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HomeMy WebLinkAboutResolution - 2003-R0269 - Creation Of A Foreign-Trade Zone - 07_10_2003Resolution No. 2003—R0269 July 10, 2003 Item No. 33 RESOLUTION WHEREAS, the City Council of the City of Lubbock, Texas, desires to establish, operate and maintain a Foreign -Trade Zone serving Lubbock, Texas; and WHEREAS, the City Council believes that Foreign -Trade Zone status will have a positive impact on future development, new employment, and increased international trade at Lubbock International Airport, the City of Lubbock, Reese Technology Center, and the surrounding region by promoting foreign trade and commerce through Lubbock's port of entry; and WHEREAS, the City of Lubbock is entitled as a port of entry to a Foreign -Trade Zone under 15 CFR § 400.2 1 (a)(1)(i) and 15 CFR § 400.22(b); and WHEREAS, the City of Lubbock is authorized to apply for and accept a grant to establish a Foreign -Trade Zone under Texas Civil Statutes, Article 1446.22; and WHEREAS, pursuant to 15 CFR § 400.24, such application must include a resolution of the governing body authorizing the official signing of the Application; NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Director of Aviation of the City of Lubbock BE and is hereby authorized and directed to sign and submit an Application in substantially the same form as the draft application attached and related documents for and on behalf of the City of Lubbock to the United States Department of Commerce Foreign -Trade Zones Board for the creation of a Foreign -Trade Zone adjacent to the U.S. Customs Port of Entry of Lubbock and other subzones. Said Draft Application is attached hereto and incorporated in this Resolution as if fully set forth herein and shall be included in the minutes of the Council. Passed by the City Council this loth day of July % , 2003. MAYOR ATTEST: Rebe ca Garza, City Secretary Foreign Trade Zone Resolution Page 1 ROVED A,950 CONTENT: Mark PAie, Director APPROVED AS TO FORM: Linda L. Chamales, Supervising Attorney Office Practice Section Le: L/ATTY/Linda/RES-Foreign Trade Zone Foreign Trade Zone Resolution Page 2 Resolution No. 2003—RO269 IMS WORLDWIDE �a -DO. a INC. A% Foreign -Trade Zone and Industrial Park Consulting and Marketing Supply Chain and Security -Threat Assessments June 26, 2003 Mr. Scott Fletcher Director of Business Recruitment Market Lubbock, Inc. 1301 Broadway Suite 200 Lubbock, TX 79401 Dear Mr. Fletcher: Enclosed you will find a VERY ROUGH DRAFT of the Application. The Application has not gone through our final edit process at this time, but is scheduled to have a final edit next week. If you have any questions please do not hesitate to call the office. Sincerely, IMS WORLDWIDE, INC. I:1PROAL.ubbock\Apptication\Cover letter forthe DRAFr Application.doc Houston Headquarters 309 Henrietta Street • Webster, Texas 77598 • Phone: (281) 554-9099 • Fax: (281) 554-9506 Affiliates in Washington, D.C., Chicago, Miami, Columbus, Buffalo, Ottawa, and The Netherlands Resolution No. 2003-IO269 Date Mr. Dennis Puccinelli Acting Executive Secretary Foreign -Trade Zones Board U.S. Department of Commerce Franklin Court Building, Suite 4100W 1099 14th Street NW Washington, D.C. 20005 Dear Mr. Puccinelli: The City of Lubbock, Texas hereby requests the privilege of establishing and maintaining a Foreign -Trade Zone (FTZ or Zone) based in the City of Lubbock (the City), Lubbock County, Texas. This Application requests Zone status for Lubbock International Airport and Reese Technology Center located in Lubbock, Texas. This Application also details a plan for Zone administration and operations. The City believes and is hereby applying for a Zone under the entitlement provision under 15 CFR Part 400.21 (a)(1)(i): "Each port of entry is entitled to at least one Zone project" and under 15 CFR Part 400.22 (b) the City is authorized by the State of Texas to apply for a Zone. The City of Lubbock's Zone project meets these elements under the entitlement provision. Furthermore, the Bureau of Customs and Border Protection (Customs) has offices and operations at the Lubbock International Airport. This Application is the result of several months of intensive, thorough research into Lubbock County area's international commerce and is designed as a General -Purpose Zone Project to meet the current and future Economic Development goals of the City and the greater Lubbock region. There are two General -Purpose sites located in Lubbock County. It was further determined that six (6) firms expressed strong interest in participating in the Zone program, with a potential six (6) companies to seek Zone status in the near future. These 12 businesses look to take advantage of the proposed Zone project in conjunction with the development of the Zone. The Zone program will serve the needs of the Lubbock area. This Zone project will encompass the Lubbock International Airport and Reese Technology Center. The City of Lubbock, will act as the project's Grantee, through the Department of Aviation utilizing multiple Operators to pursue and subsequently service businesses that both have a direct impact from logistics activity and are or desire to be located in the Lubbock area. Entities throughout the Lubbock area expressed and continue to express their support for the Zone project, as indicated by the support