Ordinance 15-10RECORD OF ORDINANCES
Ordinance No.
15 -10
Passed 20
AN ORDINANCE AUTHORIZING THE PROVISION OF
CERTAIN INCENTIVES TO MEDCO HEALTH
SOLUTIONS OF COLUMBUS NORTH, LTD. TO INDUCE
IT TO EXTEND THE LEASE TERM ON ITS FACILITY
WITHIN THE CITY AND CONTINUE ITS OPERATIONS
AND RETAIN ITS WORKFORCE WITHIN THE CITY
OF DUBLIN, AND AUTHORIZING THE EXECUTION
OF AN ECONOMIC DEVELOPMENT AGREEMENT.
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, Medco Health Solutions of Columbus North, Ltd. (the "Company") recently
performed a comprehensive examination of its workforce needs, and based on the results of
this examination, and induced by and in reliance on the economic development incentive
provided in the proposed Economic Development Agreement (as described below), the
Company is desirous of extending the lease term on its existing facility within the Cityby 10
years and continuing its operations and retaining its workforce within the City in order to
achieve the payroll withholding targets set forth in the Economic Development Agreement;
and
WHEREAS, this Council has determined that it is necessary and appropriate and in the
best interests of the City to provide for an economic development incentive to the
Company, as described in the proposed Economic Development Agreement; and
WHEREAS, this Council has determined to offer the economic development incentive, 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 the Company to
extend the lease term on its existing facility within the City by 10 years and continue its
operations and retain its workforce within the City, thereby improving 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;
NOW, THEREFORE, BE IT ORDAINED by the Council ofthe City of Dublin, State of
Ohio, of the elected members concurring, that:
Section 1. The Economic Development Agreement by and between the City and the
Company, in the form presently on file with the Clerk of Council, providing for, among
other things, the provision of certain economic development incentives in consideration for
the Company's agreement to extend the lease term on its existing facility within the City by
10 years and continue its operations and retain its workforce within 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. The
City Manager, for and in the name of this City, is hereby authorized to execute that
Economic Development Agreement, provided fuher that the approval of changes thereto
by that official, and their character as not being substantially adverse to the City, shall be
evidenced conclusively by the execution thereof. This Council further authorizes the City
Manager, 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 2. This Council further hereby authorizes and directs the City Manager, the
Director of Law, the Director of Finance, the Clerk of Council, or other appropriate officers
RECORD OF ORDINANCES
15 -10 Page 2 of 2
Ordinance No. Passed 20
of the City to prepare and sign all agreements and instruments and to take any other actions
as may be appropriate to implement this Ordinance.
Section 3. This Council finds and determines that all formal actions of this Council and
any of its committees concerning and relating to the passage of this Ordinance were taken in
open meetings of this Council or committees, and that all deliberations of this Council and
any of its committees that resulted in those formal actions were in meetings open to the
public, all in compliance with the law including Section 121.22 of the Revised Code.
Section 4. This Ordinance shall be in full force and effect on the earliest date permitted
by law.
Passed this ka day of , 2010.
Signed:
Mayor - Pres' g Officer
Attest:
aln a
Clerk of Council
Passed: 2010
Effective: 2010
CITY OF DUBLIN-
Office of the City Manager
5200. Emerald Parkway • Dublin, OH 43017 -1090
Phone: 614 - 410 -4400 • Fax: 614 - 410 -4490
Memo
To: Dublin City Council
From: Terry Foegler, City Manager T_1_/
Date: March 18, 2010 U
Initiated By: Colleen Gilger, Economic Development Administrator
Re: Ordinance No. 15 -10 - Authorizing an Economic Development Agreement with
Medco Health Solutions
Summary
Staff has been in discussions with Medco regarding the possible retention of the company's
workforce and call center pharmacy at 5151 Blazer Parkway. The City is extremely proud to have
Medco's call center pharmacy as part of our community. This call center employs over 870
employees over three shifts. The company currently is reviewing lease options for this operation
both at its current Dublin location and in other central Ohio locations.
