By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
By New Times
Phoenix city leaders may face unforeseen obstacles completing a sweetheart development deal for Sumitomo--despite assertions to the public and the Japanese conglomerate that the company would be producing silicon wafers in northeast Phoenix within two years.
Mayor Skip Rimsza and other bigwigs who crowed about the deal have been stymied of late by pesky dissidents who refuse to go away. What's more, the naysayers may have found some soft spots in the deal the city inked with Sumitomo.
The group has even begun recall drives to oust Rimsza and District 2 Councilwoman Frances Emma Barwood. As unlikely as a recall of the mayor seems (it would require more than 20,000 signatures to get the initiative on the ballot), Barwood is far more vulnerable: It will require fewer than 2,500 signatures to force a recall vote in her district.
The Coalition of Valley Citizens to Stop Sumitomo, which has held several protests in the past few weeks and now has embarked on its recall campaign, says that politically, economically and environmentally, the whole deal stinks.
And according to inaccuracies and inconsistencies contained in city and county documents, they may have a point. Or two.
The package that brought the company here was a complicated one, hastily put together in closed-door meetings without meaningful public involvement ("Sumitomo Wrestling," December 7, 1995). At its proposed new site, Sumitomo would manufacture silicon wafers--the superthin, supersmooth, superclean surfaces onto which chip manufacturers (such as Motorola and Intel, two other Valley behemoths) graft chemicals to produce semiconductors.
State and local officials offered Sumitomo--which owns the world's largest bank and boasts nearly $150 billion in annual revenue--myriad inducements: infrastructure improvements valued at $8million, a job-training grant of $450,000, a tailor-made lease with the state Land Department and, perhaps most troubling, promises to help make the site a "foreign-trade subzone," allowing the plant to operate free of import-export duties and some taxes.
And what city officials put on paper was just the beginning. The zoning process for the plant was massaged to make sure it encountered little oppositon.
Putting Sumitomo's industrial zoning in the Desert Ridge residential area required an amendment of that area's General Plan and a rezoning of that specific parcel. Both were done last August. Rather than making it clear why these steps were taken, however, the city made a formal agreement with Sumitomo to keep the company's name out of zoning matters until the last possible moment. At the zoning and General Plan votes, the Phoenix City Planning Commission was listed as the applicant, not Sumitomo.
"They [the city] said they wanted to change the zoning from residential to commercial/industrial," says Chris Estes, a member of the Desert View Tri-Villages Planning Committee (through which zoning changes for the area must first go) and now a leader of the anti-Sumitomo forces. "They told us they were talking about a medical campus."
Estes says no other uses for the land were mentioned.
Two weeks later, the Phoenix City Council approved the tax and infrastructure giveaway under the council's "emergency clause," which relaxes public-notice requirements and allows the council to vote after only a 24-hour notice.
That clause, however, is supposed to be reserved for measures necessary for the "preservation of the public peace, health and safety." And the incentive measure came to the city council after only one day's notice--a notice that was posted at City Hall, but nowhere near the affected neighborhoods.
Phoenix also promised to sponsor Sumitomo's application for a foreign-trade subzone at the site. Among other things, approval of the subzone would slash the company's annual property taxes by about 80percent--from $13.7 million to $2.7million. Over the 99-year life of the lease, Sumitomo would receive direct property-tax subsidies of about $1.1billion.
Critics say the city's application for the subzone, which tells the feds why a subzone is necessary, lacks complete information in a few key areas. And an independent review shows it to be outright misleading in others.
First, Phoenix City Manager Frank Fairbanks tells the U.S. Department of Commerce's Foreign Trade Zones Board (which will determine the application's fate) that Phoenix needs the jobs the facility will provide: "Unfortunately," Fairbanks writes, "the communities in Maricopa County, Arizona, have experienced declining employment, and the unemployment rate in Phoenix is currently 7.6percent."
The letter is dated November 17, 1995.
According to the U.S. Department of Labor, the unemployment rate in Phoenix last November was actually 3.6percent--less than half the number Fairbanks claimed. The number for Maricopa County as a whole was even lower--3.3percent.
The inconsistencies in the application don't end there. Phoenix residents were initially told the plant would eventually employ up to 750 people--in the application, the maximum number mentioned is 450. The city's application further boasts that "high-tech companies typically provide a better-than-average pay scale due to the higher skill levels and education required," and that "the average compensation per employee [will be] approximately $24,000 per year."
Those wage numbers jibe with what Phoenix officials have been saying all along--but neglect to mention that $24,000 per year is far less than average wages at other Valley high-tech plants such as Motorola and Intel, according to spokespeople for those firms. Even Sumitomo has said that only about 50 of the initial employees are expected to be higher-paid engineers. The rest mostly will be technicians and operators.