letters included in this Application. This Foreign -Trade Zone Application exemplifies the spirit of cooperation between the City of Lubbock and multiple Cities and Counties in the greater Central Pan Handle region, in their concerted efforts to bring economic, success to the area. FTZ status is a major tool in both the City and County's Economic Development strategies. In addition to the proposed site's entitlement and unique ability to further the convenience of commerce through providing "location -friendly" sites with a self-governing operation philosophy, the Foreign -Trade Zones Board should also note the expression of "support" from all the surrounding Cities and Counties. Y The City anticipates that Zone status at these proposed sites will not only provide a basis of international trade expansion, but will also attract new companies to the Lubbock area. The City requests expeditious treatment of this Application under the entitlement provision and having Subzone users interested in completing their research. The City requests authority for all General -Purpose type operations, including, but not limited to, storage, exhibition, distribution, manipulation, and destruction activities. Contained herein is the necessary information providing the justification for the establishment of this Zone project and the specific sites. Details on the proposed administrative and operational structure are also included. This Zone project is designed to 1) meet the needs of identified potential users, 2) provide for public access to Zone services, 3) provide facilities and related services so that Zone procedures may be effectively utilized, and 4) provide for the creation of Subzones to meet the already identified immediate Expansion potential of the FTZ as needed. The City of Lubbock through the Department of Aviation shall be the Grantee of this Foreign -Trade Zone, as provided for by the State of Texas enabling legislation. We appreciate your expedited approval of this Application. Respectfully submitted, Mark N. Earle Director of Aviation I:\PROI\Lubbock\Application\TranmrfittaI letter for city.doc DRAFr Executive Summary 1. Legal authority to apply Resolution No. 2003—RO269 The City of Lubbock (the City) hereby requests the authority to establish a Foreign -Trade Zone (FTZ or Zone) based at the Lubbock International Airport (the Airport). The project includes a total of approximately 2,393.44 acres in two (2) General -Purpose (GP) sites. The City is actively pursuing an FTZ program in order to promote the convenience of commerce in the Lubbock Area. The City is within the Lubbock Port of Entry (POE) No. 5503. Two (2) sites are included in the Application to promote the growth of international trade through the Lubbock Area. The City meets all of the federal, state and local requirements for eligibility as an entitled Grantee. A comprehensive Market Feasibility Study validates and justifies the need for a Zone in the region. The Lubbock Area is entitled to an FTZ project according to 15 CFR Parts 400.21 (a)(1)(i). 2. Type of authority requested The City is requesting authority to establish a GP Foreign -Trade Zone in the Lubbock Area. Approval of this FTZ will make GP services available at two (2) sites located throughout the Lubbock Area. All GP Zone authority (including, but not limited to manipulation, storage, exhibition, destruction, and packaging) is requested. No authority for manufacturing or processing is being requested at this time. The City is entitled to a Zone project under 15 CFR Part 400.21 (a)(1)(i): "Each POE is entitled to at least one (1) Zone project" and meets the requirements as an eligible applicant under 15 CFR Part 400.22 (a) and (b). The City of Lubbock's Zone project meets all of the elements required under this entitlement provision. This entitled establishment of the Lubbock FTZ will bring expansion of commerce through FTZ services to current and future businesses in the Lubbock Area. 3. Proposed Zone sites and facilities and the larger project of which the Zone is a part The City's Department of Aviation (the Department) is the lead agency managing the Zone project. The Department has the mandate from the City to assist in developing the Zone program to attract new companies and development in the Lubbock area. The City's FTZ project is actively being pursued to satisfy international trade development demand by companies seeking a central location in the United States. In the development of a Zone, the Grantee must investigate the overall potential of the Zone project in respect to what the community is witnessing in its current and future anticipated economic growth. The plans for overall economic development include Zone benefits in order to make the greatest impact. The Lubbock Area surrounding Lubbock County (the County) is a major contributor to the cotton industry, which is in a period of market instability, driving the area's need for economic diversification. Many of the manufacturing companies in the area are looking at export markets to improve their competitiveness. . DRAFT -2- Many of the companies identified for the FTZ Feasibility Study are making headway in expanding into new markets away from the traditional economic base of the region. Growth into these new areas of industry may be assisted by the implementation of the FTZ. Companies looking to expand