Title
Foreign-Trade Zone Application for Nikola Motor Corporation Phoenix Site (Resolution 21738)
Description
Request to authorize the City Manager, or his designee, to submit a Minor Boundary Modification application to the Foreign-Trade Zones Board of the U.S. Department of Commerce for Nikola Motor Corporation (Nikola), a Delaware corporation, and to support property tax reclassification for activated Foreign-Trade Zones from property tax class one with a tax assessment ratio of 18 percent, to property tax class six with a tax assessment ratio of five percent pursuant to Arizona law (A.R.S. 42-12006). Also, request authorization to enter into a Foreign-Trade Zone (FTZ) Operations Agreement (Agreement) and any other necessary documentation with Nikola, or City-approved nominee. Further request authorization for the City Treasurer to accept funds related to this item.
Report
Summary
The City of Phoenix, as Grantee of FTZ No. 75, has the right and authority to apply for FTZ site designations. Nikola Motor Corporation manufactures hydrogen fuel cell powered semi-trucks with long-haul capability. Nikola has requested an FTZ Subzone designation for property it leases and is currently improving located at 4141 E. Broadway Road, where it plans to conduct light manufacturing and assembly, research and development, engineering, and headquarters functions. The proposed FTZ site consists of approximately 10.55 acres with one building of approximately 150,000 square feet.
Property tax support letters have been provided to the City from the following applicable tax jurisdictions: Tempe Elementary School District, Maricopa Community Colleges, Central Arizona Project, and Maricopa County. Support letters are pending from the following applicable tax jurisdictions: Tempe Union High School, East Valley Institute of Technology, and Maricopa Integrated Health System.
City staff will prepare an Operations Agreement with Nikola requiring the company to:
- Comply with U.S. Department of Commerce Foreign-Trade Zones Board standards.
- Maintain record keeping satisfactory to the U.S. Customs and Border Protection.
- Obtain business bonding and insurance satisfactory to the City and the U.S. Customs and Border Protection.
- Indemnify the City against claims arising from their FTZ operations.
- Pay to the City all fees pursuant to the current zone fee schedule.
The Agreements will contain other terms and conditions deemed necessary or appropriate.
Contract Term
The term of the Agreement, if approved, will be for 20 years unless the FTZ designation terminates sooner. Provisions of the contract may include an option to extend for as long as the FTZ designation exists which may be exercised by the City Manager or his designee.
Financial Impact
The City will incur no costs associated with Nikola’s application; however, the property may be reclassified to a lower tax rate once Nikola successfully activates the FTZ.
Location
4141 E. Broadway Road
Council District: 8
Department
Responsible Department
This item is submitted by Assistant City Manager Deanna Jonovich and the Community and Economic Development Department.