No city 'holiday presents' for tech giant

Dec. 21—A huge corporate expansion announced this month left some wondering: What kind of gift-giving did Scottsdale do, this holiday season?

Big jobs often mean big deals — with perks-wrapped, incentive-bowed agreement "presents" from local governments to companies.

A Bloomberg story from March noted when Amazon was searching for a new headquarters, it instigated "a months-long country-wide bidding war which saw some states and cities promise upwards of $6 billion to attract the e-commerce giant."

In June, a CNBC story said states "are paying huge sums to lure semiconductor manufacturers."

And Forbes magazine recently noted, "Local governments are dangling hundreds of millions of dollars in tax breaks to persuade companies like Facebook, Google and Microsoft to build server farms in their backyards."

In Scottsdale, when Axon threatened to pull up stakes and build an expanded office elsewhere, the city quickly whipped up a development agreement to reimburse the body camera manufacturer over $9 million in infrastructure costs.

Yet, in building a $300 million office that will provide 500 new jobs within 1 mile of Axon, the tech giant ASM will receive from Scottsdale ... nothing.

Not yet, at least.

After a news conference featuring Gov. Katie Hobbs and the prime minister of the Netherlands, a city spokesman and an ASM executive both told the Progress there is no development deal — no perks, incentives, promises or even a free lunch.

Mayor David Ortega insisted he does not allow companies to demand so-called "freebies" to come to the area.

"In my discussions with 101 corridor prospects, I stress that one factor which I reject is subsidies," Ortega said. "Every major development must bring water and all infrastructure must be paid by (the) development. There are no shortcuts."

Even so, there were some city concerns expressed internally about AMS water use.

This could be one of the few negotiating tools the city has to leverage as ASM rolls out its ambitious plans.

While Amazon and other companies take their time in allowing cities and states to romance them, ASM and Scottsdale had a fast love affair.

Hichem M'Saad, the chief technology officer of ASM, told the Progress his company plans to begin construction of its new global headquarters in June — less than a year after ASM announced it "closed the purchase of a plot of land in Scottsdale."

ASM bought 21 acres near Scottsdale Road and the Loop 101 for $33 million. The land was purchased from Scottsdale-based De Rito Partners Development.

Why pick Scottsdale — a retiree-heavy (25% of residents 65 and older) city that is hardly known as a base for the hip young engineers ASM will be hiring by the hundreds?

"We had a very clear requirement," M'Saad said. "We want to have a new facility that's large and that's not very far from our current location — because we're going to be moving our employees to the new location."

The Dutch company has been operating in Phoenix since 1976, growing to some 1,500 employees.

Focusing on proximity to Phoenix, "areas like Peoria even though they're cheaper are out of the question for us," M'Saad said.

"So we find this land and it happens this land is in Scottsdale. We liked it for a couple of reasons. It's not very far from our current employee base, and it's next to a highway so you know, people can go in and out very, very easily," M'Saad said.

It didn't hurt that the Scottsdale location is smack between ASM's biggest customers: TSMC, which is building a giant operation in North Phoenix, and Intel, rapidly expanding in Chandler.

The ASM executive was asked if others attempted to lure the company from Scottsdale.

"To be honest with you, we got some good deals, very, very good deals — even from Finland," M'Saad said.

Money, he insisted, was not at the top of ASM's wish list.

"OK, we had to spend the money. But people is the No. 1 thing — and we don't want to lose our people. That's our number one priority.

"So that's why we chose this land in Scottsdale, even though it's expensive."

M'Saad lives near the Scottsdale/Paradise Valley border, but doesn't anticipate moving his office to Scottsdale until the headquarters is finished in early 2026.

Across the 101 from Grayhawk and the booming Scottsdale One development, ASM's new headquarters will fit snugly between the planned Banner Health, Axon and Parque corporate campuses — and near the under-construction Optima McDowell Mountain Village residential project near Scottsdale Road and the Loop 101.

Ortega crowed about "top-tier companies" coming to North Scottsdale.

"Optima, the Parque and ASM are 'best-in-class' drawing affiliates and vendors which strengthen our economic outlook," Ortega said.

ASM's new North American headquarters will cover 250,000 square feet — double the size of its current Phoenix facility.

At the news conference held at WestWorld, Benjamin Loh, CEO of ASM, said the new Scottsdale location "will substantially expand our research and development activities."

Hobbs called the ASM news "a momentous occasion for Arizona's advanced manufacturing ecosystem."

But what's in it for Scottsdale?

