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Meeting Minutes
Industrial Development Authority
Regular Meeting
February 13, 2024| 7:30 a.m.
Chandler City Council Chambers
88 E. Chicago Street, Chandler, AZ
Call to Order
The meeting was called to order by President Shannon Wilson at 7:37 a.m.
Roll Call
Commission Attendance
Staff Attendance
President Shannon Wilson
Dawn Lang, Deputy City Manager | CFO
Vice President Chuck Ertl
Tawn Kao, Assistant City Attorney
Secretary Edward Salanga
Kristi Smith, Financial Services Asst Director
Director John Lok
Karla Lange, Management Assistant
Director James Baglini, Jr.
Other Attendees
Zach Sakas, Bond Counsel, Greenberg Traurig, LLP
Angela Creedon, Public Affairs Manager, Intel
Dane Fernandes, Bond Counsel, Kutack Rock, LLP
Absent
Director Lee Kroll
Treasurer William Nolde
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Scheduled and Unscheduled Public Appearances
None.
Approval of Minutes
1.
Vice President Ertl moved to approve the December 12, 2023, Regular Meeting Minutes.
Secretary Salanga seconded the motion. Motion approved (5-0).
Briefing Items
2.
November and December 2023 Financials: Ms. Smith presented the November
Statement of Net Position that explained Total Current Assets with Cash in Bank of
$101,782, Investments of $1,069,112, providing Total Assets of $1,170,894. The
Beginning Net Position is $1,154,013 and a Year-to-Date Change in Net Position of
$16,881, providing an Ending Net Position of $1,170,894. The Statement of Revenues,
Expenditures, and Changes in Net Position for November 30, 2023, includes no change
to Operating Income, $251 in Operating Expenses, and Investment Income of $3,716,
providing a Net Change in Net Position of $3,465 for November.
Ms. Smith presented the December Statement of Net Position that explained Total
Current Assets with Cash in Bank of $101,782, Investments of $1,073,365, providing
Total Assets of $1,175,147. The Beginning Net Position is $1,154,013 and a Year-to-Date
Change in Net Position of $21,133, providing an Ending Net Position of $1,175,147. The
Statement of Revenues, Expenditures, and Changes in Net Position for December 31,
2023, includes no change to Operating Income or Operating Expenses, and Investment
Income of $4,253, providing a Net Change in Net Position of $4,253 for December.
3.
Discussion of Application for financing by the Chandler Industrial Development
Authority submitted by Intel Corporation in an amount not to exceed $700,000,000
for project expenditures that may include, in addition to other purposes,
industrial sewage and wastewater treatment facilities and solid waste disposal or
recycling facilities, associated with the chip fabrication facilities and other
present and future plant facilities.
Ms. Lang reported that the Industrial Development Authority received a bond
application from Intel on January 22, 2024. She introduced Ms. Angela Creedon, Public
Affairs Manager at Intel, who was in attendance to answer any questions the Board may
have related to the application and provide an overview of the project. Mr. Dane
Fernandes introduced himself as partner at Kutack Rock and is serving as bond counsel
representing Intel. Ms. Lang noted that Mr. Zach Sakas of Greenberg Traurig, bond
counsel for the IDA, has also reviewed the application and is available for any questions
the Board might have.
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Ms. Creedon provided the following overview of the current Intel projects in Chandler.
She reported that Intel has two (2) new FABs currently under construction, that were
announced in September 2021. The construction project is on-schedule and offered her
appreciation to the construction workers and tradesman, who have been instrumental
in keeping the project on track. She noted there have between 6,000 – 9,000 workers
on-site and on-going, Intel expects that 3,000 of these trade workers will remain working
on the jobsite at all times. The new FABs are designated as FAB 52 and FAB 62. She
offered that construction continues on the RWIF (Reclaimed Water Interconnect Facility),
which recycles ~9M gallons of water/day and the OBRF (Ocotillo Brine Reduction Facility),
which desalinizes water utilized in the facilities. She noted that construction
transformation and upgrades continue on these projects to support the new FABs. FAB
52 is on track to be operational in 2025 and FAB 62 will follow in 2026.
Ms. Creedon added that Intel has been successful in obtaining a new customer for
foundry services, for which Intel will manufacture chips for an outside party’s chip
design. She wrapped up by adding that this is a very exciting time for Intel and believes
this is a tremendous opportunity for growth.
Ms. Lang concurred that it is an exciting time for Intel, for the City of Chandler, for
Arizona and for the country. She added that this has had a positive impact for Chandler’s
local economy.
Ms. Creedon followed up by saying that Arizona has become a hub for major
manufacturers and noted that Intel is on the front edge of that. She mentioned that
Intel CEO Pat Gelsinger had only been in his position for a few months when he
announced that Intel would expand in Arizona, and they are looking forward to
continuing his vision.
