Ordinance 01-11RECORD OF ORDINANCES
01 -11
Ordinance No. Passed 20
AN ORDINANCE AUTHORIZING THE
PROVISION OF CERTAIN INCENTIVES TO
FAST SWITCH, LTD. TO INDUCE IT TO RETAIN
AN OFFICE AND ASSOCIATED OPERATIONS
AND WORKFORCE WITHIN THE CITY, 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 retention and creation of employment opportunities within the City; and
WHEREAS, Fast Switch, 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 incentives provided in the
proposed Economic Development Agreement (as described below), the Company is
desirous of renovating a facility within the City to retain an office and associated
operations and workforce within the City in order to achieve the payroll withholding
targets set forth in the Economic Development Agreement; and
WHEREAS, the Company has received a State of Ohio Job Creation Tax Credit (the
"JCTC") which was approved on December 6, 2010, providing for a fifty -five percent
(55 %) State tax credit for seven (7) years, beginning in 2011; and
WHEREAS, this Council has determined that it is necessary and appropriate and in the
best interests of the City to provide for certain economic development incentives to the
Company, as described in the proposed Economic Development Agreement; and
WHEREAS, this Council has determined to offer the 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, and to
satisfy the local support component of the JCTC, to induce the Company to renovate a
facility within the City and retain an office and associated operations and workforce
within the City, which will result in the creation of new jobs and the retention of
existing jobs, 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 of the City of Dublin, State
of Ohio, �7 — 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, and to satisfy
the local support component of the JCTC, in consideration for the Company's
agreement to renovate a facility within the City for the retention of an office and
associated operations and workforce within the City, which will result in the creation of
new jobs and the retention of existing jobs, 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 further 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.
RECORD OF ORDINANCES
01 -11 Page 2 of 2
Ordinance No. Passed 20_
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 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.
Signed:
Mayor - Pr id g Officer
Attest:
G
Clerk of Council
Passed: 2011
Effective: 2011
CITY OF DUBLIN.
Office of the City Manager
5200 Emerald Parkway • Dublin, OH 43017 -1090
Phone: 614 - 4104400 • Fax: 614141011490
To: Dublin City Council
From: Marsha Grigsby, City Manager��
Date: January 6, 2011
Initiated By: Colleen Gilger, Economic Development Administrator
Memo
Re: Ordinance 01 -11 - Authorizing Economic Development Agreement with Fast
Switch, Ltd.
Summary
Staff has been in discussions with Fast Switch, Ltd. regarding the possible expansion of the
company's office and workforce. The company, which is headquartered in Dublin, has explored
expansion opportunities both in central Ohio and in Detroit, Michigan. Fast Switch received a
seven -year, 55 percent tax credit valued at $944,000 from the State of Ohio Department of
Development in December 2010 to entice the company to choose central Ohio as its expansion
location.
Fast Switch is an Information Technology (IT) services company providing full- spectrum IT
staffing. The company, founded in Dublin in 1996, fills a void in the marketplace between
traditional IT staffing firms, IT recruiting firms and IT consulting firms. The company currently
has other operations located in Detroit, Cincinnati, Chicago, Columbus and Hilliard and services
companies in over 20 states. Fast Switch has been named to Columbus Business First's list of
"Fast 50" companies four of the last five years.
The Economic Development Agreement proposed by Economic Development to Fast Switch
includes a three -year, 20% Performance Incentive on new withholdings collected, which is
capped at $22,000 for the term of the agreement, in consideration of the company creating 25
jobs in Dublin by the end of 2013. The company would have to reach predetermined annual
withholdings targets to qualify for performance incentives.
The City estimates it would pay Fast Switch approximately $17,600 and net approximately
$70,400 in new withholdings over the agreement term, should Fast Switch grow according to
expectations.
Recommendation
Staff recommends Council passage of Ordinance 01 -11 at the second reading/public hearing on
January 24, 2011. Please contact Colleen Gilger with any questions you may have.
