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FOREIGN TRADE ZONE REQUEST FOR NON-OBJECTION THE COOKSON COMPANY Foreign-Trade Zones (FTZs) are designated areas licensed by the Foreign-Trade Zones Board at which special customs procedures may be used. The FTZ program was established to encourage and expedite U.S. participation in international trade and is a mechanism for companies to manage their duty payments. Foreign-Trade Zones are considered outside the U.S. Customs territory so goods received into FTZs are generally not subject to duties, tariffs, or quotas until, and if, they leave the zone. Public benefits of an FTZ include helping to facilitate international trade, providing special customs procedures to help firms conduct international business, encouraging and facilitating exports, and helping create local employment opportunities. Property Tax Impact In Arizona, Real property and personal property located within the boundaries of an activated foreign-trade zone or subzone are covered by Class 6(1). In accordance with A.R.S. 42-12006, all Class 6 property is taxed at the rate of 5% of assessed valuation. The FTZ applicant must obtain letters of support or non-objection from the affected taxing entities to be submitted along with the application to the Foreign Trade-Zone Board. THE COOKSON COMPANY Summary from the owner’s representative, Scott O’Conner: Cornell Cookson, as the name on the door now reads, is the merged entity after Cornell Iron Works (Mountaintop, PA), acquired the The Cookson Company, of Phoenix. Both were family owned companies, and Cornell Cookson remains family owned by the Cornell family. It has been owned and operated by the Cornells since before the Civil War! Andrew Cornell is the fifth family member to serve as CEO. They are the largest manufacturer of industrial and commercial rolling doors. Rolling doors are distinct from sectional doors, which are cheaper to make and have shorter life spans. The range of product sizes begins with teller window, and ends up with the rolling door that allows the football field at University of Phoenix Stadium to travel in and out of the building. The new plant, on South Litchfield Road in Goodyear, will, generally speaking, supply everything west of the Mississippi, while the Mountaintop plant will serve the eastern US. Most of the product components are made from raw materials at the plant. However, motors and actuators are imported, principally from Taiwan, but also from China. It is this part of the product mix that generates the need for a foreign trade zone at the plant. Cornell Cookson is the overall brand. The occupant of the plant will be The Cookson Company Inc. The owner is Cactus Realty, LLC, a wholly owned subsidiary of CIW Enterprises, the parent holding company. Facts: Goodyear recently entered into a five year development agreement with The Cookson Company June/July 2014 Adding 110 new jobs for a total job base of 265 - $13.2M in payroll. $50k/per year New equipment purchased in Maricopa County - $4.2M Construction costs - $11M. Building on 14.5 acre vacant commercial parcel located at Litchfield Road east of the Goodyear Airport Economic and Revenue Impact prepared by GPEC. Total for Goodyear over five years is estimated at $746K. Total for Maricopa County is estimated at $371K, which is more than the property tax without FTZ approval. See below. The Cookson Company is seeking to designate this property as a Foreign Trade-Zone within the Greater Maricopa Foreign Trade Zone Inc.’s Zone No. 277. The two affected school districts have approved the FTZ request. City of Goodyear is committed to do so as part of our economic development agreement. Cookson is still waiting on WestMec and MIHS. Property Tax Impact - The Cookson Company Currently, the estimated value for the Cookson property is $508K. Assessment ratio of 16% and 2013 taxes of $11,415 (County $1,042). It is estimated that after the company’s investment, the value will increase to approximately $15M for personal and real property. If the FTZ is approved, even with the lower assessment ratio of 5% there will be an increase in revenue to the taxing districts from this property based on the baseline taxes. It is estimated that total tax collections with the FTZ in Year 1 will be $110,553 ($84,747 real property + $25,806 personal property) compared to the 2013 Tax Bill on the property of $11,415. Without FTZ approval, taxes would be approximately $380K ($35k County). However, the revenue analysis prepared by GPEC shows the impact of the FTZ approval will result in an estimated $371K in direct and indirect revenues to Maricopa County.