The Economic Development Agreement proposed by Economic Development to Medco in
consideration of renewing a 10 -year lease at its current Dublin facility and retaining its existing
workforce includes a five -year, 15% Performance Incentive on withholdings collected, which is
capped at $600,000 for the term of the agreement. The company would have to reach predetermined
annual withholdings targets to qualify for performance incentives. Additionally, a sixth "bonus"
year is proposed, and Medco would be eligible only if the company reaches each of the previous
five annual targets as well as a sixth year target. The one -time bonus payment equates to a 15%
incentive, capped at $120,000.
The City estimates it will pay Medco approximately $578,072 in incentives and net approximately
$3,275,744 in withholdings over the agreement term should Medco grow according to expectations.
Over the complete 10 -year lease term, the City expects to net $8,256,690.
Recommendation
Staff recommends Council adoption of Ordinance 15 -10 at the second reading/public hearing on
April 12, 2010. Please contact Colleen Gilger with any questions you may have.
ECONOMIC DEVELOPMENT AGREEMENT
THIS ECONOMIC DEVELOPMENT AGREEMENT (this `Agreement") is made and entered into
this day of , 2010, 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 MEDco HEALTH SOLUTIONS OF COLUMBUS
NORTH, LTD. (the "Company" and collectively with the City, the `Parries "), an Ohio limited
liability company with its main office currently located at 5151 Blazer Parkway, Dublin, Ohio
43017, under the circumstances summarized in the following recitals.
RECITALS:
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 retention and creation of
employment opportunities within the City; and
WHEREAS, based on the results of the Company's recent comprehensive examination of
workforce needs, and induced by and in reliance on the economic development incentive provided
in this Agreement, the Company is desirous of extending the lease term on its existing facility
within the City and continuing its operations and retaining its workforce within the City; and
WHEREAS, pursuant to Ordinance No. 15 -10 passed on , 2010 (the
"Ordinance "), the City has determined to offer the economic development incentive described
herein to induce the Company to extend the lease term on its existing facility within the City by 10
years and continue its operations and retain its workforce within the City, which will result in the
retention of existing jobs 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 the Company have determined to enter into this Agreement to
provide these incentives in order to induce the Company to extend the lease on its existing
facility in the City by 10 years, continue its operations and retain its workforce within the City;
Now THEREFORE, the City and the Company covenant, agree and obligate themselves as
follows:
Section 1. Companv's Agreement to Extend the Lease Term on its Facilitv and
Continue its Operations and Retain its Workforce Within the City In consideration for the
economic development incentive to be provided by the City herein, the Company agrees that it will
extend the lease term on its existing facility within the City by 10 years (through December 31,
2020) and continue its operations and retain its workforce within the City pursuant to this
Agreement. The Company expects to retain approximately Eight Hundred Seventy (870)
employees within the City for the term of this Agreement. The average annual wage of these
employees for this period is estimated to be approximately Forty -Five Thousand and 00 /100 Dollars
($45,000), with total estimated payroll withholdings of approximately Three Million Eight Hundred
Fifty -Three Thousand Eight Hundred Sixteen and 00 /100 Dollars ($3,853,816.00) over the term of
this Agreement.
SSD Draft: 3 -6 -2010
Section 2. Citv Agreement to Provide Incentives
(a) General In consideration of the Company's agreement to extend the lease term on
its existing facility within the City by 10 years and continue its operations and retain its workforce
within the City, the City agrees to provide economic development incentives to the Company in
accordance with this Section.
(b) Workforce Retention Grant
(i) Calculation of Actual Withholdings On or before March 15 of each of the
years 2012 through 2016 and 2017 (if applicable), the City shall calculate the actual payroll
withholding taxes collected and received during the preceding calendar year by the City
from all Employees (as defined below). For purposes of that calculation, the Company
acknowledges and agrees that the total amount of actual payroll withholding taxes for any
calendar year shall be determined based solely upon the amount of tax payments actually
received by the City during that calendar year. The Company agrees that the determination
of whether to include in such calculation any amount received by the City in respect of any
calendar year but following the conclusion of that calendar year, shall be solely within the
discretion of the City. For purposes of this Section 2, "Employees" shall include only those
individuals employed by the Company and working within the City.
(ii) Information Relating to Employees The Company agrees that, in
accordance with the Dublin City Code, the annual payroll reconciliation and related W -2
forms relating to its Employees will be provided to the City prior to February 28 of each
calendar year.
