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Officials to add conditions to Apple's Austin expansion deal

updated 10:30 pm EDT, Thu April 5, 2012

Job-creation concessions in exchange for tax break

Apple's planned expansion of its Austin campus to create more than 3,600 new high-paying jobs is dependent on incentive offers from the city of Austin as well as the county and state. Last month, the city agreed to a package worth $8.6 million in savings, and now Travis County officials may grant Apple a 10-year, 80-percent tax break valued at $7.4 million. The commission may impose some conditions on the deal, which would bring more than 3,600 jobs to the area.

The discussion is likely a reaction to some minor public pushback over the amount of incentives Apple has been offered in exchange for the expansion. In addition to the city and county deals, the state may kick in another $21 million in incentives, all designed to prevent Apple from relocating the project to Phoenix, Arizona, said to be the company's alternate pick. Although many residents appear to be supportive, some see the giveaways as too expensive in relation to the number of jobs added.

All told, the incentives are worth some $37 million, which some residents have said may be excessive for a company viewed as one of the richest and most valuable in the world. The incentives, which would cost the area some short-term tax revenues, are however often used by local governments to attract large businesses of all types to a particular area. The deal for the Austin expansion, which would create more than 3,600 jobs, is worth an estimated $304 million.

The commission, like the other bodies, is likely to be very keen to cement the deal, which Apple has said is contingent on getting all three incentive packages. The jobs created would be higher-paying positions, the average of which would range from $54,000 to $73,500 annually. Travis County officials are said to be favoring placing some modest conditions on their $7.4 million deal, including a requirement that Apple hire a number of workers who are currently unemployed and have completed government-funded job training programs, or who live in economically hard-hit areas.

The incentives are more than worth the investment through the creation of good-paying permanent positions, and the possibility of future expansions. Apple currently has an administrative and customer-relations call center in Austin, which is nearby the specially-built Samsung factory that will be producing the next-generation A-series chips for the company. The expansion would bring many more engineers and chip specialists to Austin to work closely with the Samsung facility, and the number of jobs would bolster the Texas economy, which has been affected by the economic downturns of recent years.

The new campus, which would eventually be Apple's largest outside Cupertino, would be built in two stages. The first would be the expansion of the current facility, a $56.5 million project that would give the company 200,000 square feet of office space. The second would be a new $226 million building adding another 800,000 square feet.

Judge Samuel T. Biscoe, the presiding officer on the commission, was quoted by the Austin American-Statesman as saying "we want to provide some opportunity for upward mobility, but also give Apple employees that are qualified." The commission met in closed session to discuss the matter, and said it would make the topic its priority at an April 17th hearing. Private negotiations with Apple would happen in the interim.

The county's $7.4 million tax deal, which would discount county taxes owed by Apple by 80 percent for 10 years, is also open to being renewed for a further five-year period if the commission sees further opportunity for growth with the company. The job requirements the county is likely to ask for are not expected to derail the deal overall. [via Austin American-Statesman]





by MacNN Staff

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Comments

  1. danviento

    Joined: Dec 1969

    +2

    Do the math.

    Say 2/3 of those 3600 jobs are separate, new households. To make up $37 mil in lost tax income, the city would need less than $15.5k in property taxes from each household, or $1550 per year per household (over the cited 10-year period). Even if people don't move within that jurisdiction, you would think sales tax alone of people spending money would more than cover the difference, not even considering the halo effect of that kind of growth.

    If you don't get why cities broker conditions like these let me break it down: To a point, more taxes = less growth. Or, if you want less of an activity, tax it more. This axiom has played out time and again in our nation's history.

  1. macjockey

    Joined: Dec 1969

    -1

    like Austin needs..

    3600 Steve Jobs' :)

  1. eclux

    Joined: Dec 1969

    -1

    is our retention time that short?

    We get it. 3,600 jobs. $7.4 million tax deal from the county. You don't need to repeat it three times. This reads like a student trying to pad out an essay to the required length.

    But I was curious about the "specially-built" Samsung plant. By following the link I learned that's it's been producing since 1996, when Gil Amelio was Apple CEO and the PowerBook 5300 ruled. Guess we'll need to dig way back in the archives to find out what was special about it when it was built. Give us a hint?

  1. testudo

    Joined: Dec 1969

    -1

    Re: Do the math.

    , you would think sales tax alone of people spending money would more than cover the difference, not even considering the halo effect of that kind of growth..

    You're missing ALL the halo effects, though. These types of tax breaks help keep or bring a company in. But to add actual households, you need to add housing, and there you make the assumption that Austin is where these people will live. If 2/3rds live in the suburbs, is Austin getting it's money's worth?

    Increases in the tax base adds to the overall bottom line, but it also adds families and children, which means more schools, more roads, more public services (police, fire, trash pickup, etc.). And then people start bellyaching over crowded schools, jammed roads, and decide they need to get out of town. It isn't all as easy as "It's Apple, give them what they want, you'll be better off!"

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