Click on any question below for more information.
Q. What is the Application/Activation Process?
- A prospective site or company must be located (or looking to locate) within the GMFTZ Service Area.
- The prospective company should contact the city’s/town’s Economic Development Office to determine if there are Sites available and request information regarding local tax policy.
- The prospective landowner and/or Zone user will need to contact the Grantee/WESTMARC regarding their desire to be part of the Zone project.
- The major taxing entities must all submit letters for inclusion within the Zone application, reflecting their support of the proposed FTZ site. This may take time and require meetings and formal agreements, while in other cases it may simply require a pre-approved letter.
- An application must be submitted to the FTZ Board for review and approval along with the proper corresponding fee, depending on Zone application type.
The Grantee has created 2 simple step-by-step procedural documents for Applying for an FTZ and Activation of a Zone, which explains all of the necessary steps required, along with the timeline and chronology of those steps for any company wanting to become an FTZ site/user.
Q. What is WESTMARC’S role in the FTZ # 277 in relation to the Grantee, Greater Maricopa FTZ, Inc.
WESTMARC provides staff and marketing support for FTZ No. 277. WESTMARC’s offices are the official offices of the GMFTZ Inc., Zone, and WESTMARC’S Regional Marketing Facilitator, Sintra Hoffman overseas the marketing efforts on behalf of the Grantee. Greater Maricopa FTZ, Inc. is made up of two boards: the Board of Directors, which are volunteer citizens, having been previous WESTMARC board members and officers, and an Advisory Council made up of the economic development directors from the West Valley communities and the current land-owners within the Zone.
Q. What if an existing business in my community wants to apply for FTZ status? How does that work?
Businesses already located within your community can participate in the FTZ No. 277 projects. Many have done so already. This is how it works:
- If a business wants to become a Zone user in FTZ No. 277, they should determine the costs, benefits and operational issues by contacting a Zone consultant, or by using the Grantee’s marketing consultant to determine those cost-benefit Issues.
- If the business is already located in the community, there will be no “re-classification” of taxes on assets (both real and personal property assets within the proposed Zone Site) as a result of the Zone approval/activation. The company will have to execute a Payment in Lieu of Tax Agreement (PILOT Agreement) with the city/town, which will dictate how the payment (making up the difference between what the company would pay without an FTZ and what it will pay under the re-classification) so that all existing taxes are paid the current taxes on the property.
- Then, for all other assets added after the date of requesting official FTZ sponsorship by the Grantee (this “date” may differ for each city/town), all added assets, such as, building expansions and/or new plant and equipment addition will be taxed at the re-class rate for FTZs, once the site is “activated” by US Customs (CBP).
- This process allows existing businesses in your city/town to take advantage of the FTZ Program, while fully protecting the existing local tax base at 100% of what it would be before the FTZ program. This clever process creates a “win-win” situation for the company and the local taxing entities. It is a policy of FTZ No. 277 and is maintained within the Zone Schedule of the Grantee (the official document sent to the FTZ Board on how this Zone operates) and is mandated within each Operator Agreement.
Q. How does FTZ No. 277 protect the existing local tax base?
The local tax base is protect by FTZ No. 277 by its Zone Schedule, the official federal document that reflects the rates, rules and charges imposed by the Grantee. It is also protected by the local (city/town) Tax Policy that is approved, via city/town ordinance which in most cases outlines the city’s/town’s policies on this issue.
Existing Building before FTZ
$20M Land & Building Investment & $5M of New Investment
FTZ allows for full protection of existing Tax Base
Q. What is the difference between a Usage-Driven and Magnet Site?
A Usage-Driven Site is a location that is designated as an FTZ for a specific company within the GMFTZ Service Area. The company applying for FTZ status must commit to activating and utilizing the FTZ within 3 years or the site will become de-zoned. This application process is fast-tracked, but will require that each major taxing jurisdiction provide a letter of support. There are typically 4-5 letters needed: city/town, county, community college district, and the school district(s). Having an established tax policy within a community can provide companies without Magnet Sites with the ability to utilize a Usage-Driven site. An existing company can apply for Usage- Driven site status at its location, or it request designation for a build-to-suit relocation. The tax process usually takes three months and then once the application is received by the Grantee, two to three months are required for local and Federal approval.