Mr. Sakas noted that in the Bond Application, Intel has requested a waiver on
performing an appraisal and environmental assessment, which would be customary and
typical for a transaction like this, as there is no need since there is no real estate asset
pledged. In addition, Mr. Sakas offered that this is a broader project scope than what
the IDA has participated in financing previously, where prior transactions were focused
more exclusively on wastewater treatment and this project offers a tremendous
opportunity for expansion, which is great for both the City of Chandler and Intel. This
project includes wastewater, solid waste aspects and other broader project
components. He continued that Kutack Rock would be responsible for the analysis
ensuring that the project meets Federal and State requirements for tax-exempt
bonding. He added that this project does meet all requirements provided for in Arizona
State Statute.
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Mr. Sakas continued by noting that Intel provided information related to financial
performance in the application from the prior quarter, but released additional earnings
data shortly after submitting the application, which are publicly available for review.
Mr. Sakas noted for the Board that anything the Board potentially approves at this
meeting is a preliminary action, and the Board will need to follow up with final approval
once Intel provides exactly what they require for financing.
Secretary Salanga offered that he is happy to have Intel in Chandler and excited to be
working with them again.
Action Agenda
4.
Discuss and possible adoption of Resolution 2024-01, approving a Second
Extension Agreement relating to the Supplemental Agreement to the Intel
Corporation Amended and Restated Application for Financing by the Authority
dated November 17, 2005.
Ms. Lang reported that Intel has received lower fees related to bonding in past
agreements with the IDA since 2005. She noted that the resolution under consideration
offers entering into an agreement for the first bond sale with Intel under the existing fee
structure. Moving forward, the board would have the opportunity to discuss updating
the fee structure based on current costs and inflation. She added that Intel did pay a
$3,000 application fee with their current application, which will be waived per the
existing agreement, and if Intel is agreeable, will be applied to the closing costs for the
first sale from the $700,000,000 bond.
Mr. Sakas requested that the Board provide direction to staff to do an analysis of current
fees, including staff time spent on IDA business. Currently, there is no reimbursement
from the IDA for City staff time cost.
Secretary Salanga voiced that he would like to see an analysis of the cost the Board
expects to incur for the bond issuances to allow the Board to evaluate if adjusting the
fee schedule if deemed necessary. He also asked if Intel has an idea of what the first
issuance amount would be.
In response to Secretary Salanga’s question regarding the amount of first issuance, Mr.
Fernandes moved forward to discuss the inducement resolution, 2024-02. He continued
that the Federal tax code, for projects of this nature, requires a couple of different
elements that are served by the preliminary resolution. The main element is that it
induces the project, where the IDA is requested to declare its official intent, which allows
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Intel to begin spending on the hard costs of the project, and ultimately have these costs
reimbursed with the bond proceeds.
The second element is that projects of this type require an allocation of the private
activity bond appropriations that are given to each state, based on their population,
commonly referred to as volume cap. The preliminary resolution allows Intel to
approach the Arizona Finance Authority, who manages the volume cap process in
Arizona, and make a request for volume cap. Mr. Fernandes indicated that how much
volume cap Intel can receive determines the amount of the taxes and bonds the
Authority can issue. Because of Arizona’s rules during the current year, no project can
obtain more than $40,000,000 of volume cap, except through the director’s discretion,
but at the end of the year, anything that hasn’t been utilized is carried forward, and that
is likely the amount that Intel will request, at the end of December 2024. Depending on
how much Intel can receive, they will plan to do their first issuance in 2025. Mr.
Fernandes noted it is highly unlikely that Intel will receive $700,000,000 in one chunk,
especially now, with the number of multi-family housing projects in the state, who will
likely take a large portion of the volume cap during the current year. He projected that
Intel will likely need to come back multiple times to exhaust the $700,000,000 funding.
Secretary Salanga moved to approve the Resolution 2024-01, to approve a Second
Extension Agreement relating to the Supplemental Agreement to the Intel
Corporation Amended and Restated Application for Financing by the Authority
dated November 17, 2005. Vice President Ertl seconded the motion. Motion approved
(5-0).
5.
Discuss and possible adoption of Resolution 2024-02, granting preliminary
approval for and declaring the intention of the Authority to issue its revenue
bonds in an amount not to exceed $700,000,000 for Intel Corporation or its
affiliate.
Vice President Ertl moved to approve the Resolution 2024-02, granting preliminary
approval for, and declaring the intention of the Authority to issue its revenue bonds in
an amount not to exceed $700,000,000 for Intel Corporation or its affiliate. Secretary
Salanga seconded the motion. Motion approved (5-0).
Member Comments/Announcements
None
Calendar
The next regular meeting will be held on Tuesday, March 12, 2024, at 7:30 a.m.
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Informational Items
Adjourn
The meeting was adjourned at 7:58 a.m.
___________________________
Shannon Wilson, President