Other/Miscellaneous Request Template (Appointments; ROW; Code Changes; Zoning Action, etc.)
Date Submitted: 11-20-18
Requesting Agency: Economic Development
Division:
§ Name: Susan Liehe
§ Phone: 720-913-1689
§ Email: susan.liehe@denvergov.org
Item Title & Description:
(Do not delete the following instructions)
These appear on the Council meeting agenda. Initially, the requesting agency will enter a 2-3 sentence description. Upon bill filling, the City Attorney’s Office should enter the title above the description (the title should be in bold font).
Both the title and description must be entered between the red “title” and “body” below. Do not at any time delete the red “title” or “body” markers from this template.
title
A resolution authorizing submittal of an application for a special-purpose subzone of Foreign-Trade Zone No. 123 for use by Lexmark International, Inc.
Authorizes the city to submit an application for use by Lexmark International, located at 6555 Monarch Road in Longmont, Colorado, to establish a special-purpose subzone of Foreign Trade Zone #123, as authorized by the U.S. Foreign Trade Zones Board, for use by companies located within 60 miles of Denver International Airport. The Committee approved filing this item at its meeting on 11-28-18.
body
Affected Council District(s) or citywide?
Executive Summary with Rationale and Impact:
Detailed description of the item and why we are doing it. This can be a separate attachment.
A Foreign Trade Zone is a site within the U.S. that is considered by federal government to be outside Customs territory. It is a designated location where companies can use special procedures that help encourage U.S. activity and value added--in competition with foreign alternatives--by allowing delayed or reduced duty payments on foreign merchandise, as well as other savings. Generally, across the U.S., the largest industry currently using FTZs is the petroleum refining industry. Significant zone manufacturing also occurs in the automotive, electronic, furniture, and pharmaceutical industries.
When a business operates under FTZ procedures, it is treated, (when it comes to customs duties), as if it were located outside the United States. For example, U.S. import duties don't have to be paid on imported components coming to a factory. If the finished product is ultimately shipped to the U.S. market, the company has the option of paying the finished product duty rate rather than the component duty rate. (Many finished products have lower duty rates than their components, or are duty-free.) And if the firm re-exports the finished product, the firm does not ever pay duties on the component materials.
A firm would likely see benefit if it is doing some/all of the following:
• Importing goods with a high duty rate.
• Importing goods at a high volume.
• Adding value through assembly, manufacturing, packaging, etc.
• Combining foreign and domestic materials.
The City and County of Denver is the grantee of U.S. Foreign Trade Zone 123 (FTZ). The Denver Office of Economic Development (OED) acts as the Zone administrator for the city, considering requests from companies seeking this designation. OED makes its recommendations about the granting of a foreign-trade subzone to City Council for approval, and a resolution of Council in support of the establishment of the subzone is a requirement of applicable federal law. Eligible businesses located within a 60-mile radius or 90-minute drive-time of Denver International Airport may seek FTZ status. Because of the boundaries of our granted zone area (No. 123), some firms we work with are located outside of the City & County of Denver.
About the applicant
Lexmark creates innovative imaging solutions and technologies to serve customers worldwide. Employing 165 people in the Front Range, and recognized as a leading manufacturing company shaping the future of global manufacturing, Lexmark seeks subzone status and the use of FTZ procedures to enable cost savings on export products. Subzone status is considered critical for the Longmont location to remain a key regional production facility and distributor of products to international markets.
Address/Location (if applicable):
Legal Description (if applicable):
Denver Revised Municipal Code (D.R.M.C.) Citation (if applicable):
Draft Bill Attached?