A Magnet Site is a piece of land (industrial park) within a community that is designated with FTZ status for the purpose of attracting business and accommodating demand for Zone designation. The FTZ Board is now only approving Magnet Sites that have a current user willing to commit, or an existing building for lease, and space for future Zone users. A Magnet Site is often an industrial park or larger tract of land which can provide opportunities for multiple companies to utilize the Zone program. In addition to tax jurisdiction support, the Magnet Site approval process requires a longer application process with a much more robust justification section and approval timeframe ranges from 1- months to a year once it is formally docketed by the FTZ Board.
NOTE: Only companies that qualify federally and locate within an FTZ Magnet Site may activate and take advantage of the state tax benefits. Other firms may locate within a Magnet Site, but unless qualified federally, they cannot activate and take advantage of the Zone. As of September of 2012, the US FTZ Board is making it very difficult to add Magnet Sites in AZ and therefore only certain, specific fact-situations can be approved. Contact WESTMARC or IMS for more details.
Q. What costs are associated with being part of an FTZ?
There are several types of Zone Applications and even more steps necessary to become “an activated Zone Operator,” with various costs for consulting, software and Grantee costs; so the answer to this question is relatively complicated. However, the Grantee has created a short step-by-step process; Application Process and Activation Process, along with a Fee Schedule which is posted on this website. Each company that wants to get approved to use the Zone, for both the Federal and State benefits, must go through the steps outlined in the Application and Activation appendices attached to this website.
Q. How can WESTMARC and the Grantee (GMFTZ, Inc.) help me with the Zone?
GMFTZ, Inc. and WESTMARC act as advocates for the FTZ, having a committed and thorough marketing agenda to promote and market the use of Zone No. 277 (the West Valley Zone). Furthermore, GMFTZ, Inc. retains a full-time Zone marketing consultant, IMS, to answer any and all technical marketing and Zone operational questions regarding whether firms qualify under the Federal and State laws and regulations. IMS personnel can assist any of the WESTMARC City/Town Economic Development leaders with “project leads” who are looking to locate in the West Valley. These services from IMS are all paid for by the Grantee through Zone Grantee fees. These services include:
- Technical Zone marketing via conference calls, on-site meetings, Webex presentations, etc. to prospective Zone users (prospects) and/or their site location consultants.
- Assistance with whether or not a certain prospect could qualify under the Federal and State requirements.
- Understanding the relationship between the prospect, US Customs (CBP) and the local taxing authorities.
- Providing Cost-Benefit Analysis to any prospect.
- Answering operational questions that are posed by the prospect.
- All of these services are paid for by the Grantee, and are available to all West Valley communities and their EDC or city staff.
Q. What steps must our community take to be part of the FTZ project?
In order to be part of the FTZ No. 277 project, a community located within the Service Area will need to work with the Grantee (Greater Maricopa FTZ, Inc.) and WESTMARC to prepare FTZ tax policies for each city/town and conduct community-led marketing efforts to educate businesses and landowners in the community. The Grantee and WESTMARC maintains draft documents including Council Resolutions and tax policy documents, which can assist with this process. Due to the tax reclassification statute existing in Arizona, it will be imperative that the community and all major taxing jurisdictions within the community establish an FTZ tax policy in order to quickly expedite Zone Application processing for businesses interested in utilizing the FTZ program.
Q. Does the GMFTZ project serve our community?
The Greater Maricopa Foreign Trade Zone (FTZ No. 277) serves the Western Valley of Maricopa County, Arizona. The Service Area for FTZ No. 277 includes, but is not limited to, the following communities: Avondale, Buckeye, El Mirage, Gila Bend, Glendale, Goodyear, Litchfield Park, Peoria, Sun City, Sun City West, Surprise, Tolleson, Wickenburg and Youngtown and the unincorporated areas that exist west of the Phoenix City boundary.
Q. What can an FTZ project do for my community?
An FTZ project can benefit a community by offering businesses “world-class” financial incentives that are seeking a new site for expansion, relocation or new operations. Not all business can utilize Zone benefits, but for those that can, the cost savings make FTZ designation a prerequisite for many corporate site selection teams. A Zone-approved site offers communities with an advantage in terms of successfully attracting new economic development opportunities and the corresponding jobs to their community.