into new markets or develop new product lines in an existing industry will fuel economic growth. The changes emerging in Lubbock County industries, in conjunction with development opportunities being offered at the closed Reese Air Force Base and the Airport, will provide the City with new assets to promote the area. The FTZ would be a potential catalyst for additional economic development in attracting and expanding the area's economic base. Lubbock has the potential to offer increased opportunity for distribution activity and an expanded potential for Foreign- Trade, which will contribute to the effectiveness of the FTZ. The "bottom line" in these findings is that traditionally, domestic manufacturing sectors are aggressively "going global." As they continue to move in that direction, the use of an FTZ would protect and increase U.S. jobs and provide more export opportunities for U.S. businesses. The growth in international cargo has created the need to increase warehousing, distribution, and other related services throughout the Country. The tremendous commodity flow from Mexico and the increase in trade from the Pacific Rim, Europe, and Latin America are the primary reasons cited for the explosion of international trade. The planned development of Reese Technology Center (the Center) and the Airport and an expanded position as a major distribution point are great economic assets to the area and add to the potential development of new business centered around the facilities. The continued development of business focused on international trade increases the need for services commonly seen at other communities. The development of these types of services gives the region an even better tool for marketing the area to companies interested in establishing or expanding their presence in the import/export market. It is this potential in overall import and export growth that leads to the conclusion there are potential Zone users available to the Zone, if the Zone is marketed in conjunction with the development of the Center and the Airport. The City has chosen two (2) specific sites in the area that have the potential to foster future development of existing and relocating companies requiring Zone status. The City is requesting FTZ status for the following GP sites: Site 1 -Lubbock International Airport The Lubbock International Airport contains an estimated 3,000 acres and has identified 693.44 acres for inclusion in the Zone project. These acres represent the main industrial developable acres within the Airport. The acreage at the Airport is located in proximity to the major ground and rail assets in the Lubbock area. This places the Airport in a location conducive to distribution and manufacturing operations. Site 2 - Reese Technology Center The Reese Technology Center contains 2,467.2 total acres and has identified 1,700 acres for inclusion in the Zone project. These acres represent the main industrial developable acres within the Center. The Center is at the location of the former Reese Air Force Base and was deeded to the Reese Redevelopment Authority in November 24, 2001, and is a major area for targeted redevelopment in the Lubbock area. The acreage at the Center is located in proximity to the major ground and rail assets in the Lubbock area. This places the Center in a location conducive to distribution and light industrial operations. DRAFT -3- 4. Project background including surveys and studies The City of Lubbock is applying for an FTZ after undertaking a comprehensive Feasibility Study that discovered enough potential for FTZ users to justify the establishment of a Zone. The Feasibility Study indicated a strong basis of resources and transportation systems in the Lubbock area to warrant the creation of a Zone in Lubbock to better serve the expansion of commerce. This Feasibility Study is but one more step in a long succession of planning and development activity to ensure future economic growth in the Lubbock Area. The new Zone will address the current and future opportunities in meeting market demand for FTZ services in the Lubbock Area. The City's Zone project is planned and designed to meet the unmet Zone needs in the Lubbock Area. At least six (6) businesses have expressed an interest in participating in the FTZ program, with six (6) companies looking to add manufacturing or Subzones (at a later date). Results of the study prove that an FTZ would play an integral part in addressing an unmet demand for benefits associated with such a project. In addition to meeting the needs of present businesses, another important element in the creation of this Zone project is to provide an attractive location with FTZ benefits for businesses who want to establish, expand, or relocate operations to the Lubbock Area. 5. Relationship of the project to the community's and state's overall economic development plans and objectives The key driving force in the development of the FTZ is the City's Airport and the key economic development organization for the region, Market Lubbock, Inc. Market Lubbock, Inc., has been a catalyst in the development of not only Lubbock, but the entire region. The establishment of an FTZ in Lubbock would work hand -in -hand with the economic goals of the City, County and region. The creation and retention of jobs through business expansion and development summarizes the