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INTERGOVERNMENTAL AGREEMENT
BETWEEN THE CITY OF CHANDLER
AND THE CITY OF PHOENIX
(TO ESTABLISH ESSAI INCORPORATED,
A SUBSIDIARY OF ADVANTEST AMERICA INCORPORATED,
WITHIN A FOREIGN-TRADE ZONE)
This INTERGOVERNMENTAL AGREEMENT (“Agreement”) is made and entered
into this _____ day of _______________, 2025 (“Effective Date”), by and between the
City of Chandler (“Chandler”), a municipal corporation duly organized and existing under
the laws of the State of Arizona, and the City of Phoenix (“Phoenix”), a municipal
corporation duly organized and existing under the laws of the State of Arizona. Chandler
and Phoenix are sometimes referred to collectively as “Parties” and individually as a
“Party.”
RECITALS
A. Chandler is empowered to enter into this Agreement under A.R.S. § 11-952, as
amended, and has authorized the undersigned to execute this Agreement on behalf of
Chandler by resolution, a copy of which is attached to this Agreement as Exhibit A and
incorporated by reference.
B. Phoenix is empowered to enter into this Agreement under A.R.S. § 11-952, as
amended, and has authorized the undersigned to execute this Agreement on behalf of
Phoenix by resolution, a copy of which is attached to this Agreement as Exhibit B and
incorporated by reference.
C. Phoenix has received a Grant (Board Order 185, dated March 25, 1982) from the
Foreign-Trade Zones Board (“Board”) to establish FTZ No. 75, and the alternative site
framework format for FTZ No. 75 was approved by the Board in a notice published on
October 20, 2010 in 75 Fed. Reg. 64708.
D. Chandler does not have a grant of authority to establish a Foreign-Trade Zone.
E. Essai Inc. (“Essai”), a subsidiary of Advantest America, Inc., operates facilities on
certain real property within the City of Chandler located at 280 S. 79th Street, Chandler,
Arizona 85226 (APN 301-90-471) and 4111 W. Saturn Way, Chandler, Arizona 85226
(APN 301-89-007W) (collectively, “Site”) and desires to have the Site designated as a
foreign-trade zone (“Zone Site”). The Site as shown in Exhibit C, which is attached to
this Agreement and incorporated by reference, is utilized for the manufacture of Test
Sockets, which are used for Semiconductor part testing.
F. Chandler desires to assist Essai in obtaining approval from the Board to establish,
operate, and maintain a foreign-trade zone at the Zone Site.
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G. Phoenix is willing to submit an application to the Board on behalf of Essai
(“Application”) for a minor boundary modification to establish, operate, and maintain a
foreign-trade zone at the Zone Site to demonstrate its interest in a cooperative regional
effort to encourage the retention and expansion of business in the greater metropolitan
area.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained and described herein, the parties agree as follows:
I. Statutory Requirements
1. Purpose – Ariz. Rev. Stat. § 11-952(B)(2). The purpose of this Agreement is to
memorialize Chandler’s and Phoenix’s agreement to work together to assist Essai in its
efforts to obtain foreign-trade zone status for the Zone Site and to assure Phoenix that
the establishment, operation, and maintenance of a foreign-trade zone status at the Zone
Site, including any unsuccessful efforts made in respect thereto, shall be accomplished
without any cost or liability whatsoever to Chandler or Phoenix.
2. Duration – Ariz. Rev. Stat. § 11-952(B)(1). This Agreement shall take effect and
become operative as of its Effective Date provided above, after the latter of when the
approved by both Chandler’s and Phoenix’s respective City Councils and the date it is
executed by the duly authorized officials of each of the Parties. This Agreement will
continue in duration for the term of the Foreign-Trade Zone Operations Agreement
(“Operations Agreement”), which is to be negotiated and executed between Phoenix
and Essai pursuant to §§ 7 and 8 below, until that Operations Agreement terminates or
otherwise expires unless this Agreement is terminated earlier in accordance with § 4
below. The Parties do not intend that the term of this Agreement shall exceed any
limitation imposed by law, including without limitation the laws of the State of Arizona, and
agree to comply with any applicable requirements of such laws in connection with the
Agreement’s term.
