City Council OKs tax breaks for Atmel
Mar 27, 2012 (The Gazette - McClatchy-Tribune Information Services via COMTEX) --
The Colorado Springs City Council on Tuesday approved a series of retroactive tax breaks for California-based semiconductor manufacturer Atmel Corp. that will cut its tax bill by $339,070 on $25 million in equipment and other capital spending it plans in the Springs from 2011-15.
The tax breaks are retroactive for Atmel, which employs 1,330 at a chip plant at 1150 E. Cheyenne Mountain Blvd. An earlier agreement expired in 2009 and the company wanted the breaks to apply to $10.4 million it spent last year on the equipment, Bob Cope, a specialist in the mayor's Economic Vitality Office, said Tuesday. The city's economic development agreement with Atmel extends the breaks for 10 years beginning Jan. 1, 2011, and covers both the $10.4 million spent last year and another $14.6 million planned over the next four years, he said.
Under the new agreement, the city will rebate half of the personal property tax Atmel pays on equipment purchases during the 10-year period totaling between $1 million and $5 million and 90 percent of any amount higher than $5 million. Use taxes on machinery and equipment purchases would be reduced on any such spending totaling between $5 million and $20 million and waived above that level. The estimated tax reduction is 1.4 percent of what Atmel is spending and 1.1 percent of the revenue the city expects to receive from the company.
City officials estimate that Atmel's impact on the Colorado Springs economy during the 10-year term of the agreement at $1.9 billion, almost entirely from wages paid to its employees and wages from 2,056 jobs at retailers and other businesses Atmel employees support by spending their pay on cars, televisions, groceries and other items. The city also estimates Atmel would generate $31.6 million in revenue to the city from surplus payments from Colorado Springs Utilities to the city general fund as well as sales, property and other taxes.
"Atmel is one of our most important primary employers. It is exciting that they continue to invest in this community," said David White, executive vice president of marketing for the Greater Colorado Springs Chamber and EDC.
The agreement specifies the rebates can only be paid after the city has collected tax and other payments from the company and requires the company to make the $25 million investment in its local plant and "retain an estimated 1,300 existing local jobs assigned to its facilities" here. The agreement is similar to others the city has made with retail giant Wal-Mart to build a data center on the city's far north side and with test equipment manufacturer Agilent Technologies to expand its data center in northwest Colorado Springs.
The new agreement with Atmel comes just months after the company ended the contracts of an undisclosed number of temporary workers at the plant as the company responded to slowing sales and a weakening world economy. The plant had employed 1,700 as recently as December 2010, when an Atmel executive said the company had spent another $25 million to upgrade equipment in the facility and had recalled hundreds of workers let go in earlier layoffs to meet surging demand for chips used in smartphones and tablet computers.
"We've enjoyed our relationship with the city of Colorado Springs," Tom Roff, Atmel's vice president of worldwide manufacturing, said Tuesday in a statement. "We are happy City Council has approved the renewal of this incentive agreement."
Semiconductor sales are slowing for Atmel. The company reported last month that revenue for the fourth quarter declined 16.2 percent from a year earlier to $383.6 million,. Profits for the same period were off 85.3 percent to $32.9 million, although all but $90 million of Atmel's earnings during the fourth quarter of 2010 came from a tax refund. Revenue for the year was up 9.7 percent to $1.8 billion.
Contact Wayne Heilman: 636-0234 Twitter @wayneheilman
Facebook Wayne Heilman
___ (c)2012 The Gazette (Colorado Springs, Colo.) Visit The Gazette (Colorado
Springs, Colo.) at www.gazette.com Distributed by MCT Information Services
[ Back To SIP Trunking Home's Homepage ]