(iii) Incentive Payments to the Company If the actual payroll withholding taxes
collected and received by the City during the then preceding calendar year from all
Employees, net of refunds ("Actual Withholdings'), meets or exceeds the Target
Withholdings (as defined in subsection 2(b)(iv)) for that preceding calendar year, the City
shall, on or before April 15 of the then current calendar year, pay to the Company, solely
from nontax revenues (as defined in subsection 2(d)), an amount equal to the product of (A)
an amount equal to the Actual Withholdings, multiplied by (B) fifteen percent (15 %) (with
such product being referred to as the Annual Incentive Payment'); provided, however, that
(1) the City shall not be required pursuant to this subsection 2(b) to remit an Annual
Incentive Payment to the Company in excess of the Annual Cap (as defined in subsection
2(b)(iv)) in any calendar year, (2) the aggregate of all Annual Incentive Payments remitted
pursuant to this subsection 2(b) by the City to the Company in respect of years 2011 through
2015 shall not exceed Six Hundred Thousand and 00 /100 Dollars ($600,000.00) and (3) the
City shall not be obligated to remit an Annual Incentive Payment to the Company in respect
of calendar year 2016 unless the requirements of subsection 2(b)(v) have been satisfied.
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(iv) Target Withholdings and Annual Can The Target Withholdings and Annual
Cap for each of the calendar years 2011 through 2016 shall be:
Calendar Year
Target Withholdings
Annual Cap
2011
$740,543
$120,000
2012
755,354
120,000
2013
770,461
120,000
2014
785,870
120,000
2015
801,588
120,000
2016
801,588
120,000
(v) Bonus Annual Incentive Payment in Respect of Calendar Year 2016 If the
Company's Actual Withholdings meet or exceed the Target Withholdings for each of the
calendar years 2011 through 2015, then the Company shall be eligible to receive an Annual
Incentive Payment in respect of calendar year 2016 which will be calculated and paid in
accordance with this Section 2, provided that such Annual Incentive Payment shall be
subject to the Annual Cap set forth in subsection 2(b)(iv).
(vi) Forfeiture of Right to Receive Incentive Payment The Company agrees and
acknowledges that Annual Incentive Payments provided for in subsection 2(b) are being
made by the City to the Company in consideration for the Company's agreement to extend
the lease term on its existing facility within the City by 10 years and continue its operations
and retain its workforce within the City. The Company further agrees that if the Target
Withholdings requirement is not met for any given year as set forth in subsection 2(b)(iv),
the City shall not be obligated to make any Annual Incentive Payment to the Company for
the calendar year in respect of which the Target Withholdings requirement was not satisfied.
Subject to subsection 2(b)(v), failure to meet the Target Withholdings requirement in respect
of any one calendar year does not prohibit the Company from receiving an Annual Incentive
Payment for any subsequent calendar year in respect of which the Target Withholdings
requirement is satisfied.
(c) Method of Payment The payments to be paid to the Company as provided in this
Section 2 shall be made by the City to the Company by electronic funds transfer or by such other
manner as is mutually agreed to by the City and the Company.
(d) 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 the Company 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. For purpose of this Agreement, "nontax revenues"
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shall mean, all moneys of the City which are not moneys raised by taxation, to the extent
available for such purposes, including, but not limited to the following: (i) grants from the
United States of America and the State; (ii) payments in lieu of taxes now or hereafter authorized
to be used for the purposes by State statute; (iii) fines and forfeitures which are deposited in the
City's General Fund; (iv) fees deposited in the City's General Fund from properly imposed
licenses and permits; (v) investment earnings on the City's General Fund and which are credited
to the City's General Fund; (vi) investment earnings of other funds of the City that are credited
to the City's General Fund; (vii) proceeds from the sale of assets which are deposited in the
City's General Fund; and (viii) rental income which is deposited in the City's General Fund; and
(ix) gifts and donations.
(e) 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) Assignment This Agreement may not be assigned without the prior written consent
of all non - assigning Parties.
(b) Binding Effect The provisions of this Agreement shall be binding upon the
successors or assigns of the Parties.
(c) 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.