ultimate ambition of the City's endeavors. An "open Zone" concept, adopted successfully by communities similar to Lubbock, will provide the catalyst necessary for the maintenance, expansion, and relocation of businesses into the Lubbock Area. The benefits associated with Zone status allow these companies to address and meet the demands of a competitive international environment. The success of the City's comprehensive economic development project can be better realized with the presence of an FTZ involving numerous sites located in areas throughout the County. A number of companies, representing industries from oil field equipment to agricultural products, are looking at advantages of Zone benefits relative to current distribution, manufacturing, and other specific support operations. Other benefits for businesses seeking to locate in Lubbock include a recognized Enterprise Zone program and an active Base Reuse Plan. Lubbock International Airport is located within the Enterprise Zone and offers job credits, development credits, sales tax credits and certain other tax abatements that will work with the FTZ to attract economic development into the development area. DRAFT Lubbock is seeking to build a reputation as a player in international commerce through increased involvement in the logistics and distribution supply chains of major industries and the fostering of local manufacturers to seek out export opportunities for their products, creating a global business -friendly environment. With the development of internationally -tied companies in Texas, the City is obligated to provide convenient trade - promoting initiatives, such as the FTZ program, to businesses needing assistance in leveling the global playing field. 6. Plans for operating and financing the project Zone status is being requested for two (2) sites situated primarily in the Lubbock Area. These sites are currently unable to take advantage of Zone status because of the absence of opportunity afforded by an established FTZ. The City has adopted the "open Zone" concept which provides for multiple GP Zone sites with multiple GP Operator/Users coexisting with individual Subzone Operators. The City intends to offer FTZ status to qualified companies interested in benefitting from the program. Each prospective user that meets the qualifications of the Zone schedule, once the Zone is established and the schedule is developed, will operate independently from other projects. Thus, the Zone will be run by multiple Operators, giving each company equal opportunity to manage their respective facility. Should a company not want to become an Operator, it may become a user of a GP facility within the FTZ project. The City is committed to this project with multiple Operators. The use of multiple Operators in a single Zone project eliminates the threat of comprehensive liability in the event an Operator fails to comply with the laws governing FTZ activity. Individual Users will bear their own financial obligations required to effectively operate their FTZ project. Subzone and GP Operators, through their annual payment of Grantee fees, will allow the City to meet its FTZ administration and marketing expenses. In each of the possible scenarios investigated during the Feasibility Study (a conservative and aggressive case), recoupment of initial FTZ establishment costs and ongoing administrative costs were realized in a conservative case in year six (6), and outlay costs, including operational expenses, will occur by year 14. The City has secured all financing necessary to promote and support an "open" FTZ project for businesses in the Lubbock Area. 7. Additional pertinent information needed for a complete summary description of the project This FTZ Application represents a Regional effort to promote economic development. The County has sent a letter of support to the City in regard to this FTZ project, indicating that it has no objection to the new Zone. Several other counties have also provided letters of inclusion to be added to the Zone Service area. The City of Lubbock has taken great pains to ensure that this Zone project has the support of both public and private entities throughout the entire service area, as evidenced by the enclosed support letters and resolutions. There are inventory tax issues in connection with this Application. Each taxing entity impacted by this DRAFT -5- Application has offered its comments in letters enclosed with the Application. All further sites and Subzones will be required to present the Zone Grantee with letters referencing the taxing entities impacted. The sites requesting designation will be utilized for warehousing, repackaging, and distribution with no manufacturing planned at this time. Environmental Issues Site 1 -Lubbock International Airport There are no known land use issues related to the proposed site. The sites are designed for industrial use and are acceptable for Zone Activity. Approval of this proposed FTZ Application site will not create any environmental concerns. The site is in compliance with all applicable federal, state and local environmental requirements. The use of the parcels within the Zone program will not change the physical aspects of the parcels or any existing facilities currently housed on these parcels. The facilities currently on the parcels will not have to be transformed or