Agenda Item #
Columbus Consolidated Government (Approved at the December 10, 2013, Council
Meeting)
Council Meeting
December 10, 2013
Agenda Report #
TO: Mayor and Council
SUBJECT: Enterprise Zone ? McDonald?s Company
INITIATED BY: Rick Jones, Director of Planning Department
Recommendation: Approval is requested of a resolution for McDonald?s Company
to receive ad valorem tax abatements (with the exclusion of school and general
obligation debt levies) as specified under the Enterprise Zone Employment Act.
Applicant?s signed application states that the applicants project meets the
minimum requirements as established in the Enterprise Zone Employment Act.
Background: McDonald?s Company, is located at 3450 Victory Drive (previous
address of record, prior to March 2013 was 3448 Victory Drive) within the
boundaries of the Columbus Business Development Center (Enterprise Zone). The
applicant is requesting to receive tax abatements on all ad valorem taxes (with
the exclusion of school and general obligation debt levies) for a stated
$1,200,000.00 additional investment in land, buildings, machinery and
equipment.
Analysis: McDonald?s Company, states that they will hire employees and
maintain at least five new jobs, (estimated total of 50) as required by the
Enterprise Zone Employment Act, prior to the tax abatement period. They plan to
maintain 50 jobs overall, with hiring to be based on qualifications and a
target of approximately 90% of those hired being qualified as low to moderate
income residents.
Council must consider the economic stimulus effects of the applicant?s stated
investment of $1,200,000.00.
This project is being financed by Columbus Bank and Trust, contact Mr. Jonathan
Payne.
Financial Considerations: Tax abatements under the State of Georgia Enterprise
Zone Act will be made available to this project. Ad valorem taxes will be
abated based upon the following schedule:
-- One hundred percent (100%) of the property taxes shall be exempt for the
first five years; and,
-- Eighty percent (80%) of the property taxes shall be exempt for the next two
years; and,
-- Sixty percent (60%) of the property taxes shall be exempt for the next year;
and,
-- Forty percent (40%) of the property taxes shall be exempt for the next year;
and,
-- Twenty percent (20%) of the property taxes shall be exempt for the last year.
The Board of Tax Assessors will provide the estimate of taxes abated for the
ten-year period beginning with Tax Year 2014.
Projected Annual Fiscal Impact Statement: At a stated value of $1,200.000.00
investment in real property, (land $200,000.00, buildings $700,000.00 and
equipment $300,000.00) the 10-year abatement would be based on an annual
valuation of the asset, the type of asset (percentages set by the state) and
the annual mileage rate.
Based on a planned investment of $1,200.000.00 in land, buildings, machinery
and equipment, the approximation of ad valorem tax levied would increase from
the 41.40 mil rate in 2013 of $21,475.00 ($8,865.00 of that is for city taxes
and subject to EZ abatement) to approximately $24,959.00 ($11,345.00 city
portion. There may be a possible adjustment to the state mil rate and these
amounts do not consider any depreciation of personal property that will occur.
Of that approximate $24,959.00 in ad valorem taxes due, the abatement would not
cover school district taxes (23.37 mils) or state taxes (.15 or .10 mils), nor
would it abate Bond debt service (.79 mils) but would only be an abatement for
the city portion of ad valorem taxes collected (17.09 mils). The abatement is
distributed over 10 years, 100% of the city's portion for the first five years,
then 80% of the city?s portion in the sixth and seventh years, 60% of the
city?s portion in the eighth year, 40% of the city?s portion in the ninth year
and 20% of the city?s portion in the 10th year. Based on this declining
schedule (but not calculating personal property depreciation), and using as
value the applicant's stated investment (actual real property and personal
property appraisals are performed by the Tax Assessor's office), the
approximate tax abatement would total $88,194.00 - an average annual abatement
of $8,819.40.
Without the additional $1,200.000.00 investment proposed by the applicant, the
annual tax revenue, (net to the city after school, state and bond mils are
subtracted) would be $8,864.92 per year. Over ten years, (with no new
investment - at its current valuation and millage rate) the property would
generate approximately $88,649.92. Over ten years, using the applicant?s
stated additional investment and making assumptions of continuity in land value
(and not considering depreciation of personal property), the property could
generate $113,454.00
However, with Enterprise Zone abatements, this property will generate
approximately $24,960.00 over the ten year abatement period - an average annual
revenue of $2,496.00. Therefore, the proposed investment would decrease the
amount of taxes the city currently collects on this property by $88,494.00
during the EZ abatement period.