Ortega put it in reputational terms.

"I describe Scottsdale as the intersection of talent and investment combined with flight to quality," Ortega said.

"This is especially true at the 101 where 720 acres of state land trust with visibility and access along the highway, draw top-tier companies. Multinational executives reside in Scottsdale and tech employers recognize the advantages of our healthy Scottsdale lifestyle."

That might not convince some North Scottsdale neighbors, who have been leery — to say the least — of other projects in the area, complaining of already-clogged surface streets.

How much more traffic will ASM bring?

No traffic study has been submitted by ASM at this point, according to a city spokesman.

What about water?

Like many tech firms, ASM is rather secretive about its products, but does say it designs and manufactures "equipment and process solutions to produce semiconductor devices for wafer processing."

Wafers serve as bases for semiconductor chips.

On its 20 acres, ASM plans "a combination of capital expenditures related to infrastructure and lab equipment," with research and engineering jobs coming — as hinted at by plans for a five-story parking garage, in addition to two offices and labs.

Many around Scottdale are wondering: What about that most precious resource, water?

"We take sustainability very seriously as a company," M'Saad said.

"You know, our European DNA in a way makes it — like sustainability is a strong thing. We, as a company, we're going to be net zero by 2035, which is the most aggressive target of any semiconductor company, and we are very proud of it."

Part of that, he stressed, is an aggressive water recycling/reusing program.

"Here in Phoenix, we have initiated recycling of our water. So in the facility where I'm here right now, we do 60% — 60% of the water that we use is recycled," M'Saad said.

"Our objective in Scottsdale is from the get go, we're going to be at 80% recycling of the water."

A city email chain, however, set off mild alarm bells about how much water the ASM headquarters will use.

"Over the past several months, city departments have been working with company representatives as they have been working on their plan for the new (ASM) facility," an email from Scott Cooper, the city's acting Economic Development director, stated.

"In September 2023 we were provided a preliminary water usage number of 90,000 — 150,000 GPD (gallons per day) ...However, in late November, the water demands had increased to 424,800 GPD.

"Our Water Resources team has analyzed and considered ASM's water demands and has notified their representatives of concerns and continue discussions on next steps," Cooper said.

Kelly Corsette, a city spokesman, was asked about ASM's water use — and if that could be a negotiating point.

"While the company plans to recycle a significant portion of water, we understand that water usage is an important issue for the region," Corsette responded.

"We are actively exploring additional measures and technologies to further minimize their water footprint and ensure responsible usage. We are collaborating on shared goals of sustainability and responsible resource management to strengthen the partnership between the company and the city."

According to Corsette, "The city does not have a development agreement with ASM."

But, he added, "Multiple city departments have been working with ASM representatives as they have been working on a plan for their new facility.

"Those discussions are continuing, including outlining next steps, which may include a development agreement."

Unlike Axon, which needs a major rezoning on the state land it purchased to accomplish its "mixed-use campus" goals, the land ASM purchased is zoned for the corporate headquarters and research work.

So the city doesn't have any negotiating tools, right?

"Zoning on the property is in place — however, it is not accurate to say that the city lacks leverage for any agreements," Corsette said.

"A potential development agreement would be the means through which additional elements related to the project — but not part of zoning entitlement — could be negotiated, such as the developer building public infrastructure."

ASM's costs to build roads, drains and other "improvements" could be partially reimbursed by the city if an agreement is reached, Corsette said.

The city spokesman hinted that some parts of a potential development agreement have already been outlined.

When asked about incentives, Corsette said "quality of life in Scottsdale is always a top attractor," but added "speed to market opportunities for the company ...

"Expedited permitting and workforce development assistance were also offered as potential opportunities" to ASM, he said.

A preliminary meeting between the city and ASM on a potential development agreement will take place in January, Corsette said.

"Reimbursing the developer for its proportional costs in developing public infrastructure is a common practice and could be arranged via a development agreement in this case," the city spokesman said.

Development agreements can be drafted in private, but must be approved by Scottsdale City Council in a public meeting.

"Initial offsite infrastructure discussions are underway, including road improvements, traffic signal optimization, and other enhancements necessary to manage their relocation plans," Corsette said.

The ASM executive is confident his company will have no problems with the city.

"I think with the city of Scottsdale, we have a very good relationship," M'Saad said.

"I think the city of Scottsdale really was happy for us to be there. I met the mayor and the mayor of the city is really excited that we chose Scottsdale from all the places.

"And they are providing us the support necessary for us to be successful."