3. Manner of Financing/Budgeting – Ariz. Rev. Stat. § 11-952(B)(3). Funding for
Chandler’s and Phoenix’s respective responsibilities under this Agreement are annually
approved by Chandler’s and Phoenix’s respective City Councils when they approve their
annual budgets.
4. Termination – Ariz. Rev. Stat. § 11-952(B)(4). This Agreement will terminate
upon the earliest occurrence of the following:
4.1.
the Agreement reaches the end of its term;
4.2.
the Parties mutually agree to terminate this Agreement by formal
amendment signed by the Parties;
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4.3.
one Party is in default of its obligations and fails to institute required
corrective actions (see § 26 below); or
4.4.
one Party provides the other Party with a Notice to terminate at least 180
calendar days before the effective termination date, with each Party to bear its own costs
and expenses incurred as a result of that termination.
5. Separate Legal Entity – A.R.S. § 11-952(B)(5). This Section is intentionally left
blank.
6. Other Necessary Matters – A.R.S. § 11-952(B)(6). See § II (Responsibilities)
below.
II. Responsibilities
7. Chandler’s Obligations. Chandler’s responsibilities under this Agreement include
the following:
7.1.
Facilitate the negotiation and execution of an Operations Agreement, if any,
between Phoenix and Essai;
7.2.
Support the Application process;
7.3.
Notify Phoenix when Chandler desires enforcement of Phoenix’s right to
terminate the Operations Agreement if Essai, without the prior approval of Chandler and
in breach of the Operations Agreement, either seeks or obtains property tax
reclassification
under
Arizona
Revised
Statutes
(“A.R.S.”)
§ 42-12006(2)
(“Reclassification Statute”) for real property at the Zone Site; and
7.4.
Take all action requested by Phoenix related to enforcement of the
provisions referred to in § 7.3 above.
8. Phoenix’s Obligations. Phoenix’s responsibilities under this Agreement include
the following:
8.1.
Conduct operations in good faith with Essai; and
8.2.
Enter into an Operations Agreement with Essai for operation of the Zone
Site, which shall contain provisions that: (a) Essai must be responsible for all costs related
to the Zone Site that are incurred by Phoenix and Chandler, and (b) Phoenix may
terminate the Operations Agreement if Phoenix is advised by Chandler that Essai has
sought or obtained a real property tax classification under the Reclassification Statute.
8.3.
To provide in the Operations Agreement that: (a) Phoenix may seek
revocation of Essai’s personal property tax classification under the Reclassification
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Statute if Essai fails to comply with its obligations under the Operations Agreement; and
(b) Essai shall not seek or obtain property tax classification under the Reclassification
Statute for the real property improvements at the Zone Site. Nothing in this section
prevents Essai from seeking personal property tax classification under the
Reclassification Statute.
9. Indemnity. Each Party (as “Indemnitor”) agrees to indemnify, defend, and hold
harmless the other Party (as “Indemnitee”) from and against any and all claims, losses,
liability, costs, or expenses (including reasonable attorney’s fees) (hereinafter collectively
referred to as “Claims”) arising out of bodily injury of any person (including death) or
property damage, but only to the extent that such Claims which result in
vicarious/derivative liability to the Indemnitee are caused by the act, omission,
negligence, misconduct, or other fault of the Indemnitor, its officers, officials, agents,
employees, or volunteers.
10. Acknowledgements.
10.1. The Parties acknowledge that 15 C.F.R § 400.49 provides for monitoring
and reviews of foreign-trade zone operations and activity. Section 400.49(c) provides
that the Board or the Commerce Department’s Assistant Secretary for Import
Administration may restrict or prohibit zone activity that it finds is no longer in the public
interest and the Board has authority under 14 C.F.R. § 400.61 to revoke a grant of
authority to operate a zone for cause.
