Greater Maricopa Foreign Trade Zone, Inc. Zone …

1 1 Greater Maricopa Foreign Trade Zone, Inc. Zone #277 Contents Frequently Asked Questions: Communities Page 2 Frequently Asked Questions: Business Page 6 Frequently Asked Questions: Site Locators Page 9 Manufacturing Example Page 14 Distribution Example Page 15 Application Process Page 16 Activation Process Page 19 Contact Information Page 21 2 Frequently Asked Questions - Community Leaders Q. What steps must be taken to qualify? (Application Procedures) A.

2 A prospective site or company must be located (or looking to locate) within the GMFTZ Service Area. 1. The prospective Company should contact the City s/Town s Economic Development Office to determine if there are sites available and what the City s/Town s tax policy is comprised of. 2. The prospective landowner and/or user will need to contact the Grantee/WESTMARC regarding their desire to be part of the Zone project. 3. The major taxing entities must all submit letters for inclusion within the application, reflecting their support of the proposed FTZ site.

3 This may take time and require meetings and formal agreements, while in other cases it may simply require a pre-approved letter. 4. An application must be submitted to the FTZ Board for review and approval along with the proper corresponding fee, depending on 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 to take, and the timeline and chronology of those steps for any company wanting to become an FTZ site/user.

4 Q. What is WESTMARC S role in the FTZ # 277 in relation to the Grantee, Greater Maricopa FTZ, A. WESTMARC provides staff support and marketing support for FTZ # 277. WESTMARC s offices are the official offices of the Zone, and WESTMARC S President, Michelle Rider overseas the marketing efforts on behalf of the Grantee. Greater Maricopa FTZ, Inc. is made up of 2 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.

5 Q. What if an existing business in my community wants to apply for FTZ status? How does that work? A. Businesses already located within your community can participate in the FTZ # 277 projects. Many have done so already. This is how it works: If a business wants to become a Zone User in FTZ # 277, they should determine the costs, benefits and operational issues by contacting their own zone consultant, or by using the Grantee s marketing consultant to determine those Cost-Benefit Issues.

6 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) from 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.

7 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), the added assets (building expansions and/or new plant and equipment added) will be taxed at the re-class rate for FTZs, once the site is activated by US Customs (CBP). 3 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.

8 This clever process creates a win-win situation for the company and the local taxing entities. It is a policy of FTZ 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 # 277 protect the existing local tax base? A. The local tax base is protect by FTZ # 277 by its Zone Schedule, the official Federal document on the rates, rules and charges imposed by the Grantee.

9 It is also protected by the local (city/town) Tax Policy that is approved, via city/town ordinance in most cases that 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. A Usage-Driven Site is a location that is designated as an FTZ for a specific company and can be located within any community within the GMFTZ Service Area.

10 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 4 letters needed: the 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 the Usage-Driven site option for those committed to activating and utilizing an FTZ.