Title
Foreign-Trade Zone Application for Sunlit Arizona LLC (Resolution 21992)
Description
Request a Resolution to authorize the City Manager, or his designee, to submit an application to the Foreign-Trade Zones Board of the U.S. Department of Commerce for Sunlit Arizona LLC, a subsidiary of United EM Holding Inc. (Sunlit), its subsidiaries, affiliates, or related entities, and to support property tax reclassification for activated Foreign-Trade Zones from property tax class 2 (or other classification) with a tax assessment ratio of 15 percent, to property tax class 6 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 Sunlit, or its 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. Sunlit manufactures specialty chemicals to be used in microchip production which will help address the worldwide shortage of microchips that has led to supply chain issues with a variety of products and vehicles. Sunlit has requested an FTZ Subzone designation for property it owns located at 777 W. Alameda Rd. in Phoenix. The proposed FTZ site consists of approximately 17 acres. Building(s) expected to be constructed in Phase I will total approximately 130,000 square feet. The project will create 25 new jobs with a projected capital investment of $50M.
Property tax support letters have been provided to the City from the following applicable tax jurisdictions: Central Arizona Water Conservation District and Western Maricopa Education Center. Support letters are pending from the following applicable tax jurisdictions: Deer Valley Unified School District, Valleywise Health, Maricopa County and Maricopa Community Colleges.
City staff will prepare an Operations Agreement with Sunlit 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 Agreement 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 Sunlit’s application; however, the property may be reclassified to a lower tax rate once Sunlit successfully activates the FTZ. FTZ Operators pay annual fees to the City, pursuant to the current zone fee schedule, to administer the FTZ.
Location
777 W. Alameda Road
Council District(s): 1
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Community and Economic Development Department.