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003-03 OrdinanceRECORD OF ORDINANCES Ordinance No ................................... Passed ................................................................, 03-03........ VF R AN ORDINANCE APPROVING A TAX CREDIT AND ECONOMIC DEVELOPMENT AGREEMENT WITH AELITA SOFTWARE CORPORATION AND AUTHORIZING, CONFIRMING AND RATIFYING THE EXECUTION OF THE AGREEMENT. WHEREAS, Aelita Software Corporation (the "Company") is an employer located in the City of Dublin, Ohio (the "City") at 6500 Emerald Parkway (the "Property"), and based on inducements and incentives offered by the City in an Economic Development Agreement (the "Agreement"), the Company is embarking upon a expansion of operations at their existing facility; and WHEREAS, the City, by provision of the incentives provided in the Agreement, desired and intended to induce the Company to pursue expansion of operations for the purpose of creating jobs and employment opportunities and to improve the economic welfare of the people of the State of Ohio and the City as authorized in Article VIII, Section 13 of the Ohio Constitution; and WHEREAS, pursuant to Section 122.17 of the Ohio Revised Code (the "ORC"), the State of Ohio (the "State") established the Ohio Tax Credit Authority (the "Authority") authorized to execute agreements with taxpayers of the state of Ohio for the purpose of granting these taxpayers job creation tax credits against the taxpayers' State corporate franchise or State income tax, which tax credits are provided to create new jobs in the State; and WHEREAS, pursuant to Section 122.17 ORC, on December 9, 2002, the Authority granted the Company's request for a Jobs Creation Tax Credit; and WHEREAS, pursuant to Section 718.08 ORC, a municipal corporation is authorized to grant local income tax credits to taxpayers which have received a Jobs Creation Tax Credit from the State; and WHEREAS, the granting of the tax credits by the City for the proposed expansion by the Company will create jobs and increase opportunities for employment and strengthen the economy of the City; and WHEREAS, receiving these tax credits from the State and the City is a critical factor in the Company's decision to go forward with the project; and NOW, THEREFORE, BE IT ORDAINED by the City Council of Dublin, Franklin, Union and Delaware Counties, Ohio, of the elected members concurring that: Section 1. The City hereby finds and determines that it is necessary and appropriate and in the best interests of the City to provide certain assistance to the Company for the purpose of creating jobs and employment opportunities and to improve the economic welfare of the people of the State of Ohio and the City as authorized in Article VIII, Section 13 of the Ohio Constitution. Section 2. To provide the assistance and thereby induce the Company to expand their operations located at the Property, the City Manager and the Director of Finance, for and in the name and on behalf of the City, shall execute, acknowledge and deliver the Agreement by and between the City and the Company in substantially the form thereof on file with the Clerk of Council. That Agreement is approved with changes therein not inconsistent with this ordinance and not substantially adverse to the City and which are RECORD OF ORDINANCES Ordinance No .............03-03....................................... Passed ........_..............._............................Page 2....,,:;.;.n...... permitted by law, and shall be approved by the City Manager and the Director of Finance, provided that the approval of those changes by such officers, and their character as not being substantially adverse to the City, shall be evidenced conclusively by their execution of those instruments. Section 3. The City Manager and the Director of Finance shall execute, deliver and, if applicable, file for and in the name and on behalf of the City any other materials, documents or certifications which are necessary or appropriate to consummate the transactions contemplated in this ordinance and the Agreement. Section 4. This Council finds and determines that all formal actions of this Council concerning or relating to the passage of this ordinance were taken in an open meeting of this Council and that all deliberations of this CoLUlcil that resulted in those formal actions were in meetings open to the public in compliance with the law. Section 5. This ordinance shall take effect in accordance with Section 4.04 of the City Charter. Passed this ~,~ day of , 2003. Mayor -Presiding Officer Attest: ~~L Clerk of Council Passed: Z , 2003 Effective~.,G6 _ ~ ~ , 2003 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. ~~ ~~ Clerk of Council, Dublin, Ohio Division of Economic Development 5800 Shier-Rings Road Dublin, Ohio 43016-1236 CITY OF DUBLIN Phone: 614-410-4600 Fax: 614-761-6506 Memo To: Members of Dublin City Council From: Jane Brautigam, City Manager~~,~5, ~ °- ' Date: January 8, 2003 Re: Ordinance No. 03-03 - Aelita Software ' i Michael H. Stevens Director of Economic Develo ment ~~~ Inlt ated by p Summary: The status of this Ordinance has not changed. Recommendation: Staff is recommending the adoption of Ordinance No. 03-03. CITY OF DUBLIN Division of Economic Development 5800 Shier-Rings Road Dublin, Ohio 43016-1236 Phone:614-410-4600 Fax:614-761-6506 Memo To: Members of Dublin City Council From: Jane S. Brautigam, City Manage~"~, .,~~. (,~~,~,,,G, ~,,,,.,~' Date: December 19, 2002 V Re: Ordinance No. 03-03 Initiated by: Michael H. Stevens, Director of Economic Development Summary Ordinance No. 03-03 is the authorization to enter into an Economic Development Agreement with Aelita Software (Aelita). The Economic Development Agreement is to provide a municipal corporate income tax credit that will support the State of Ohio's Job Creation Tax Credit. The municipal corporate income tax credit is for five years at a maximum of 50 percent. Aelita received a Job Creation Tax Credit from the Ohio Tax Credit Authority on December 9, 2002. The State's incentive is contingent upon the approval of local support. Aelita is located at 6500 Emerald Parkway and currently has 50 employees. The Company develops, markets, and supports software for Windows NT administration and security. Aelita has committed to creating 60 additional jobs over the next three years. The average wage of the new positions will be $70,000/year. It is anticipated that the incentive will not exceed $42,000. Recommendation: Staff is recommending the adoption of Ordinance No. 03-03 at the January 21, 2003 City Council meeting. Division of Economic Development 5800 Shier-Rings Road Dublin, Ohio 43016-1236 CITY OF DUBLIN Phone: 614-410-4600 Fax: 614-761-6506 M e m o To: Members of Dublin City Council From: Jane Brautigam, City Manag~~~,~„ ;~. ~~.~,,,~...~~~ Date: December 2, 2002 Re: Economic Development Update -Aelita Software Initiated by: Michael H. Stevens, Director of Economic Development ~ _ !~ Summary Aelita software, 6500 Emerald Parkway, is a local software company that develops, markets, and supports software for Windows NT administration and security. The company has recently received $10 million in Venture Capital funding (see attached Dispatch and Business First Articles) and is considering expanding its operations in Dublin. Aelita is working with the State of Ohio to secure a Job Creation Tax Credit (JCTC). Currently, Aelita has 50 employees at its Dublin office and as part of its JCTC application, will commit to creating 60 additional jobs over the next 3 years. The average wage of the jobs will be $70,000/year. As City Council is aware, local support is required for the JCTC incentive. The City has offered its standard level of local support, afive-year, fifty percent corporate municipal income tax credit. Aelita's JCTC application is scheduled to be heard by the Ohio Tax Credit Authority on December 9, 2002. Recommendation No action is required at this time. Staff will place the first reading of the Aelita Software Economic Development Agreement on City Council's January 6, 2003 agenda. ECONOMIC DEVELOPMENT AGREEMENT AGREEMENT BETWEEN THE CITY OF DUBLIN AND AELITA SOFTWARE CORPORATION January 2003 ECONOMIC DEVELOPMENT AGREEMENT This Agreement is entered into on , 2003, between the City of Dublin (the "City") and Aelita Software Corporation (the "Company") for the purpose of assisting in the Company's future expansion of its technology development company corporate headquarters located at 6500 Emerald Parkway, Dublin, Ohio. ARTICLE I. BACKGROUND The Company delivers enterprise class solutions for administration and provisioning, migration and deployment, operations and security, and backup and recovery to improve the manageability and performance of Windows-based networks. The Company offers four types of support services: training, on- site consulting, custom development, and technical support. The Company has approximately 296 worldwide employees and currently has offices in Dublin, Chicago, Russia, and England. The company's Dublin presences as of November 30, 2002 consist of 52 employees. The Company relocated its offices to Dublin in 2002. The Company currently leases 13,000 s.f. and plans to lease an additional 10,000 s.f. The Company's expansion plans are expected to result in an additional 60 new jobs in Dublin in the thirty-six month period beginning January 1, 2003 