Title
Foreign-Trade Zone Application for SKU Distribution (Resolution 21830)
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 SKU Distribution (SKU). Also, request authorization to enter into a Foreign-Trade Zone (FTZ) Operations Agreement (Agreement) and any other necessary documentation with SKU or City-approved nominee, and to enter into an Intergovernmental Agreement (IGA) with the Town of Gilbert. Further request authorization for the City Treasurer to accept funds related to this item.
Report
Summary
The City of Phoenix, as Grantee of FTZ 75, has the right and authority to apply for FTZ site designations. SKU offers order fulfillment, e-commerce fulfillment, and third party logistics services. SKU has requested an FTZ Subzone designation for property it leases at 2075 W. Obispo Ave., Suite 102 in Gilbert, AZ, where it plans to provide distribution, warehouse and e-commerce activities for their clients. The proposed Subzone site includes approximately 41,000 square feet.
The Town of Gilbert has provided to the City of Phoenix a letter of support for SKU’s FTZ application for the site in Gilbert. With City Council authorization, the City of Phoenix will enter into an IGA with the Town of Gilbert to evidence conditions of Gilbert’s support of the subzone application and outline the cities’ responsibilities to one another. City staff will prepare an Operations Agreement with SKU 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 of Phoenix against claims arising from their FTZ operations.
- Pay to the City of Phoenix 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 SKU’s application.
Location
2075 W. Obispo Ave., Suite 102, Gilbert, AZ
Council District(s): Out of City
Department
Responsible Department
This item is submitted by Assistant City Manager Deanna Jonovich and the Community and Economic Development Department.