reconstructed in order to facilitate Zone operations. It is the understanding of the Grantee and the parcel owner that the use of the Zone status does not exempt any party operating or using the Zone from having to comply with the federal, state and local environmental requirements. The north portions of the Airport are bordered with agricultural land and contain some buildings that will be demolished when development of the north section of the Zone begins. This land is governed under the land use policy affecting the airport and the land use plan has already designated this land for industrial development. Site 2 - Reese Technology Center There are no "current outstanding environmental issues" at Reese however, a ground water contamination did occur in the past from Trichloroethylene (TCE) generated by the Air Force. The main contaminated area and portions east of the campus are in the full remediation program under the supervision of the U.S. Air Force, TNRCC and EPA. These areas have been in remediation since 1995 and will continue until certified as in full compliance by the appropriate agencies. The remediation program is now seven (7) years ahead of schedule and has the water clean down to the 120-foot level of the aquifer. It is very well funded, organized and is a very successful program. There are no current land use issues that would adversely impact the FTZ Application. We are approved to develop the land and have been issued a clean deed from the Air Force for the entire 1,700 acres of the airfield. The deed was issued in November of 2001. In summary, Reese is not aware of any other environmental conditions but felt it was import to disclose the past issues to give a full and honest report for Reese. The current issues are in full control and should have no negative impact on any FTZ activities. Site Management Policy Publicly and Privately -owned sites with no activated Operators For the first four (4) years following Zone approval, no marketing fees will be charged to site owners. At the beginning of the fourth year after FTZ Board approval of the Zone, the Grantee will send a letter to each site owner with no FTZ-related activity informing them of the requirement to begin active Zone operations. If activity has not commenced by the beginning of the fifth year, a marketing fee will be assessed to all site owners with no Activation. DRAFT By the fifth and sixth years after FTZ Board approval, if activity has still not commenced, an additional marketing fee will be assessed to all site owners with no Activation, and the site will be notified of the requirement to begin some type of activity or provide a plan for marketing and Activation. This reflects a federal requirement that all Zones show activity or specific plans for activity within five (5) years. Foreign -Trade Zone Public and Private Site Owners Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 No activity or fee required, but effort to No fees Activity If no activity, a secure an Operator must be made and charged. must plan for reported annually. "Start begin or a marketing/Acti- Activity" marketing vation must be alert letter fee is due. submitted along sent. with a marketing fee. Conclusion The City is clearly "entitled" to a Zone under the federal regulations. The City meets all the requirements of an entitlement under 15CFR Part 400.21 (a)(1)(i). The POE for Lubbock is No. 5503 as identified in 19 CFR 101. There is not a Zone associated with this POE and the Zone to the south and the Zone to the north are each associated with their own POE. Each Zone was asked for their Zone Service Area boundaries and every effort was made to create a Zone Service Area for Lubbock that did not interfere with the existing Zones. With the requirements of entitlement clearly met by the City, we expect an expedited Application approval process. Lubbock clearly has genuine interest in providing Zone benefits to promote its economic development goals of creating jobs through the growth of international business. Thus, the City commissioned a Feasibility Study to determine whether or not an FTZ project for the City could provide the necessary FTZ services which companies located in the City and the surrounding areas are currently not receiving. An extensive and comprehensive FTZ Feasibility Study was conducted in the Lubbock Area analyzing the need for an FTZ project, whether the project would be economically feasible, and what regulatory and political issues may exist. The main focus of the study was on the Market Feasibility. As demonstrated by the Feasibility Study (included in the Appendix), it was concluded that an FTZ project could potentially benefit the City and its business base. Further, a Zone project could offer new economic development opportunities in the area. According to the findings in the study, the Zone project would assist the City and County in the ongoing effort to market the area to businesses. Planned marketing efforts along with current economic development initiatives will promote and support a Zone project. Community, businesses, and stakeholders have all expressed their support for the creation of an FTZ with the City providing the leadership in developing a Zone project for the area. The City has the strong support of both private and public sectors in meeting the criteria for a successful Zone Project.