FIVE BELOW DISTRIBUTION CENTER FTZ ANALYSIS-GPEC.PDF

Five Below
Distribution
Center
FTZ Analysis
February 2021

FTZ Analysis
Foreign Trade Zone
A Foreign Trade Zone (FTZ) is an area that is considered to be in international commerce for U.S.
Customs purposes. Any foreign or domestic material can be moved into a FTZ without being
subject to U.S. Customs duties. An FTZ is operated as a public venture sponsored by a municipality
and a Zone Grantee. Eligibility includes companies that would receive an economic benefit from the
deferral, reduction, or elimination on duties from imported products. Benefits of an FTZ include
duty elimination, duty deferral, duty reduction, logistical benefits, and lower state and county
property taxes.
Additional Depreciation
In Arizona, additional depreciation significantly reduces personal property tax liability through the
fifth year, and then the regular depreciation schedule is unaffected by additional depreciation.
Additional Depreciation is available to most businesses, including businesses operating in a
Foreign Trade or Military Reuse Zones.
Companies can elect to use additional depreciation to fully depreciate their property more quickly.
By using additional depreciation, a company’s property will be valued at 25% of its scheduled
depreciated value for year one (25% * depreciation factor * property value), and 100% by year six,
(100% * depreciation factor * property value).
NON-FTZ Depreciation Schedule
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Year 1 Year 2 Year 3 Year 4 Year 5
Depreciation Factor Depreciation (Including Additional Depreciation)
FTZ Depreciation Schedule
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Year 1 Year 2 Year 3 Year 4 Year 5
Depreciation Factor Depreciation (Including Additional Depreciation)
Source: AZ Property Tax Manual 2021

FTZ Analysis
Overview
Provided below is an FTZ analysis for the facility located at 2150 S. Miller Rd, Buckeye. The benefit
of being classified as a Foreign Trade Zone (FTZ) include a lower assessment ratio, which, for this
analysis, results in a 5-year savings of $11.6 million. Personal property within an FTZ only
depreciates as low as 20% of its original value, while personal property that is not in an FTZ
depreciates as low as 2.5%. Property in an FTZ is not eligible for the personal property exemption
of $195,878.
Capital Investment
• Personal: $30.5 million
• Real: $108 million
• Total: $138.5 million
Type Year 1 Year 2 Year 3 Year 4 Year 5
Personal $30,500,000 -- -- -- --
Real $108,000,000 -- -- -- --
Total $138,500,000 $138,500,000 $138,500,000 $138,500,000 $138,500,000
Classification Tax Rate Assessment Effective Tax Rate Tax (5 Liability Years)
Non-FTZ 14.91% 18% 2.68% $16,048,165
FTZ 14.91% 5% 0.75% $4,465,423
FTZ Savings: -- -- -- $11,582,742
Tax Payments
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
Year 1 Year 2 Year 3 Year 4 Year 5
Non-FTZ FTZ
Source: Maricopa County Assessor’s Office