Intel Corp. receives rare tax incentive from county

By Dan MacArthur
North Forty News

Larimer County property owners could pay about the price of a postage stamp in additional taxes each of the next 10 years to compensate for a tax break granted the Intel Corp., the world's largest manufacturer of computer chips.

A chorus of advocates was singing to the choir of county commissioners who, in January, unanimously concurred that the small price would prove a wise investment in the region's economic development.

"That's a bargain," said Commissioner Karen Wagner, an admitted critic of such incentives. "This just makes sense" to keep good jobs here.

As allowed by state law, the commissioners agreed to reduce by half the personal property tax assessment on equipment installed at Intel's new design center in the former Celestica facility in southeast Fort Collins.

The tax exemption will be in place for 10 years. Based on a projected $20 million investment, the value of the tax break was estimated at $83,672 during the first five years. The exemption also would apply to $810,000 in existing equipment.

"This is one of the few things the county has the ability to do," said Commissioner Kathay Rennels.

County budget manager Bob Keister said the total value of the tax break could not be accurately determined at this time. He said it would vary annually based on depreciation schedules and the extent that Intel refurbishes, upgrades and replaces equipment.

In return, Intel's $20 million equipment investment is estimated to return nearly $56.9 million in direct and secondary benefits to Larimer County in the first five years. Direct revenues to the county were estimated at $437,729 during that time. Based on those figures, the payback period to the county was estimated at about two years.

"It just doesn't get any better than this in the economic development world," said J.J. Johnston, president and chief executive officer of the Northern Colorado Economic Development Corp.

County manager Frank Lancaster said this is the first time he can recall that a tax incentive has been approved by the county. He said one was under consideration in the early 1990s when Hyundai Electronics Industries was "shopping for a place to go." But he said the deal fell through when the Fort Collins City Council rejected an incentive package and the company instead went to Oregon.

Intel's Fort Collins design center has grown from 67 to some 350 full-time employees, according to the NCEDC. In the next five years the company expects to add a "significant number" of design engineers to work on its Itanium microprocessors. They will earn about $90,000 a year, well more than double the $35,516 average annual salary in Larimer County.

Intel will move those employees to the 200,000-square-foot facility at 4701 Technology Parkway purchased from Celestica for $10 million. Celestica closed its manufacturing facility in December, putting some 800 people out of work. Intel community relations manager Judy Cara said the company expects to hire laid-off, high-tech workers.

The company selected Fort Collins as the site for a design center following an extensive search for a suitable location. Based in Santa Clara, Calif., Intel is the world's largest manufacturer of computer chips and a leading manufacturer of computer networking and communication products. Worldwide, the company employs some 91,000 people.

Keister estimated the Intel tax break could cost average homeowners from 36 to 38 cents a year, should the commissioners agree to increase property taxes to recover the lost revenues as they are permitted. But they showed little interest in doing so.

"In the end, that's not very much," said commission chairman Glenn Gibson.