Approval of this item will allow Heaven Hills Brand LLC to seek designation as a Foreign Trade Zone designated site. 

Opportunity Austin created the Foreign Trade Zone of Central Texas, Inc. (Foreign Trade Zone No. 183) in the 1990s to create a tax-incentive to manufacturing businesses locating within the zone. The zone includes the Austin MSA counties including Bastrop, Caldwell, Hays, Travis, and Williamson. Heaven Hill is currently planning an expansion that will result in imported product coming to the Buda production facility. City Council's approval of this item will relieve Heaven Hill of trade tariff duties on imported materials and property tax on imported inventory.

Similarly, the City of Buda already has a freeport exemption in the City, exempting property tax on inventory held for less than 175 days.

From Opportunity Austin:

A Foreign Trade Zone (FTZ) is an area within the United States that is designated by the federal government as outside of U.S. Customs territory. FTZs encourage investment in the U.S. and the creation of American jobs by allowing U.S. businesses to operate with equivalent customs treatment to business conducted off-shore. Businesses using FTZs can reduce customs duties and fees, and achieve logistics benefits for the import and export of goods. FTZs can be an effective part of a community economic development program.

The Austin region is served by FTZ 183 which was established in the 1990s to capitalize on the growth of the high-tech industry and to provide local businesses with a tool to help them compete in the global economy. The Foreign Trade Zone of Central Texas, Inc., is the grantee of FTZ 183 and is run by a board of directors appointed by the cities and economic development organizations in the Austin metropolitan area.

In July 2012, the Foreign Trade Zone of Central Texas received approval from the federal government to operate under new streamlined procedures designed to make U.S. business more competitive. Under the new approval, all of the five-county metropolitan statistical area (MSA) has been pre-approved by the federal government as eligible FTZ property. With the concurrence of local officials, the federal government will provide any eligible business in the Austin MSA FTZ designation on an expedited and simplified basis. A previously expensive process that historically lasted over a year to accomplish now takes less time with modest expense.

Learn more about the FTZ of Central Texas at https://opportunityaustin.com/economic-development/incentives/foreign-trade-zone/. Learn more about Free Trade Zones through the International Trade Administration at https://www.trade.gov/about-ftzs. 

There is no financial impact to the City. As no imported product is currently on the property, the City will not lose any funding. Domestic inventory is also exempted currently under the freeport exemption enacted by the City. 

Pros: creates a tax break incentive for a Buda-based business.

Cons: the City forgoes property tax that it potentially could have collected.

None.