10.2. Chandler acknowledges that both Chandler and Essai have determined that
it would be detrimental to the public interest if Essai were to seek and obtain real property
tax classification under the Reclassification Statute in breach of the Operations
Agreement.
11. Notices. Any notice, demand, or other communication (“Notice”) given or to be
given, by either Party to the other, shall be given in writing, by certified mail, and shall be
addressed to the Parties at the addresses set forth below, or at such other address as
the Parties may otherwise designate by given Notice. Any Notice shall be deemed
received upon actual receipt or three (3) business days after deposit in the United
States mail, whichever date is earlier.
11.1. To Phoenix
Community & Economic Development Director
City of Phoenix
200 West Washington Street, 20th Floor
Phoenix, Arizona 85003-1611
and
City Clerk
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City of Phoenix
200 West Washington Street, 15th Floor
Phoenix, Arizona 85003-1611
and
City Attorney
City of Phoenix
200 West Washington Street, 13th Floor
Phoenix, Arizona 85003-1611
11.2. To Chandler
City Manager
City of Chandler
P.O. Box 4008, Mail Stop 605
Chandler, Arizona 85244-4008
and
City Attorney
P.O. Box 4008, Mail Stop 602
Chandler, Arizona 85244-4008
III.General Provisions
12. Recitals and Captions: The Parties acknowledge that recitals set forth above are
true and correct and are incorporated into this Agreement by reference. The captions in
this Agreement are merely for reference, and not to construe or limit the text.
13. Governing Law and Jurisdiction. The laws of the State of Arizona will govern
this Agreement, both as to interpretation and performance. Any citations to a statute in
this Agreement refer to the version of that statute in effect when the Parties execute this
Agreement. ARIZ. REV. STAT. §§ 12-133 and 12-1518 may require arbitration of a dispute.
Otherwise, the dispute is subject to the jurisdiction of the Maricopa County Superior Court.
14. Compliance with Laws. The Parties will comply with all applicable federal, state,
and local laws, ordinances, codes, rules, regulations, and executive orders, including
those governing equal employment opportunity, immigration, nondiscrimination, and the
Americans with Disabilities Act.
15. Mutual Benefits. In making the promises contained in this Agreement, the Parties
agree that certain benefits and advantages will accrue for each Party by performance of
this Agreement, so they enter this Agreement in reliance on the mutual benefits afforded
each Party.
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16. No Adverse Inference. This Agreement shall not be construed more strongly
against one Party or the other. The Parties to this Agreement had equal access to, input
with respect to, and influence over the provisions of this Agreement. Accordingly, no rule
of construction which requires that any allegedly ambiguous provision be interpreted more
strongly against one Party than the other shall be used in interpreting this Agreement.
17. Successors and Assigns. The Parties bind themselves and their successors,
assigns, and legal representatives to this Agreement’s covenants. A Party may not assign
or otherwise transfer its interest in this Agreement without the other Party’s written
consent and formal amendment to this Agreement signed by the Parties. Any attempt to
assign otherwise is void.
18. No Agency Created. Nothing in this Agreement: (a) creates any partnership, joint
venture, or agency relationship between the Parties; or (b) gives any right or cause of
action for the benefit of any person, firm, organization, or corporation that is not a Party
here.
19. No Third-Party Beneficiaries or Agency. Nothing in this Agreement gives any
rights or benefits to anyone but the Parties. All duties and responsibilities undertaken
under this Agreement are for the exclusive benefit of the Parties—and not any other party.
This Agreement does not create a contractual relationship with any third party or
otherwise establish any third-party beneficiaries. No third party may enforce the terms
and conditions of this Agreement.
20. Conflict of Interests. The Parties acknowledge that this Agreement is subject to
cancellation within three years under ARIZ. REV. STAT. § 38-511 in the event of a conflict
of interest for a Party’s official/employee. No official/employee of the Parties may: have
any direct or indirect interest in this Agreement; or participate in any decision relating to
the Agreement that is prohibited by law.