and ending December 31, 2005. The City desires to enumerate specific cooperative efforts, which will be undertaken to assist the Company's future expansion. This effort is being made in recognition that expansion at the Dublin facility and the creation of these new jobs will provide economic benefits to the City and will further add to the quality of this community. Page 1 of 3 ARTICLE II. AGREEMENT 1. Municipal Corporate Income Tax Credit. City agrees to assist the Company in its application for Job Creation Tax Credit from the State. If the Company obtains a Job Creation Tax Credit from the State for the Dublin office expansion, the City will commit to granting a 50% credit of new City income tax revenues generated by new jobs resulting from the expansion, towards up to 50°Io of the Company's municipal corporate income tax obligation, for a five (5) year period, commencing January 1, 2003 through December 31, 2007. The tax credit shall under no circumstances exceed 50°Io of the Company's corporate Municipal income tax liability. 2. Coordination. To allow for the expansion of this facility in a timely and cost-effective manner, the City will assign its Director of Economic Development to work with the Company to assist in obtaining approval for the Jobs Creation Tax Credit through the Ohio Tax Credit Authority. ARTICLE III. INTENTION OF COMPANY It is the Company's intent to carry out expansion of operations as contemplated by and set forth herein this Agreement. ARTICLE IV. EXPEDITIOUS ACTION The City and the Company recognize that the creation of additional jobs is a matter of highest priority, and both parties will use their best efforts to proceed as expeditiously as possible in carrying out their responsibilities hereunder. Page 2 of 3 ARTICLE V. AUTHORIZATION This Agreement shall become effective when fully executed by both parties. The City Manager will sign on behalf of the City following adoption of an authorizing ordinance by Dublin City Council. CITY OF DUBLIN By: City Manager By: Director of Finance AELITA SOFTWARE CORPORATION By: Page 3 of 3 Business First of Columbus -November 11, 2002 httl~;llcc~lta~x~ b~.ds.l~i zj ctrar~nals.cc~rnlct~l~ unl~usltitctt•cs12{}()2/1 l /l llstttry3, l~ttnl ~~~~ ~ ~~^ From the November 8, 2Q02 print edition ~~ More Pnnt_Edition Stories Aelita nails $IONI in VC from Insight Laura Newpoff Business First A four-year-old software provider has landed a $10 million funding deal from a New York-based venture capital firm. Aelita Software Corp. of Dublin will use the money to hire more employees, expand its sales and marketing efforts, accelerate product development and expand its customer base. "We have reached a stage in our business development where we would like to have a strong partner," said Ratmir Timashev, the company's chief executive. "We haven't been looking so much for the money because we've always been profitable and have been growing the business (in terms of sales) over 100 percent annually in the last four years." Insight Venture Partners, which specializes in software company investments, gave Aelita the $10 million infusion. "This will help us to validate our presence," Timashev said. "We have to admit we are not necessarily in the high-tech area -Silicon Valley, Boston or New York. So we have to validate our business model, validate the fact that we are in Columbus and can grow a successful technology business in Columbus." In a statement, Scott Maxwell, Insight Venture's managing director, said Aelita is a "mature organization for a company receiving its first round of funding, with a strong management team, customer-centric product development, a fully funded business plan and superior technology." ~row'srt~ market A Microsoft Gold Certified Partner for software products, Aelita develops and sells network management software to help, for example, companies painlessly migrate from Windows NT to Windows 2000. The company also develops products that make networks more secure. According to Gartner Dataquest, a division of technology researcher and advisor Gartner Inc., Windows- based systems comprised nearly three-quarters of all infrastructure servers purchased by organizations in 2001. When Timashev started the business in 1998 with co-founder Andrei Baronov, the company's chief technology officer, he estimated Microsoft "probably had less than 2 or 3 percent network operating systems market share." "This was definitely a new market opportunity," Timashev said. Aelita has grown to serve 3,000 customers, including the Internal Revenue Service, Pfizer Inc. and Raymond James & Associates. Aelita's sales for 2001 were $12.8 million, and the company expects revenue of $22 million