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ITEM 9
City Council Memorandum Economic Development Memo No.
ED22-010
Date:
February 24, 2022
To:
Mayor and Council
Thru:
Joshua H. Wright, City Manager
Andy Bass, Deputy City Manager
Micah Miranda, Economic Development Director
From:
Edyie McCall, Economic Development Senior Program Manager
Subject:
Resolution No. 5551, authorizing support for a Foreign Trade Zone application for Rinchem Company, Inc.; authorizing the execution of an Intergovernmental Agreement between the City of Chandler and the City of Phoenix; and authorizing the Mayor to sign the Resolution and related documents as approved by the City Attorney.
Proposed Motion:
Move City Council approve Resolution No. 5551, authorizing support for a Foreign Trade Zone Application for the Rinchem Company, Inc., distribution warehouse located at 6805 W. Morelos Place; authorizing the execution of an Intergovernmental Agreement between the City of Chandler and the City of Phoenix; and authorizing the Mayor to sign the Resolution and related documents as approved by the City Attorney.
Background:
Rinchem is a chemical management solutions provider for high purity, pre-packaged chemicals and gases. The company operates a distribution warehouse at 6805 W. Morelos Place in Chandler. To maintain global competitiveness, Rinchem contacted the City’s Economic Development Division staff requesting support for a Foreign Trade Zone (FTZ) at the 6805 W. Morelos Place distribution warehouse facility. Rinchem employs 80 employees at the Chandler location and the operation supports local suppliers and service providers.
The FTZ status would allow Rinchem to take advantage of the import/export duty reduction for companies located in an active FTZ and realize administrative and customs cost savings as well as take advantage of global supply chain efficiencies inherent to the FTZ program. While Arizona state law also allows properties in an active FTZ to obtain a reduction in property tax assessed valuation from 17.5% to 5%. Rinchem has agreed to not pursue or claim this beneficial tax treatment for its existing facility or any new buildings and equipment at the location. Therefore, support of the FTZ designation has no direct fiscal impact to the City or other area taxing jurisdictions (e.g. school districts).
The City of Phoenix holds the authority to establish new FTZ designations for certain areas in the greater metropolitan region. If City Council approves this resolution with authorization to enter into an intergovernmental agreement with the City of Phoenix at a future date, the Phoenix City Council will then need to authorize Rinchem’s application for a permanent Foreign Trade Zone. The Foreign Trade Zone application will then move on to the federal Foreign Trade Zones Board in Washington, D.C., for review and approval.
There are currently three companies with Foreign Trade Zones in the City of Chandler: Intel, Avnet and Viavi. If Rinchem receives an FTZ designation, the company will be able to participate in international trade more effectively due to the lower duty rates and administrative costs associated with FTZ status. The City would also benefit from Rinchem’s trade activities, which support jobs at the company and other local suppliers and service providers in Chandler.
Financial Implications:
There are no financial implications to the City of Chandler.
Attachments
Resolution 5551
Rinchem Notice of Intention to Apply for FTZ Status
Intergovernmental Agreement
Rinchem Legal Description
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