(d) Day for Performance Wherever herein there is a day or time period established for
performance and such day or the expiration of such time period is a Saturday, Sunday or legal
holiday, then such time for performance shall be automatically extended to the next business day.
(e) Entire Agreement This Agreement embodies the entire agreement and
understanding of the Parties relating to the subject matter herein and therein and may not be
amended, waived or discharged except in an instrument in writing executed by the Parties.
(f) Events of Default and Remedies Except as otherwise provided in this Agreement,
in the event of any default in or breach of this Agreement, or any of its terms or conditions, by any
Party hereto, such defaulting Party shall, upon written notice from any non - defaulting Party,
proceed immediately to cure or remedy such default or breach, and, in any event, within thirty (30)
days after receipt of such notice. In the event such default or breach is of such nature that it cannot
be cured or remedied within said thirty (30) day period, then in such event the defaulting Party shall
upon written notice from any non - defaulting Party commence its actions to cure or remedy said
breach within said thirty (30) day period, and proceed diligently thereafter to cure or remedy said
breach. In case such action is not taken or not diligently pursued, or the default or breach shall not
be cured or remedied within a reasonable time, the aggrieved non - defaulting Party may institute
such proceedings as may be necessary or desirable in its opinion to cure and remedy such default or
breach, including, but not limited to, proceedings to compel specific performance by the defaulting
Party.
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(g) Executed Counterparts This Agreement may be executed in several counterparts,
each of which shall be deemed to constitute an original, but all of which together shall constitute but
one and the same instrument It shall not be necessary in proving this Agreement to produce or
account for more than one of those counterparts.
(h) Extent of Covenants: No Personal Liability All covenants, obligations and
agreements of the Parties contained in this Agreement shall be effective to the extent authorized and
permitted by applicable law. No such covenant, obligation or agreement shall be deemed to be a
covenant, obligation or agreement of any present or future member, officer, agent or employee of
the City or the Company other than in his or her official capacity, and neither the members of the
legislative body of the City nor any official executing this Agreement shall be liable personally
under this Agreement or be subject to any personal liability or accountability by reason of the
execution thereof or by reason of the covenants, obligations or agreements of the City and the
Company contained in this Agreement.
(i) Governing Law 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 the Company, 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.
0) Legal Authority The Parties respectively represent and covenant that each is legally
empowered to execute, deliver and perform this Agreement and to enter into and carry out the
transactions contemplated by this Agreement. The Parties further respectively represent and
covenant that this Agreement has, by proper action, been duly authorized, executed and delivered by
the Parties and all steps necessary to be taken by the Parties have been taken to constitute this
Agreement, and the covenants and agreements of the Parties contemplated herein, as a valid and
binding obligation of the Parties, enforceable in accordance with its terms.
(k) Limit on Liability Notwithstanding any clause or provision of this Agreement to
the contrary, in no event shall City or the Company 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.
(1) 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 if hand - 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
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Attention: Economic Development Director
(ii) the Company at: Medco Health Solutions of Columbus North, Ltd.
5151 Blazer Parkway
Dublin, Ohio 43017
Attention: President
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.
(m) Recitals The Parties 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.
(n) Severability If any provision of this Agreement, or any covenant, obligation or
agreement contained herein is determined by a court to be invalid or unenforceable, that
determination shall not affect any other provision, covenant, obligation or agreement, each of which
shall be construed and enforced as if the invalid or unenforceable portion were not contained herein.
That invalidity or unenforceability shall not affect any valid and enforceable application thereof, and
each such provision, covenant, obligation or agreement shall be deemed to be effective, operative,
made, entered into or taken in the manner and to the full extent permitted by law.
(o) Survival of Representations and Warranties All representations and warranties of
the Parties in this Agreement shall survive the execution and delivery of this Agreement.
(remainder ofpage intentionally left blank — signature page follows)
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IN WITNESS WHEREOF, the City and the Company 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
Printed: Terry Foegler
Title: Citv Manager
Approved as to Form:
C
Printed: Stephen J. Smith
Title: Director of Law
MEDCO HEALTH SOLUTIONS OF COLUMBUS
NORTH, LTD.
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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: .2010
Marsha I. Grigsby
Deputy City Manager /Director of Finance
City of Dublin, Ohio