this year. Timashev thinks the company can win new business by expanding from its Microsoft-only focus to developing software that allows companies to move to other computer platforms. imp{csyrr~ertt to dc~ulale The venture capital deal is expected to help Aelita double its employment base during the next year. The company employs 50 workers in Columbus and about 200 in offices in the United Kingdom and at product development centers in Timashev's native Russia. The new jobs would be made up of management, technical management, and sales and marketing employees. Mark Butterworth, chairman of the Columbus Venture Network, said Aelita's paying customer base and strong revenue growth made it an attractive investment. "Venture firms are investing for different reasons now than they did during Central Ohio's last venture boom in 1999 and 2000. They are backing CEOs with a proven track record," he said. "Investment from venture firms outside Central Ohio is important because there are only two venture funds that have headquarters in Columbus -the Battelle Technology Fund and the 1st Fifty Fund," Butterworth said. "These funds have $27 million of capital to invest." © 2002 American City Business Journals Inc. All contents of this site ©American City Business Journals Inc. All rights reserved. The Columbus Dispatch Page 1 of 2 I~~ _ ._:.~-- ~ Hanae f Sign In j New Search j Help ~ Customer Service Privacy Policy l DUBLIN SOFT WARE COMPANY GAINS $10 MILLION INFUSION Friday, November 8, 2002 Illustration: Photo BUSINESS O 1 E By Mike Pramik THE COLUMBUS DISPATCH A Dublin-based software company named after ascience-fiction character has received $10 million in funding, something close to a fantasy during a year when venture-capital investment in central Ohio has been rare. Aelita Software Corp. will use the investment by Insight Venture Partners to expand its sales operations and increase product development, said Ratmir Timashev, co-founder, president and chief executive. Before Insight's investment, central Ohio firms had received a total of $15.1 million in venture capital through the first nine months of 2002. Timashev said Aelita -- whose name was taken from an early Russian science-fiction novel -- plans to add up to 200 employees in the next year. The company would not say how many of those jobs will be based in Columbus. Aelita's headquarters are at 6500 Emerald Parkway, where 70 employees work. Most of the company's 270 employees are in Russia. The company maintains a European headquarters in Reading, England. "It's always a concern to get that big," Timashev said. "Historically we were very conservative with our spending because we didn't have any outside funding. It is definitely a concern to us to stay fiscally conservative." Aelita's specialty is creating tools that help large companies operate computer systems running Microsoft Windows and related products. It also helps companies convert from one operating system to another, among other functions. http://shop.dispatch.com/NewsArchive/audit.asp?DBLIST=cd02&DOCNUM=49157&TEF... 12/2/2002 The Columbus Dispatch Page 2 of 2 While Timashev said Aelita's software programs are used by 3,500 companies in one department or another, about 100 of them use the programs companywide. Those customers account for more than 70 percent of Aelita's revenues, which were $12.8 million in 2001. Timashev expects income to nearly double this year to the $22 million to $24 million range. Scott Maxwell, Insight managing director, said Aelita has the potential to get much bigger. He said it could grow to the size of a company such as Quest Software, an Aelita competitor that last year had $245 million in sales. "Aelita has a terrific product," said Maxwell, whose New York firm has invested $1 billion in software companies. "Now it's all about getting the right connections into customers then growing the sales force. "For the local Ohio market, you're going to over time hear more and more about this company around the nation and the world." Timashev said business has been good even as the U.S. economy struggles because companies "always invest in improvements in their infrastructure." "We have good products that solve business-critical issues," he said. "Even in today's tough environment, our revenue has been growing fast. If the economy was better, we'd have 20 (percent) to 30 percent more revenues." mpramik @ dispatch.com Caption: Ratmir Timashev Back to Search Results All content herein is ©2002 The Columbus Dispatch and may not be republished without permission. ~capyrigt~E ~Qfi2. Tt~e CeiGinktsus Di~~~t~ct~a ~~ ~ ~ ~ http://shop.dispatch.com/NewsArchive/audit.asp?DBLIST=cd02&DOCNUM=49157&TEF... 12/2/2002