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California Project to Use Foreign Trade Zone Status

The US Department of Commerce has granted Foreign Trade Zone (FTZ) status to more than 3,200 acres of California land.

By John McCloud | Updated on March 25, 2008

BAKERSFIELD, CA-Though the US Department of Commerce has granted Foreign Trade Zone (FTZ) status to more than 3,200 acres of California land, developers have been slow to take advantage of the opportunities such designation confers. In fact, till this month’s granting of FTZ status to an initial 177 acres at Tejon Industrial Complex on the outskirts of this growing city at the southern end of California’s Central Valley, barely 200 acres of trade zone land had been activated.

“On the East Coast, foreign trade zones have been widely and successfully utilized, but it’s not been popular in California,” observes Barry Hibbard, vice president of commercial and industrial development for Tejon Ranch Co., which is developing the 1,450-acre master-planned business park in partnership with Rockefeller Development Group. “The problem, I think, is that most developers don’t know what to do with it. They don’t understand how it benefits tenants or how to explain the benefits to tenants. That’s one reason we hooked up with Rockefeller. They have been very good at quantifying the benefits so companies can clearly see what it does for them.”

According to Hibbard, many developers have become expert at setting up foreign trade zones, but few have recognized the need for follow-through. “If you look at most zones, they don’t have someone who can articulate to the tenant what they will gain by locating in an FTZ,” he says. “You need someone who can walk you through the whole process and point out you don’t have to pay this duty or this tax or help you figure out what percentage of your materials comes from nontaxable sources. You need someone who runs the whole thing out on a spec sheet and tells you, here’s your savings.”

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