Colorado Real Estate Journal - June 1, 2016
Limon Foreign Trade Zone No. 293 is now an available! Whether you represent a business importing goods into Colorado or are working with a client, this may be an important tool. Businesses, real estate professionals, economic development professionals should know about this tool. An FTZ is a designation, granted by U.S. Department of Commerce through the Foreign Trade Zone Board, designed to encourage U.S. job activity by allowing delayed or reduced duty payments on foreign components while using U.S. labor forces for production. From a local viewpoint, an FTZ is a tool encouraging primary jobs in the U.S. that could have been offshored and creates tax revenues for counties, municipalities, school districts and special districts. Limon and Lincoln County, with Town of Limon as Grantee, received a Grant of Authority for FTZ No. 293 on June 11, 2015. The Limon FTZ No. 293 was granted authority for up to 2,000 acres statewide. The Limon FTZ Service Area includes all of the counties of Adams and Arapahoe and major portions the counties of Elbert, Lincoln and Morgan. This greatly expands the areas of Colorado that are eligible for user sites. A site can be a parcel of land, a warehouse, a portion of warehouse or multiple, closely located warehouses. Under the alternative site framework, any site, allowed by local land use regulation, is eligible within the Service Area. The Grant of Authority allows designation of Subzones outside the Service area when operations cannot feasibly be moved to, or accommodated in the Service Area. Alternative Site Framework (ASF) is designed to serve projects that want the flexibility to both attract users to certain fixed sites and to serve companies at other locations where the demand for FTZ services is expected to arise in the future. The ASF: • Front-loads 90% of the legwork for designation of a site, reducing paperwork when a site needs to be designated as an FTZ and shortening the boundary modification process to roughly 30 days. • Allows the zone/site to become flexible for operation and administration. FTZs allow users to defer, reduce or eliminate duties: • Defer: Import a product to the site; hold it for a designated amount of time; transport within the U.S.; and pay duty only when the good exits the FTZ Site into the U.S. market. •Reduce: Import different products to the site; combine these products with others, including U.S. products; transport in the U.S.; and then pay lower duties on the final product rather than the sum of the individual duties. • Eliminate: Import a product; then export the product or the product combined with others; and pay no duty. Duty payments on most imported components are due as soon as the component enters the United States. Those same components can be imported into a FTZ site and the duty is deferred until the final product enters the U.S. market. If the imported component is combined with domestic components into a final product, the duty paid is the lesser of the individual components or the final component. If the final product is then exported and never enters the U.S. market, no duty is paid to the U.S. So while local communities benefit and Colorado primary employees are used in processes, the company has a clear savings in customs duty. Types of Sites under Limon FTZ No. 293 • Usage-Driven Site ° A property consisting of a warehouse, a portion of a warehouse or multiple closely located warehouses run by ONE Operator for the specific purpose of creating immediate usable space for ONE or MULTIPLE predetermined users. • Subzone ° Subzone (Special Purpose) is a single-purpose site for one company when the operations cannot feasibly be moved to, or accommodated within the Service Area, with no strict limits on location (though it should be within a reasonable distance of the Limon FTZ). • Magnet Site ° A larger property, often consisting of multiple warehouses (i.e., industrial park), used on an as-needed basis where users act as renters and do not need to apply for zone status. A Magnet Site can have ONE or MULTIPLE Operators with each catering to ONE or MULTIPLE Users. ° The Town of Limon has identified two Magnet Sites within the Town of Limon. The Limon FTZ will work with other local government and economic development organizations to identify user driven sites. More complete information on FTZ No. 293, including a Guidebook, is available online at http://www.townoflimon.com/index.php/economic-development/foreign-trade-zone-no-293/limon-ftz-guidebook. For questions, contact Joe Kiely, FTZ Director, at jkiely@ townoflimon.com or call 719-775-2346.