Here’s how Columbus businesses achieved tax incentive deals in 2020
COLUMBUS, Ohio (COLUMBUS BUSINESS FIRST) – Companies whose property tax bills were reduced under the Columbus Incentive Agreements have not collectively downsized, but have failed to meet new business creation goals. jobs due to the coronavirus pandemic, according to the city’s development ministry.
However, the city is still in the lead, as the payroll for these jobs was well above estimates. This means more income tax, which accounts for 80% of Columbus’ income, compared to 6% of property tax.
Income tax withholding in 86 enterprise zone and community reinvestment zone agreements that were active in 2020 totaled $ 20.7 million in jobs retained and $ 4.4 million in new ones. Part of this money comes out of city coffers if a worker lives in a suburb that also has income tax.
Employers reported 8,800 jobs that predated their incentives or moved to the new site, more than the 8,000 pledged, according to this year’s Tax Incentive Review Board’s annual report, sent to city council on Monday.
But they achieved 58% of the new employment targets: 3,700 out of the 6,400 promised. The total may be low due to late or missing employer reports.
Rogue Fitness has pledged to create 90 new jobs at its head office and factory in Milo-Grogan, in addition to moving 337. Last year, it created 805 jobs.
Other companies that have far exceeded their offers: UPS created 417 jobs when it pledged to create 25; NetJets Inc. created 173 new jobs out of a pledged 19, and Micro Center 51 jobs out of five pledged.
Employers collectively spent $ 1.3 billion on construction and other property improvements, more than the $ 1.16 billion pledged, at the end of 2020.
The review recommended the dissolution of a single deal: Benderson Development Co. has yet to begin construction of the planned $ 8 million light industrial buildings on Tussing Road. The developer might look for a new incentive when they are ready to move forward with the project.
Another incentive was already dissolved in May, for “The Fort”, a more than a century old fire engine factory that Fortner Upholstering rehabilitated in 2019 to house its own complementary businesses. The Franklin County auditor revised how the property’s value was calculated prior to the transaction, so there is no increase to which the abatement can apply.
Neither company recognized any savings from the incentives.
Board members accepted the report’s recommendations, which also ask the Development Department to send follow-up letters on 19 transactions to remind them of the reporting requirements. One of these agreements could be dissolved depending on the response.
Some incentives do not yet register job creation as construction is still underway. CoverMyMeds, for example, has created hundreds of jobs over the past two years, but the property tax incentive is tied to the Franklinton headquarters which opened this summer.
Any savings will flow to the new owner, Virginia real estate investment company Golden Eagle Group Inc., which bought the first of the two buildings for $ 120 million this spring. CoverMyMeds, owned by McKesson Corp., pays $ 8.6 million in annual rent, according to a regulatory filing.
Separately, CoverMyMeds raised a cumulative amount of $ 318,000 as a 2019 incentive based on a percentage withholding income tax on new jobs in the city. At the end of 2020, the software maker added 620 of the 1,030 new jobs planned. It had two offices downtown before the move, and remote workers living in the city count towards the deal. Overall, it has over 1,500 employees statewide and working remotely.
Here’s how property tax incentives work:
- Homeowners pay 25% of their property taxes, if any, for terms of 10 or 15 years in exchange for real estate investment and employment commitments. Before a change in state law in 1994, tax breaks did not require such promises.
- School districts and other tax entities such as libraries always collect property value before improvements, and agreements may include some form of sharing of schools’ income from income tax.
- The city is also required to share with schools any new withholding net of income tax after the first $ 1 million per year from a single project, which would be the 2.5% tax after the first $ 40 million. dollars in payroll added. The only one who comes close is Snape.
Columbus City schools saw their collections reduced by $ 3.2 million in fiscal 2020, offset by $ 890,000 in payments in lieu of taxes, due to incentives in the city, County of Franklin and Hamilton Township, according to the district’s annual report. Property tax collections totaled $ 324.5 million, or about a third of its budget.
For more business news, visit ColumbusBusinessFirst.com.