GPS board agrees to letter granting tax incentive for Apple site in Mesa - East Valley Tribune: Mesa

GPS board agrees to letter granting tax incentive for Apple site in Mesa

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Posted: Monday, November 18, 2013 9:45 pm | Updated: 1:34 pm, Tue Nov 19, 2013.

A potential impediment to Apple developing a facility in Mesa was cleared on Monday night after the Gilbert Public Schools Governing Board agreed to sign a letter of no objection to allow for the re-zoning of the property for tax purposes.

“This is a win/win for everyone and I really support this,” said board member Lily Tram.

The victory for Gilbert Public Schools comes in the form of an increase in tax revenue from the property. The district currently receives $1 million a year from it, and will earn $3.5 million in taxation from the property located near Phoenix-Mesa Gateway Airport as long as Apple builds the facility.

On the other side of the coin, the board’s decision to sign the letter clears the final barrier for the re-zoning of the location into a foreign trade zone. A total of eight entities had to sign the letter of no objection – the City of Mesa, East Valley Institute of Technology and Maricopa County were three of them – and Gilbert Public Schools was the last one that had held out.

Mesa Director of Economic Development Bill Jabjiniak said foreign trade zones are a federal program that provides incentives for companies to keep manufacturing facilities in the country. A major advantage for companies is a reduction in real and personal property taxes of between 75 and 80 percent, and the designation gives companies additional fiscal benefits for their imports and re-exports.

Federal and state law allows for the conversion, and companies that have benefited from the program in the East Valley include Intel, PetSmart, Orbital Sciences, The Gap and Abbott Laboratories, among others.

“This is all about bringing domestic manufacturing back to the U.S.,” Jabjiniak said.

Gilbert Public Schools board member Daryl Colvin said at the Nov. 18 night meeting that re-zoning the property as a foreign trade zone will also lower property taxes for area residents.

The vote to approve the no objection letter came just less than a week after the board initially discussed signing it, but the decision to do so was tabled in a 3-2 vote after Colvin and clerk Julie Smith had reservations about the decision. At the first meeting on Nov. 12, Smith said she would vote against signing the letter of no objection because she felt it violated her principles and created an unfair competitive balance in favor of large companies; Jabjiniak, however, said the program is available to large and small manufacturers.

The second attempt at signing the letter was much more successful, with the board members approving it unanimously. Tram and board member Jill Humpherys reiterated their support for the re-zoning prior to the vote because of the economic benefits it can provide the district, although Humpherys’ said the district will still have to make budget cuts due to the recent rejection of its override by voters.

Board president Staci Burk, who was the deciding vote in tabling the motion, apologized for not approving the letter the week prior, citing a death in the family she was informed of shortly before the meeting as a major reason for her decision.

While Colvin and Smith did change their vote, they did not regret the decision to hold off on the approval. Colvin said the additional time allowed him to learn more about the issue from the people involved in the deal, and he was in favor of the positive tax benefits for residents. He did add it would be preferable if companies decided to move to the region without the tax incentives.

“I’m willing to permit this,” he said.

Smith also said the additional time allowed her to learn more about the re-zoning and to receive feedback from constituents about an issue she said lacked clarity. Even though she voted in favor of the item, she said the constituents she spoke with agreed with her opposition to it, and Smith said she’ll try to change the regulations through the governor’s office.

But she said the decision presented to her wouldn’t change the regulations, and she voted for it because it was, “in the best interest of Gilbert Public Schools.”

After the meeting, Mesa District 6 Councilmember Scott Somers said he shared some of the members’ concerns, but credited the board for its final decision.

“They got it right,” he said.

Mayor Scott Smith wrote via Twitter he was pleased the board approved the vote unanimously and for the opportunity to continue with the project.

“Now let’s move forward!” he wrote.

The board’s vote doesn’t guarantee Apple will build a site for the producer of one its components in Mesa, but it does eliminate a barrier to the construction of a plant in Mesa’s Gateway region. Earlier this month, Apple announced it would revamp the First Solar facility located in that part of Mesa and build it up to produce sapphire material through an agreement with GT Advanced Technology. The plant is expected to add 700 jobs to the region after its completion and 1,300 construction jobs prior to that.

Prior to the vote, Humpherys and Tram – the latter received a round of applause from the audience for her comments — said the plant will help both Gilbert students and Gilbert itself thanks to the additional tax revenue and increased jobs in the areas. Somers shared their sentiments, and said the plant could provide jobs for Gilbert Public Schools graduates and many benefits for residents all over the region.

“Having a company like Apple is good for the entire state,” Somers said.

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