The village of Marble Cliff and Zipline Logistics LLC have reached an agreement on a memorandum of understanding that could lead to a tax abatement for the company to move its expanding operations into the village.
Marble Cliff Village Council is expected to vote to approve the agreement at its meeting Monday, July 15. The approval would allow the village to begin negotiations on a final tax-abatement agreement with the company.
The draft proposal calls for a five-year tax-incentive agreement in which the village would reimburse the company for 50 percent of the income tax from only the payroll of new employees Zipline plans to add.
The company currently has 24 employees at its Northwest Boulevard location and expects to add another 40 full-time employees in the coming years.
Last month, Zipline received a 40 percent, six-year job-creation tax credit from the Ohio Tax Credit Authority. The company will use the incentive to help pay for the training of the new employees.
Zipline is considering signing a lease to move into the second floor of Babbage Simmel building at 2300 W. Fifth Ave.
Company officials wanted an understanding of what type of incentive the village may be willing to offer as it considers its relocation options.
Under the terms of the draft tax-incentive agreement, Zipline would receive a 50 percent abatement on the annual additional income tax of $32,000 the payroll for its 40 new employees would be expected to generate.
With the abatement, the village still would receive $16,000 in annual income-tax revenue from the additional payroll during the five-year agreement, as well as about $14,100 from the current 24 employees.
The income tax resulting from the current employees would not be reduced.
The agreement includes a revised provision, requested by Zipline, that would allow the company to recoup an abatement retroactively for any year that its new payroll exceeds the base figure of $1.6 million per year.
That would mean if the company did not meet the payroll standard for the first year, but did in its fourth year, it could still earn the abatement for that first year.
The abatement is capped at $18,000 per year, or $80,000 over the five-year agreement.
Originally, the agreement allowed only a one-year "look back" for collecting unearned abatement money.
Another provision added to the draft proposal allows the village to terminate the agreement if Zipline fails to remit monthly employee withholding taxes at any time.