The Saratoga County Industrial Development Agency gave final approval Monday to granting Advanced Micro Devices a sales tax exemption worth nearly $28 million for its planned Luther Forest computer chip factory.
One IDA board member said the additional tax break was unnecessary, given that AMD is already getting $1.2 billion in various state incentives to build in New York. The majority, however, approved the deal without comment.
“I voted yes because I am supportive of AMD,” said IDA Chairman Raymond F. Callanan after the meeting in Malta. “The IDA should be supportive of bringing 1,400 jobs to the area.”
AMD, through a new spinoff company being called The Foundry Co., plans to build a $4.6 billion factory at the Luther Forest Technology Campus where an estimated 1,465 people will work.
The exemption will apply to state and county sales tax on building materials for the factory, which could start construction next summer. The exemption is estimated to be worth $27.8 million.
The sales tax exemption wasn’t anticipated when AMD’s plans were announced in 2006. Town officials from the two towns decided to use the IDA’s payment-in-lieu-of-taxes system to split tax revenue from the plant between the Ballston Spa and Stillwater school districts.
The plant will pay a full tax bill based on being located in the Ballston Spa school district, but the Stillwater district will get 25 percent of the money.
Also Monday, AMD announced a revised agreement for the plant’s financing, one that reduces AMD’s ownership stake in The Foundry Co., which will take over AMD’s manufacturing facilities.
In October, AMD said it obtained financing by forming a partnership with the Advanced Technology Investment Co. of Abu Dhabi. ATIC was providing $2.1 billion in return for 56 percent ownership of the factory company.
On Monday, AMD and ATIC announced that because of the recent decline in AMD’s stock price (it closed at $2.10 a share Monday, down from $4.59 when the deal was announced), ATIC’s share of ownership will rise to 66 percent with the same investment.
The Foundry Co.’s board will remain evenly split between representatives of AMD and ATIC, having equal voting power.
“The vote and controlling interest remain the same,” said AMD spokesman Travis Bullard. “It’s great we can still get this done, given the economic climate.”
The deal creating The Foundry Co. is expected to close in January. It still needs approval from AMD shareholders.
The only public speaker at the IDA’s public hearing at Malta town hall said no more tax breaks should go to the project, given the oil wealth in Abu Dhabi.
“I think you gentlemen ought to seriously say enough is enough. I think we’ve given enough to AMD,” said Jerry Oswitt of Malta.
IDA board member Charles Hanehan agreed, and was the only member voting against the agreement. “If it’s not going to make the difference, why use it?” Hanehan asked.
The IDA has the power to grant property tax, sales tax and mortgage recording tax exemptions to lure businesses into the county. AMD sought only the sales tax exemption.
The agreement passed 5-1, with IDA member Sue Nolen abstaining to avoid a conflict with her role reviewing AMD’s plans as a member of the Malta Town Board.
Bullard said the project would continue moving forward, even if the sales tax exemption hadn’t been granted.
“It’s not accurate to say it was a deal breaker, but the county has an IDA to attract these kind of businesses,” Bullard said.
AMD just rented 9,000 square feet of office space at the Saratoga Technology and Energy Park, and Bullard said about a dozen people will be working there by January.
Current plans call for land clearing to start in March and construction to start in June. The nearly one-million-square-foot building shell will be done in late 2010, and the plant is supposed to produce its first computer chips in 2012.
There shouldn’t be a problem complying with an IDA policy that encourages hiring local construction labor, said an attorney for AMD.
“I think it will take all the available labor in all those [construction] trades to achieve that tight schedule,” said Kevin R. McAuliffe, a partner in Hiscock & Barclay of Syracuse.
Empire State Development will hold a public hearing on the $1.2 billion state incentive package at 1 p.m. Wednesday at the Luther Forest Technology Campus administrative building.
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Categories: Schenectady County