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Companies that import a significant portion of their raw materials from overseas participate in <br />the FTZprogram for a number of reasons. Significant benefits include relief from inverted <br />tariffs, duty exemption on re-exports, duty elimination on waste, scrap, and yield loss, Weekly <br />Entry Savings, and duty deferral. Exhibit Cincludesa page from the Foreign Trade Zone <br />Resource Center, which explains these benefits in detail. <br />The Gulf Winds International,Inc.Agreement <br />The agreement between Gulf Winds International, Inc.and the City of La Porte states thatthe <br />companyagrees to waive the Federal Exemption with respect to ad valorem taxes payable to the <br />City for FTZ inventory owned by the company and located within the complex to the extent of <br />75% of the City’s ad valorem tax rate, claiming only 25% of the Federal exemption. The <br />company agrees to pay the City 75% of the otherwise total ad valorem tax liability on FTZ <br />inventory owned by the Company. <br />Under Federal law, the valuation dates for tax purposes are January 1 and September 1. On those <br />dates, the company will identify any inventory that qualifies for an FTZ exemption, and pay 75% <br />of the ad valorem taxes on that inventory that would otherwise be due to the City of La Porte. <br />The agreement also states that theCity of La Porte will submit a letter of non-objection(see <br />Exhibit B)so that the companycan proceed with their application to the Port of Houston for FTZ <br />status. <br />Staff recommends that Council approve the agreement as presented. <br />Action Required by Council: <br />1.Consider approval or other action of an agreement between Gulf Winds International, <br />Inc.and the City of La Porte. <br />2.Consider approval or other action of a letter of no objection for the Gulf Winds <br />International, Inc. foreign trade zone application. <br />Approved for City Council Agenda <br />Corby D. Alexander, City ManagerDate <br /> <br />