Title
Foreign-Trade Zone Application for Taiwan Semiconductor Manufacturing Company (Resolution 21886)
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 Taiwan Semiconductor Manufacturing Company (TSMC), a U.S.-based subsidiary, 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 5 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 TSMC, 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. TSMC manufactures 5-nanometer technology for semiconductor wafer fabrication. TSMC has requested an FTZ Subzone designation for property it is seeking to acquire through an Arizona State Land Department auction located at the northwest corner of Loop 303 and 43rd Avenue alignment. TSMC plans to conduct semiconductor fabrication at the campus to include administrative and other supporting facilities. The proposed FTZ site consists of approximately 1,128 acres. Buildings expected to be constructed in phase I will total approximately 3.8 million square feet.
Property tax support letters have been provided to the City from the following applicable tax jurisdictions: Central AZ Water Conservation District, Deer Valley Unified School District, Valleywise Health, and Western Maricopa Education Center. Support letters are pending from the following applicable tax jurisdictions: Maricopa County and Maricopa Community Colleges.
City staff will prepare an Operations Agreement with TSMC 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 TSMC’s application; however, the property may be reclassified to a lower tax rate once TSMC successfully activates the FTZ.
Location
Northwest corner of Loop 303 and 43rd Avenue alignment
Council District: 1
Department
Responsible Department
This item is submitted by Deputy City Manager Jeff Barton and the Community and Economic Development Department.