AMD seeks to exempt purchases

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Advanced Micro Devices has asked the Saratoga County Industrial Development Agency for a sales tax exemption on its planned $4.6 billion computer chip factory at the Luther Forest Technology Campus.

IDA approval would allow AMD — through a newly formed subsidiary, AMD Fab Technologies US — to save nearly $28 million in county sales tax on building materials, according to its application.

The IDA’s payment-in-lieu-of-taxes system would also also serve as a mechanism for splitting property tax revenue from the factory between the Ballston Spa and Stillwater school districts.

Any economic development incentives granted by the IDA would be in addition to $1.2 billion in previously negotiated state incentives for the plant.

The factory is expected to employ 1,465 people, starting in around 2012, and have an annual payroll of about $88 million, or about $60,000 per job.

“It is the single largest project ever presented in Saratoga County, and the IDA is happy to be part of it,” said IDA Chairman Raymond F. Callanan, after the IDA heard a presentation on AMD’s behalf on Monday.

AMD announced earlier this month it had made the final commitment to build the factory, plans for which were first announced in 2006.

AMD plans to spin off its manufacturing operations — including the Luther Forest project — to a new company, being called the The Foundry Co. The Foundry Co. also would take ownership of AMD’s two existing chip-fabrication plants in Dresden, Germany.

The Foundry Co. will be 55 percent owned by an Abu Dhabi government technology investment company. It will be incorporated in the Cayman Islands. AMD Fab Technologies US will be its U.S. subsidiary.

The Cayman Islands, in the western Caribbean, have no corporate income tax, one of the reasons it is a major world financial center, where many international corporations are registered.

As a foundry company, the new venture would sell computer chips independently. It would have AMD as its first and primary customer, but over time would sell chips to others, “to become one of the world’s largest independent semiconductor service suppliers,” according a summary of the company business plan.

The IDA payment-in-lieu-of-taxes program will be used to address what could have been a sticky tax revenue issue created because the 1,350-acre tech campus includes land in both Malta and Stillwater.

Under a zoning condition approved in 2004 by both towns, property tax revenue from the plant will be split, with 75 percent going to the Ballston Spa school district and 25 percent to the Stillwater school district. The plant will be within the Ballston Spa district.

“It’s a very unique arrangement,” said IDA Chief Executive Officer Larry Benton. “They pay 100 percent of the school taxes.”

The size of the payments will depend on school tax levies and the factory’s assessment, but will certainly be in the millions of dollars each year.

The IDA, which heard the application at a meeting in Ballston Spa, scheduled public hearings on the proposed plans for 8 a.m. Dec. 8 at Stillwater Town Hall, and 10:30 a.m. that day at Malta Town Hall. It could act on the application immediately after the second hearing.

Pending a variety of state and local approvals, AMD plans to start clearing land in March, and break ground in June, said Matthew Jones of Saratoga Springs, AMD’s local attorney. Construction is expected to take about two years, and employ 1,600 people.

The plant would be nearly 1 million square feet, with a 180,000-square-foot “clean room,” where there tiny chips would actually be made.

The IDA also set its administration fee for AMD’s application at $1,057,000, based on the cost of the land, building and exterior infrastructure. It is the highest fee the IDA will have collected. That money will be added to IDA funds available for future economic development projects.