Chandler council hears presentation on Avnet foreign-trade-zone subzone; staff says no direct city tax impact

Economic development staff on Feb. 2 told the Chandler City Council that a proposed foreign-trade-zone subzone for Avnet’s Morelos Place facility would give the company federal import-export advantages without creating a direct tax liability for the city.

Micah Miranda, presenting the study-session briefing, explained that foreign-trade zones are administered through U.S. Customs and Border Protection and can offer duty deferral, duty exemption and other cash‑flow benefits for goods processed inside an FTZ. Miranda said the city partners with the City of Phoenix, which serves as the FTZ grant administrator, and that Avnet previously received an FTZ designation for a South McKinney Avenue facility in 2018.

Council members pressed staff on potential local fiscal and enforcement implications. Miranda said property ownership does not transfer to the federal government, that Avnet retains site control, and that any property tax reclassification tied to an FTZ would require a separate application to the city and approval by taxing entities—“they have to go back through the city to get our approval as well as approval from the taxing entities,” Miranda said. He also said FTZ oversight of goods is handled through federal customs procedures and that the city would not be the primary enforcer for FTZ compliance.

Council Member Harris asked whether a company that initially declines specific tax or property reclassification benefits could later opt in; Miranda replied that the company would need to pursue those changes through the city and the taxing authorities, and could not unilaterally change tax status without approvals. On the question of what types of goods are typically involved, Miranda said Avnet’s operations primarily handle electronic components.

Miranda told council that an FTZ designation does not, in itself, reduce city revenues and that the program’s primary purpose is to support business competitiveness and cash-flow management. He said the city already has multiple FTZ subzones and that each site’s operations and eligibility are evaluated on their own merits.

The council requested a concise fact sheet for members summarizing FTZ mechanics and local implications; staff agreed to provide that. No formal action was taken at the study session; several items discussed at study session are scheduled for a Thursday meeting where council may vote.