Title
Discussion of Summit County Intergovernmental Memorandum of Understanding for Job Creation and Retention and Tax Revenue Sharing
Brief Description: Discussion of Summit County Intergovernmental Memorandum of Understanding for Job Creation and Retention and Tax Revenue Sharing
Body
Legislative History
Resolution No. 11-60, A Resolution authorizing the City Manager to execute the 2011 Summit County Intergovernmental Memorandum of Understanding for Job Creation and Retention and Tax Revenue Sharing. Passed June 1, 2011.
Resolution No. 12-75, A Resolution authorizing the City Manager to execute the 2012-2013 Summit County Intergovernmental Memorandum of Understanding for Job Creation and Retention and Tax Revenue Sharing. Passed May, 16, 2012.
Resolution No. 14-116, A Resolution authorizing the City Manager to execute the 2014-2015 Summit County Intergovernmental Memorandum of Understanding for Job Creation and Retention and Tax Revenue Sharing. Failed October 1, 2014.
Resolution No. 14-141, A Resolution authorizing the City Manager to execute the 2014-2015 Summit County Intergovernmental Memorandum of Understanding for Job Creation and Retention and Tax Revenue Sharing. Passed December 17, 2014.
Resolution No. 15-123, A Resolution authorizing the City Manager to execute the 2015-2016 Summit County Intergovernmental Memorandum of Understanding for Job Creation and Retention and Tax Revenue Sharing. Passed September 15, 2015.
Resolution No. 17-87, A Resolution authorizing the City Manager to execute the 2017-2018 “Summit County Intergovernmental Memorandum of Understanding for Job Creation and Retention and Tax Revenue Sharing.” Passed June 20, 2017.
Staff Report 18-0043, A discussion that the 2017 agreement will automatically renew, unless there are suggested changes. There being no changes suggested by Council, no further action is necessary unless another signatory community proposes changes.
23-0024, A discussion regarding the Summit County Intergovernmental Memorandum of Understanding for Job Creation and Retention and Tax Revenue Sharing; March 14, 2023.
Purpose & Explanation
The City of Hudson participates in the Summit County Intergovernmental Memorandum of Understanding for Job Creation and Retention and Tax Revenue Sharing (“MOU”) which aims to encourage collaboration among communities in Summit County and dissuade poaching of major employers through incentives. The MOU has been adopted by all but two communities (Stow and Twinsburg Township). From 2014 to 2018, the city collected an additional $302,908 in income taxes for jobs that moved to Twinsburg under an incentive. Beginning with 2022, the city will pay the City of Green a portion of our income taxes collected from Diebold Nixdorf as they received a Jobs Creation Grant as part of their relocation to Hudson.
Following the discussion in the City Council Workshop on March 14, 2023, Staff reached out to other Economic Development professionals within Summit County to discuss the future of this agreement. Feedback was extremely limited as many communities within the county do not have fully dedicated Economic Development professionals. Staff discussed the MOU with the Economic Development team at Summit County and learned that the communities would be called together only if specific amendments were submitted to be discussed and voted upon. After further discussion, Summit County Economic Development team agreed to hold a meeting as a touchpoint post-pandemic. As a result, the Economic Development Manager and Assistant City Manager - Finance drafted proposed changes or discussion points for that meeting. A summary of those proposals has been attached.
On November 7, 2023, Summit County Economic Development hosted the annual meeting to review the agreement with all participating communities. The Staff report attached outlines the key points discussed and proposed amendments to be voted upon in a follow up meeting to be held in December 2023.
DECEMBER 2023 UPDATE:
City staff participated in the virtual meeting to discuss the proposed changes to the agreement on December 18, 2023. The following changes were discussed:
1. Make the agreement an Effective Date rather than a period of time. The effective date of the amended agreement would be July 1, 2024. This will also allow sufficient time for communities to legislatively adopt changes.
2. Remove net profit tax portion of income tax from the sharing agreement. This would limit tax sharing to withholding income taxes.
3. Increasing the threshold that would trigger sharing. Currently it is $3.5 million in payroll. There was extensive discussion about the amount, should be increased or remain the same, etc.
4. Language was added to recognize the impact of work from home. In summary, the destination community would only be required to share in tax revenue actually received by that community rather than the sharing be based on how much the departed community lost. Additionally, language was added about reconciling refunds to prevent the destination community from over-paying.
5. The current agreement covers business relocations based on annual payroll for the past two full calendar years to determine which Tier it falls in. The group discussed making it three years to account for the impact of COVID.
The group decided to send a survey to the communities to make an informal vote on increasing the threshold and if adding a third year to determine the appropriate Tier is appropriate. We will likely receive the survey in January 2024. We will provide a status update at the Jan 9, 2024 workshop.
Timing Considerations
None
Fiscal Impact
Currently Budgeted (Account #, $)
Supplemental Appropriation Required (Account #, $)
X Appropriation Not Required.
Recommendation
Suggested Action
Staff would like City Council’s feedback on the proposed changes and discussion points prior to meeting with the agreement participants.
Submitted by,
Thomas J. Sheridan, City Manager
Greg Hannan, Community Development Director
Katie Behnke, Economic Development Manager