GT Advanced Technologies bankruptcy challenges Arizona’s subsidies
Mesa Arizona is going to suffer along with GT Advanced Technologies. GT Advanced Technologies’ bankruptcy will bring renewed scrutiny to subsidies and incentives handed out by the state of Arizona and local governments to individual companies and for individual developments.
Apple supplier GT Advanced Technologies’ bankruptcy and financial free fall could nix their much promoted and government subsidized sapphire glass production plant in Mesa.
It will bring renewed scrutiny to subsidies and incentives handed out by the state of Arizona and local governments to individual companies and for individual developments.
The GT bankruptcy also is another potential setback for DMB Associates’ Eastmark development on the former GM Proving Ground in Mesa.
Apple was slated to received $10 million from the Arizona Competes Fund for the Mesa factory. The Arizona Commerce Authority — the privatized state economic development agency which administers the $25 million sweeten-the-deal fund along with Gov. Jan Brewer — said neither Apple nor GT Advanced (Nasdaq: GTAT) have received any money.
City of Mesa spokesman Kevin Christopher said the East Valley city has not doled any incentives or tax rebates for the plant.
“The city did not provide any tax breaks or tax exemptions for the Apple/GTAT facility,” Christopher said.
The plant was supposed to employ 700 workers.
What Mesa did was spend $10 million to build infrastructure for the plant site when Tempe-based First Solar promised to build a production plan there.
First Solar (Nasdaq: FSLR) pulled the plug on the plant and Apple bought the property for a bargain $114 million.
Brewer and the Arizona Legislature approved tax breaks related to sales taxes on energy at manufacturing plants. The state also put the Apple/GT plant into a special tax zone that pays a 5 percent commercial property tax rate. Most Arizona companies pay a 19 percent rate this year and an 18.5 percent next.
Intel Corp., Honeywell International and some other big companies also pay 5 percent property taxes.
Apple (Nasdaq: AAPL) is valued at $591 billion, according to Google Finance.
The November elections will usher in a new governor, secretary of state and state attorney general. It also could provide an opportunity for changes in the ACA’s structure, incentives and transparency. The authority is chaired by the governor and has a private board of CEOs and real estate developers.
Democrats concerned about corporate interests and conservatives worried about the government “picking winners and losers” could come together around the issue.
The GT bankruptcy also could challenge Eastmark.
The sprawling East Valley development sits on the former GM Proving Ground. The recession and real estate slide set back some plans at Eastmark. First Solar’s failed plant turned to the now in jeopardy Apple/GT factory.
Plans for Gaylord Entertainment at the DMB development are sidetracked by the recession despite tax breaks from Mesa.
Gaylord was acquired by Marriott International (Nasdaq: MAR). There could be legal challenges if Mesa tries to shift Gaylord tax breaks to its new owner.
Representative from DMB and the city of Mesa said the resort and conference center project is still a possibility despite delays.
“The existing agreement is still in place and awaits for Marriott/Gaylord to determine when they are ready to move forward. The city is in contact periodically with Marriott representatives and stands ready to assist them once they make a decision,” Christopher said.
Mike SunnucksSenior Reporter- Phoenix Business Journal Mike Sunnucks writes about residential and commercial real estate, government, law, sports business and workplace issues.