After the 10th year, based loosely on the millage rate for 2013 and the
applicant?s stated values in 2013, of which the personal property portion will
be depreciated in a real-life scenario, (land value should remain the same
value in 2013 as 2014 unless there is a change in the size of the parcel), the
new city-portion of the taxes would be approximately $11,345.00 ? an annual
increase of approximately $2,480.00. Based on these estimations, it would take
over 40 years to break even from the lost tax revenue due to Enterprise Zone
abatements.
Legal Considerations: The Board of Tax Assessors also requires to be notified
of the status of the project as of January 1 of each year in order to grant the
abatement. This information enables the Board to value the property at the
stage of completion as of the January 1 valuation date asset by Georgia code.
The Board would need to know when the project is considered completed. The only
personal property types, which have been approved for recognition within the
Enterprise Zone, are machinery and equipment that is permanently located within
the EZ.
Recommendations/ Actions: Approve the resolution authorizing the City Manager
to extend ad valorem tax abatements to McDonald?s Company, for the stated
additional investment of $1,200.000.00 at their 3450 Victory Drive location,
along with consideration of the CCG Board of Tax Assessors' recommendation.
A RESOLUTION
NO. _____
A RESOLUTION AUTHORIZING APPROVAL OF THE REQUEST FOR MCDONALD?S, LOCATED AT
3450 VICTORY DRIVE, TAX MAP PARCEL ID #063-015-004, TO RECEIVE TAX ABATEMENTS
UNDER THE STATE OF GEORGIA ENTERPRISE ZONE ACT.
WHEREAS, McDonald?s, (Tax Map Parcel ID #063-015-004) is located within
the boundaries of the Columbus Business Development Center (Enterprise Zone);
and,
WHEREAS, McDonald?s proposes to make an additional investment in
personal property at their 3450 Victory Drive location in the amount of
$1,200.000.00; and,
WHEREAS, the project meets the Enterprise Zone business type criteria
as retail; and,
WHEREAS, McDonald?s will create at least 5 jobs (approximately 50 jobs)
at this particular location prior to the tax abatement period, and maintain the
5 jobs (net) during the full length of the tax abatement period in order to
provide additional economic stimulus to the area; and,
WHEREAS, McDonald?s will provide operating statements, income and expense
information, as well as before and after photographs to the Board of Tax
Assessors at the stage of completion as of the January 1 valuation date as set
by Georgia code; and,
WHEREAS, the project will incorporate and maintain the facade requirement for
the duration of the tax exemption period, as established by local Ordinance
#98-30.
NOW, THEREFORE, THE COUNCIL OF COLUMBUS, GEORGIA, HEREBY RESOLVES AS
FOLLOWS:
That the Council of the Consolidated Government of Columbus hereby
authorizes and approves McDonald?s, located at 3450 Victory Drive, Tax Map
Parcel ID #063-015-004, to receive abatement of taxes as allowed by law under
the Enterprise Zone Employment Act of the State of Georgia. McDonald?s, shall
comply with the listed requirements in order to receive those tax abatements:
1.
McDonald?s, will show proof to The Board of Tax Assessors every year that they
are maintaining those five (5) new jobs required under the Enterprise Zone
Employment Act. Failure to maintain those new jobs will result in the
termination of the tax abatements.
2.
The Board of Tax Assessors also requires recipients to provide notice of the
status of the project as of January 1 of each year in order to grant the
abatement. This information enables the Board to value the property at the
stage of completion as of the January 1 valuation date as set by Georgia code.
The Board would need to know when the project is considered completed.
3.
The project will incorporate and maintain the landscape requirement, for the
duration of the tax exemption period, as established by local ordinance# 98-30.
The applicant shall also be required to follow any additional requirements as
determined by the City.
4.
Facade enhancement shall be approved by the City official prior to the granting
of the tax abatements.
____________
Introduced at a regular meeting of the Council of Columbus, Georgia, held the
__________ day of __________ 2013, and adopted at said meeting by the
affirmative vote of ___________ members of said Council.
Councilor Allen voting __________.
Councilor Baker voting __________.
Councilor Barnes voting __________.
Councilor Davis voting __________.
Councilor Henderson voting __________.
Councilor Huff voting __________.
Councilor McDaniel voting __________.
Councilor Turner Pugh voting __________.
Councilor Thomas voting __________.
Councilor Woodson voting __________.
________________________________ ___________________________
Tiny B. Washington, Clerk of Council Teresa Pike Tomlinson, Mayor
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