ECONOMIC DEVELOPMENT AGREEMENT
THIS ECONOMIC DEVELOPMENT AGREEMENT (the `Agreement") is made and entered into
this day of , 2011, 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 FAST SWITCH, LTD. (the "Company" and
together with the City, the Parties "), an Ohio limited liability company, 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 incentives provided
in this Agreement, the Company desires to retain an office and associated operations and
workforce within the City; and
WHEREAS, the Company has received a State of Ohio Job Creation Tax Credit (the
JCT(7") which was approved on December 6, 2010, providing for a fifty -five percent (55 %) State
tax credit for seven (7) years, beginning in 2011; and
WHEREAS, pursuant to Ordinance No. 01 -11 passed on , 2011
(the "Ordinance "), the City has determined to offer the economic development incentives
described herein to satisfy the local support component of the JCTC program, and to induce the
Company to renovate a facility within the City for the retention of an office and associated
operations and workforce within the City, which will result in the creation of new jobs and 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 renovate a facility within the City and
retain its operations and workforce within the City;
Now THEREFORE, the City and the Company covenant, agree and obligate themselves as
follows:
Section 1. Companv's Agreement to Renovate a Facilitv and Retain Its Operations and
Workforce Within the City In consideration for the economic development incentives to be
provided by the City herein, the Company agrees that it will renovate a facility within the City for
the retention of an office and associated operations and workforce within the City, all consistent
with the terms of this Agreement. The Company expects to create twenty -five (25) new employee
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positions within the City by December 31, 2013. The average annual wage of these employees is
estimated to be Eighty Thousand and 00 /100 Dollars ($80,000.00), with total estimated payroll
withholdings of approximately Eighty -Eight Thousand and 00 /100 Dollars ($88,000.00) over the
term of this Agreement. The Company also expects to retain sixty -three (63) existing employee
positions within the City. The average annual wage of these employees is estimated to be
Dollars ($ ), with total estimated payroll withholdings of
approximately Dollars ($ ) over the term of this
Agreement. The Company agrees that the City's obligations to remit payments pursuant to Section
2 of this Agreement shall be contingent upon the Company's satisfaction of the Actual
Withholdings requirements in Section 2.
Section 2. City Agreement to Provide Incentives
(a) General In consideration for the Company's agreement to renovate a facility within
the City for the retention of an office and associated operations and workforce within the City, and
in order to satisfy the local support component of the JCTC program, the City agrees to provide
economic development incentives to the Company in accordance with this Section.
(b) Workforce Creation Incentive
(i) Calculation of Actual Payroll Withholding Taxes On or before March 15 of
each of the years 2012 through 2014, the City shall calculate the actual payroll withholding
taxes collected and received during the preceding calendar year and in respect of that
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 in respect of any calendar year shall be determined based solely
upon the amount of payroll withholding tax payments actually received by the City from the
Company 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 and in respect of
that preceding calendar year from all Employees, net of refunds (such amount being referred
to as the Actual Withholdings "), meet or exceed 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) the difference between (1) an
amount equal to the Actual Withholdings for that preceding calendar year minus (2) an
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amount equal to the Base Withholdings, multiplied by (B) twenty percent (20 %) (with each
such product being referred to as an 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, and (2) the aggregate amount of all Annual Incentive
Payments remitted pursuant to this subsection 2(b) by the City to the Company shall not
exceed Twenty -Two Thousand and 00 /100 Dollars ($22,000.00).
(iv) Target Withholdings and Annual Cap The Target Withholdings and Annual
Cap for each of the calendar years 2011 through 2013 shall be:
Calendar Year
Base Withholdings
2011
2010 Actual WH
2012
2010 Actual WH
2013
2010 Actual WH
Target Withholdings
Annual Can
$ 16,000 plus 2010 Actual WH
$ 4,500
32,000 plus 2010 Actual WH
7,500
40,000 plus 2010 Actual WH
10,000
For purposes of this subsection 2(b)(iv), "2010 Actual WH" shall be (in each of the
calendar years 2011 through 2013) an amount determined by the City (which amount shall
be reasonably computed by the City) to be the amount of actual payroll withholding taxes
collected and received by the City during calendar year 2010 and in respect of calendar year
2010 from all Employees, net of refunds.
(v) Forfeiture of Right to Receive Workforce Creation 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 renovate a facility within the City for the retention of an office and
associated operations and workforce within the City and to create additional employment
opportunities and retain existing employment opportunities, all within the City. The
Company further agrees that if the Target Withholdings requirement is not met for any
given calendar year as set forth in subsection 2(b)(iv), the City shall not be obligated to
make an Annual Incentive Payment to the Company for the calendar year in respect of
which the Target Withholdings requirement was not satisfied. 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
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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"
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; (viii) rental income which is deposited in the City's General Fund; and (ix)
gifts and donations.
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
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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.
(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
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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) the Company at: Fast Switch, Ltd.
Dublin, Ohio 4301
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.
(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 of page 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: Marsha I. Grigsbv
Title: Citv Manager
Approved as to Form:
C
Printed: Stephen J. Smith
Title: Director of Law
FAST SWITCH, LTD.
Printed:
Title:
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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: .2011
Director of Finance
City of Dublin, Ohio
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