21. No Payment of Consideration for Agreement. The Parties warrant that they
have not paid or given—and will not pay or give—any third person any money or other
consideration for obtaining this Agreement.
22. Entire Agreement. This Agreement expresses the full agreement and
understanding of the Parties, superseding all prior written or oral communications.
23. Modification. This Agreement’s terms may not be modified, supplemented,
amended, or otherwise changed except by formal amendment signed by the Parties.
There will be no oral modification of this Agreement.
24. Severability. If any provision or application of this Agreement is invalid or illegal,
then the Agreement’s remainder endures unaffected and enforceable to the fullest extent
permitted by law—so long as the severability does not defeat this Agreement’s
fundamental purposes.
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25. Counterparts. The Parties may sign this Agreement in counterparts, and each
counterpart will be effective and enforceable as though it were the original agreement.
26. Default. A Party shall be deemed in default under this Agreement upon failure of
such Party to observe or perform any material covenant, condition, or agreement on its
part to be observed or performed under this Agreement, and the continuance of such
failure for a period of 30 days after Notice is given by the other Party. Such Notice shall
specify the failure and request it be remedied within 30 days, unless the Party giving
Notice agrees in writing to an extension of the time period prior to its expiration. However,
if the failure stated in the Notice cannot be corrected within the applicable period, it will
not give rise to a default under this Agreement if corrective action is instituted within the
applicable period and diligently pursued until the failure is corrected.
27. Default Rights/Remedies. In the event of default under this Agreement, the non-
defaulting Party will have all rights and remedies available to it at law or in equity. The
exercise by any Party of one or more such rights or remedies will not preclude that Party
from exercising—at a different time—any other rights or remedies for the same default or
any other default by the defaulting Party.
28. Nonliability of Officials and Employees. In the event of any default or breach by
any Party, no official or employee of that Party will be personally liable for any payments
or other obligations due under this Agreement.
29. No Waiver. A Party may not construe the failure or delay of the other Party to
enforce—or require performance of—any of this Agreement’s provisions to be a waiver
of that provision. Such failure or delay will not affect the validity of any part of this
Agreement or the rights of the Parties to enforce every provision.
30. Additional Documents/Actions. The Parties agree to execute and deliver all
documents and take all actions reasonably necessary to implement and enforce this
Agreement.
31. Force Majeure. The Parties will not be responsible or otherwise liable, or deemed
in breach of this Agreement, for any delay in the performance of this Agreement’s
obligations to the extent caused by circumstances beyond its control, without the fault or
negligence, that could not have been prevented by their exercise of due diligence (such
as fires, natural disasters, riots, wars, and unavoidable or unforeseeable site conditions).
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first
written above.
CITY OF CHANDLER
CITY OF PHOENIX
Ed Zuercher, City Manager
Kevin Hartke
Ryan Touhill
Mayor
Community & Economic
Development Director
ATTEST:
ATTEST:
______________________________
Chandler City Clerk
Phoenix City Clerk
APPROVED AS TO FORM:
APPROVED AS TO FORM:
Julie M. Kriegh, City Attorney
______________________________
Kelly Schwab
Micah Ray Alexander
City Attorney
Assistant Chief Counsel
ATTORNEY DETERMINATION
In accordance with the requirements of A.R.S. § 11-952(D), the undersigned attorneys
acknowledge: (1) that they have reviewed the above Agreement on behalf of their
respective clients; and (2) that, as to their respective clients only, each attorney has
determined that this Agreement is in proper form and is within the powers and authority
granted under the laws of the State of Arizona.
______________________________
Kelly Schwab
Micah Ray Alexander
City Attorney
Assistant Chief Counsel
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Exhibit A
[INSERT CHANDLER RESOLUTION]
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Exhibit B
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Exhibit C
[INSERT SITE MAP]