GlobalFoundries has applied to the Saratoga County Industrial Development Agency for $307 million in additional sales tax exemptions on its purchases of building materials and manufacturing equipment.
The computer chipmaker is asking for an added sales tax exemption on the manufacturing equipment it is about to start installing, on top of an exemption granted earlier.
GlobalFoundries also seeks a sales tax exemption for the purchase of building materials for a planned $40 million second administrative building, and an exemption from sales tax on $75 million in spending on other “facilities, fixtures and equipment.”
The IDA routinely grants sales tax exemptions as a job-creating incentive. County senior planner Michael Valentine said the size of the exemption for GlobalFoundries is large because GlobalFoundries is investing so much money — as much as $7 billion by the end of 2014, according to the application.
The $4.6 billion Fab 8 computer chip fabrication factory at the Luther Forest Technology Campus is nearing completion, with installation of manufacturing tools scheduled to start this summer.
By the end of 2012, the company expects to be in full operation and have 1,200 employees, and an annual payroll of $105 million.
GlobalFoundries is currently planning to spend about $3.7 billion on tools, though a clean room is being constructed for a second phase that would hold another $2 billion in manufacturing tools. The IDA application asks that the exemption include the expansion, though GlobalFoundries isn’t yet committed to doing it.
If the expansion proceeds, total on-site employment would rise to an estimated 1,665.
Company officials said they’re turning to the IDA exemption as a way to be sure the manufacturing tools can be purchased tax-free.
Manufacturing equipment is generally exempt from sales tax under state law, but GlobalFoundries representatives have complained the state decision-making process is slow and uncertain.
“While the tool sets identified in the project budget are essential components in the manufacture of semiconductor wafers and should be exempt as manufacturing equipment, the NYS Department of Taxation and Finance has held that the applicability of the manufacturing sales tax exemption can only be ascertained after a detailed analysis of the manufacturing operation of each company,” GlobalFoundries states in the application.
Because of that concern, the company last fall applied for an IDA exemption on 25 percent of the manufacturing tool costs. The IDA granted that exemption in December. GlobalFoundries now seeks to exempt the entire tool cost through the IDA.
The planned second administration building would provide room for an additional 450 corporate jobs, on top of the 1,200 to 1,665 jobs at the factory. Work is expected to start in the second half of this year. Company officials estimate the exemption for those building materials would be worth $1.2 million.
Any exemptions granted to GlobalFoundries by the IDA are on top of $1.3 billion in cash incentives and tax relief it is receiving under a 2006 agreement with New York state to build its plan here.
The county IDA will review the new application at a meeting at 8 a.m. Monday at Malta town hall. A public hearing will need to be held before any new incentives can be approved.