Intel Corp. is considering issuing up to $250 million in tax-exempt Industrial Development Authority bonds to pay for parts of the $2 billion overhaul of its Fab 12 chip manufacturing plant in Chandler.
Intel, the world’s largest semiconductor company, is re-equipping the plant with the latest manufacturing tools to make future generations of its microprocessors, which run most of the world’s personal computers.
The company could receive lower interest rates by issuing bonds because they are tax-exempt to investors. But, federal and state laws place restrictions on the types of projects that are eligible for such financing.
Also, the approval of the Chandler Industrial Development Authority Board and the City Council would be needed before the bonds could be issued.
The Chandler board gave preliminary approval to the plan on Aug. 9.
In tel spokeswoman Jeanne Forbis said the company might use bond financing for environmental projects related to the conversion, such as industrial sewage and wastewater treatment. But she said the company could decide to use other forms of financing or simply pay cash.
"We want to make fiscally sound decisions," she said. "That is what we are researching."
Chandler taxpayers would not be on the hook to repay the bonds if Intel should default, said Maria Spelleri, attorney for the Chandler Industrial Development Authority. Instead, the bonds would be guaranteed by Intel itself or by another entity such as a bank or insurance company, she said.
The City Council’s approval is required under fe deral and state law because the bonds are structured in a manner similar to tax-free municipal bonds, she said. If Intel opts for bond financing, it would be by far the largest project ever approved by the city’s Industrial Development Authority, according to city officials.
Previous major bond projects in Chandler included the Chandler Community Hospital and refurbishing of the San Marcos Ho tel, both about $20 million.