The Sherman Economic Development Corp. could soon present Finisar Corp. with the first half the $1 million incentive agreement that was agreed to in March.
The SEDCO board of directors approved a restructuring of the payment schedule for the incentive agreement approved earlier this year that will see the corporation providing Finisar four payments of $250,000 each over a two-year period as the electronic components manufacturer invests $160 million in capital equipment and construction in its Sherman facility in the former MEMC building.
“The payment structure was different than our normal payment structure, so this addendum modifies that payment structure just to make it more conducive to the project,” Executive Vice President Stacey Jones said.
Finisar announced in December that it would hire 500 new employees to expand its production of VCSELs at its new Sherman facility this year to help meet Apple’s demand for the technology in its iPhone line of products. VCSELs are small semiconductor devices that emit light vertically and measure the depth at which that light is reflected. That depth-sensing technology helps power Apple product features such as facial recognition, portrait mode selfies and proximity-sensing capabilities.
Finisar is still eligible to receive each $250,000 payment after providing documentation of a local investment of at least $40 million but the change puts just three months between the second and third and third and fourth payments instead of the six months that was originally included in the contract.
Jones said Finisar officially received its certificate of occupancy at the Sherman facility last week and has provided documentation of more than $80 million in investments locally. That means the company has met the requirements for its first two incentive payments and the new payment structure states the second payment can be made as early as Oct. 15. Jones said the $500,000 check will be included in SEDCO’s next round of payables later this month.
“Then the next one is three months later,” Jones said, explaining the next incentive payment can now be made after Jan. 15 and after April 15, as long as Finisar provides documentation of a $120 million and $160 million investment for each payment. “That way it’s ready for them; they just can’t have it before Jan. 15 and April 15.”
Jones said it is possible Finisar will receive its entire $1 million incentive from SEDCO by the end of April of next year.
“If they haven’t met those requirements, they have until Aug. 13, 2020, to submit for them,” she said, explaining the previous terms of the incentive would have extended past the expiration of the contract. “I think it was just an agreement between both of us just to simplify it. We were going to have to do something to keep our payment structure from going past the end of the contract. And they were already ready to submit for two payments.”
In addition to the SEDCO incentive, the Sherman City Council unanimously approved a 10-year tax abatement and a five-year Chapter 380 tax rebate agreement for Finisar in March. City staff estimated the tax abatement agreement would save the company around $3.3 million in property taxes, and the tax rebate agreement would save it around $1.2 million.
The 10-year tax abatement agreement will give Finisar a 60 percent tax abatement for each of the first three years, a 55 percent abatement for each of the following three years and a 50 percent abatement for the final four years of the agreement. The five-year tax rebate agreement will see the city giving a grant back to Finisar after its full tax bill is paid in years 11 through 15. The grants will be for 45 percent of the taxes paid in each of the first two years of the agreement, 40 percent for the third and fourth years and 35 percent for the final year.
In April, the Grayson County Commissioners Court approved a 10-year tax abatement agreement and five-year tax rebate agreement for Finisar that matched the terms of Sherman’s agreements.