Honeywell has five facilities within that zone, including one in Tempe.
Special to AFN

The only Ahwatukee member of the Tempe Union High School District governing board failed to stop his colleagues from approving 3-2 a request by Honeywell International Inc. for a real estate and personal property tax break that will cost the district about $112,000 over the next five years.

Brandon Schmoll was joined by Michelle Helm in casting the two votes against the request, which Honeywell made under the federal Foreign Trade Zone program.

“I don’t support this,” Schmoll said. “This is giving special treatment to one company over another…. There are a lot of businesses that are assets to the community. I see this as an equality issue.”

Helm added, “What you do for one group, you should do for another.”

The Foreign Trade Zone program is designed to give American businesses a competitive edge against companies that provide similar products and services on the international market by reducing taxes, allowing them to set lower prices.

The “zone” that Honeywell belongs to extends well beyond Tempe Union’s boundaries and encompasses Maricopa County. But every taxing jurisdiction must approve its request for a tax reduction from 18 percent to 5 percent.

Honeywell has five facilities within that zone, including one in Tempe.

In its request, Honeywell said those five sites generate a total of $8.9 million in revenue for 17 different taxing bodies. Each of those jurisdictions must approve the company’s request before it can achieve savings it estimated at about $3.8 million.

Noting it is Maricopa County’s second-largest manufacturer after Intel, Honeywell submitted a lengthy report on the economic benefits it generates for Maricopa County.

It said its average annual salary paid to 1,523 employees at its Tempe facility alone is $91,685. Within the trade zone Honeywell employs a total 6,949 people with an average annual salary of $96,295.

“Honeywell directly or indirectly supports an approximate 14,000 jobs and generates $1.03 billion in annual personal income within the Foreign Trade Zone,” the company told Tempe Union Superintendent Kenneth Baca in a letter requesting the tax break.

A report by Applied Economics analyzing Honeywell’s economic impact within the zone estimated it pumps more than $3 billion into the regional economy as a result of its own investments and spending by its employees.

“Honeywell evaluates its sites in order to remain competitive,” the letter to Baca stated.

“While there are no immediate plans for real property capital expansion to the Honeywell FTZ site, should such an opportunity arise, the desire is to make Honeywell Phoenix a priority for future expansion.”

Schmoll said by approving the request, the board would be selling the district short and that Tempe Union had quality schools that would lure companies to the district even without a tax break.

But the outline of Honeywell’s economic  impact was enough to persuade the other three governing board members to support the request.

“We don’t have many employers with an average salary of $97,000,” said board President DeeAnne McClenahan. “The loss in taxes is very small in comparison to the loss we would experience if they moved out of the area.”

Board member Sandy Lowe said she was “looking at the big picture” and noted that “Arizona has a hard time attracting new businesses” that can bring the district additional students.

Board member Bernadette Hodge agreed, calling the request necessary to keep Honeywell in the community.

 

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