrees to provide economic development incentives to Ohio Health in accordance with this Section. (b) Location Grant. Ohio Health will initially occupy the Dublin facility with 321 fulltime employees. The City agrees to provide a location grant to Ohio Health totaling $300,000. The City will execute a payment of $150,000 to Ohio Health upon occupancy of the facility but no earlier than September 30, 2006. The City will execute a second payment of $150,000 to Ohio Health no sooner than nine (9) calendar months following the initial grant payment. (c) Use of Optical Fibers. The City will grant the use of four (4) of its optical fibers throughout its DubLink system. Ohio Health will use these optical fibers in accordance with the Indefeasible Right to Use (IRU) (Exhibit "A", attached) to be executed between the City and Ohio Health. (d) Workforce Relocation Incentive. (i) Calculation of Actual Withholdings. On or before March 15 of each of the years 2008 thru 2021 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 all individuals employed by Ohio Health in the City of Dublin and working at the Revenue Cycle Office. Ohio Health agrees that, in accordance with the Dublin City Code, the annual payroll reconciliation relating to Ohio Health's Employees will be provided to the City prior to February 28 of each calendar year. (ii) Payments to Ohio Health. If the Actual Withholdings meets or exceeds the Target Withholdings for the preceding calendar year, the City shall, on or before April 15 of the then current calendar year, pay to Ohio Health, solely from non-tax revenues, an amount equal to the product of (1) an amount equal to the Actual Withholdings (net of refunds paid to employees by the City), multiplied by (2) the incentive factor (25%, 20% or 15%) as set forth by the schedule in subparagraph (iii) below. -2- Draft 3, August 10, 2005 (iii) Withholdings and Incentive Payments. With respect to the Actual Withholdings collected during each of the calendar years 2007 thru 2020 (14 years), the Target Withholdings and Incentive Payment to be paid in respect of each of those calendar years shall be paid in accordance with the following schedule: Calendar Year Target Withholdings Incentive Payment (Based on Assumes 2.5% annual growth) a Percentase of Actual Withholdings for the Preceding Calendar Year) 2007 $ 246,697 N/A 2008 $ 272,248 $ 61,674 (25% of 2007) 2009 $ 280,416 $ 68,062 (25% of 2008) 2010 $ 288,828 $ 70,104 (25% of 2009) 2011 $ 297,493 $ 72,207 (25% of 2010) 2012 $ 306,418 $ 74,373 (25% of 2011) 2013 $ 315,610 $ 61,284 (20% of 2012) 2014 $ 325,079 $ 63,122 (20% of 2013) 2015 $ 334,83 l $ 65,016 (20% of 2014) 2016 $ 344,876 $ 66,966 (20% of 2015) 2017 $ 355,222 $ 68,975 (20% Of 2016) 2018 $ 365,879 $ 53,283 (15% of 2017) 2019 $ 376,855 $ 54,882 (15% of 2018) 2020 $ 388,161 $ 56,528 (15% of 2019) 2021 N/A $ 58,224 (15% of 2020) The payments provided for in this Section 2 shall be made by the City to Ohio Health by electronic funds transfer or by such other manner as is mutually agreed to by the City and Ohio Health. (e) Forfeiture of Incentive Pam. Ohio Health agrees that if the target withholding is not met, as set forth in 2(d) and 2(e) above for any given year, the City is not obligated to make any incentive payment to Ohio Health for the year in which the target was not met. Failure to meet the withholding target in any one incentive year does not prohibit Ohio Health from receiving an Incentive Payment for any subsequent year. (f) City's Obligation to Make Payments Not Debt• Payments Limited to Non-tax 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 Ohio Health 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 -3- Draft 3, August 10, 2005 appropriations by the City Council and certification by the Director of Finance of the City as to the availability of such non-tax revenues. (g) 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) Ohio Health at: Dublin, Ohio 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, 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 Ohio Health in other than his or her official capacity. No official executing or approving the City's or Ohio Health'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 Ohio Health and its successors and assigns. -4- Draft 3, August 10, 2005 (d) Recitals. The City and Ohio Health 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 Ohio Health. (f j Executed Counterparts. This Agreement may be 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 provision 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 Ohio Health, 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. (j) Survival of Representations and Warranties. All representations and warranties of Ohio Health 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 Ohio Health 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. (Signature Pages to Follow) -5- Draft 3, August 10, 2005 IN WITNESS WHEREOF, the City and Ohio Health 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: City Manager By: Printed: Marsha I. Grigsby Title: Deput~ty Manager/Director of Finance Approved as to Form: By: Printed: Stephen J. Smith Title: Director of Law OHIO HEALTH By: Printed: Title: -6- Draft 3, August 10, 2005 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 -7-