Council members discuss one of 'deals of the decade' with Apple

On March 15, representatives from Apple Inc., the Cupertino, Calif.–based technology company, discussed with City of Austin staff the details of an economic development proposal in which Apple would locate a new operating center in Northwest Austin, resulting in the addition of 3,635 new jobs in the area.

"This is a huge deal. This is what we consider to be one of the deals of the decade," said Dave Porter, senior vice president of economic development for the Greater Austin Chamber of Commerce, during the March 15 presentation.

On March 9, Gov. Rick Perry announced Apple's plans to build a $282.5 million, 1-million-square-foot facility, which would be located on 38.1 acres of land adjacent to its existing campus at Riata Vista Circle and Parmer Lane, official documents said.

Apple could receive a $21 million investment over 10 years in exchange for its commitment to create these new jobs. The investment would come from the Texas Enterprise Fund, which is used to attract businesses to the state. As part of the arrangement, Apple would agree to maintain its 3,100 existing Austin employees.

In exchange for the investments and jobs created, the city would also provide a performance-based grant equal to the taxes that Apple would pay on the new property. Brian Gildea, the city's economic development manager, said those taxes would amount to $8.6 million.

The city estimates the economic benefit of the deal would be $89.8 million, with total costs, including the money spent on services for the new employees, amounting to $75.2 million.

Kevin Johns, director of economic growth and redevelopment services for the city, said in comparison, Samsung, which also received a 100 percent tax rebate through an economic development agreement, invested $2.5 billion and created 700 jobs.

The first phase of the project would add 200,000 square feet of real property and 650 employees. Apple would have to complete these steps by Dec. 31, 2015. The company would be eligible for its tax incentives one year after receiving its certificate of occupancy, Gildea said.

The remaining $226 million investment would be 800,000 square feet, which would have to be completed by Dec. 31, 2021.

Of the 3,635 jobs Apple would agree to create, about 93 percent would be hired locally and 1,500 would be entry-level positions. The average wage of the new employees would be $63,950, with the lowest 10 percent receiving $35,000.

Jason Lundgaard, manager of state and local government affairs for Apple, said the positions would include human resources, accounting and customer support.

"We really appreciate the fact that you are bringing jobs, and and you're going to actually employ Austinites, and that you're not creating jobs just for the highly educated but also people that go to [Austin Community College]," Councilwoman Sheryl Cole said.

Gregorio Casar, business community liaison with the Workers Defense Project, a workers' advocacy group, asked what safety measures and wages Apple would agree to before construction began, considering the size of the project.

Lundgaard said worker safety is extremely important to Apple but that the conversation would need to occur offline with the city. He said Apple would be willing to meet with representatives from the Workers Defense Project.

According to documents, Apple is also is considering Phoenix as the location of the new operating center. Gildea said Phoenix is Apple's Plan B in case the city does not approve the economic development agreement with the incentives, which would also make Apple ineligible for the incentives at the state level.

Council voted to host the public hearing for the proposal March 22 at 4 p.m. during its regularly scheduled meeting. It will likely vote on the deal at that time. The public has the opportunity to comment on the proposal until 5 p.m. March 18 at www.austintexeas.gov/economicgrowth.

Documents for Apple's proposed economic development agreement are available to the public on the city's website.

By Amy Denney

Managing Editor, Austin metro

Amy has worked for Community Impact Newspaper since September 2010, serving as reporter and senior editor for the Northwest Austin edition as well as covering transportation in the Austin metro. She is now managing editor for the 10 publications in the Central Texas area from Georgetown to New Braunfels. She enjoys spending time with her husband, son and two cats.