Photo courtesy Apple Inc.At its April 17 meeting, the Travis County Commissioners Court approved tax rebates for Apple Inc. to expand its workforce in Austin.
The court voted 4-1 to approve an economic development agreement with the Cupertino, Calif.-based company. Commissioner Sarah Eckhardt opposed, stating that companies should not receive a tax subsidy for actions that are in their economic interest to do.
The agreement will be in effect from May 1, 2012, until Dec. 31, 2030.
Apple's responsibility
As part of the agreement, Apple will retain its current 3,100 employees and gradually create 3,635 new full-time jobs before the end of 2025. Apple must pay these employees $54,000–$73,500 per year over a 10-year period.
Contract jobs, which can comprise up to 25 percent of the new jobs, must meet benefits requirements.
It will also invest $282.5 million in a 1 million-square-foot Northwest Austin operations center in two phases. In Phase 1, Apple will invest $56.5 million and add 200,000 square feet by the end of 2015. In Phase 2, the company will invest $226 million and add 800,000 square feet.
Travis County's responsibility
In exchange for meeting these and other requirements, the county will rebate portions of Apple's tax responsibility. No taxes will be returned in any year where Apple does not meet its end of the deal.
Apple will receive a base rebate of 60 percent of its taxes back each year for the first 10 years and then 40 percent in the last five years of the agreement. The first payment is planned for Jan. 1, 2016, a year after Phase 1 is complete.
Apple will be eligible for an additional 5 percent rebate if it builds its facility to Leadership in Energy and Environmental Design certification standards, and another 5 percent rebate if half of the new jobs are filled with Travis County residents.
The county can take back two years of rebate funds if Apple does not meet requirements over 10 years, or five years of funds if Apple does not meet requirements over 15 years.
Added provisions
The agreement also states that Apple will participate in Lone Star Rail discussions regarding station locations and possible financing sources. It will also encourage its employees to use public transportation.
Following a staff summary of the agreement, Eckhardt noted that the county's agreement lasts for 15 years while the City of Austin's and the state's agreements last 10 years.
She noted that a provision to hire Travis County workers did not affect Apple's base rebate. She said that, in theory, Apple would not have to hire a single Travis County worker and could still receive the base rebate.
Answering Eckhardt's question, staff said there was no language in the agreement requiring the company to hire economically disadvantaged individuals.
Court comments
Eckhardt said Apple or any other business should not receive a tax subsidy to do what it's in its economic interest to do.
"I was willing to play along with the charade of our influencing Apple's decision-making process in exchange for Apple's commitment to hire economically disadvantaged individuals," she said. "I was willing to play along with this charade for an admittedly modest but verifiable number economically disadvantaged hires by this company, because, after all, Travis County has 37 percent low-income residents, 41 percent housing cost burdened residents and 22 percent uninsured residents. These are the folks who could benefit the most from your jobs at Apple."
"I heard today, for the first time, that Apple was no longer willing to consider this commitment, and therefore, I am no longer willing to entertain relieving Apple of its tax responsibilities to Travis County."
Judge Samuel T. Biscoe said the county negotiated for several months, and he thought the county did a good job and the best it could.
"I don't know that we can blame the poverty rate or the lack of insurance on Apple. In fact, from what I hear, regarding its treatment of the 3,100 employees that work for them today, they've been doing a fine job, and they are one of our best employers," he said. "I would think that we do not have a requirement that you should not be a successful company to get financial incentives from Travis County."
Biscoe noted that the Apple deal will bring a significant amount of money to local taxing entities such as the county, Central Health and Austin Community College.
Commissioner Ron Davis said community outreach may not be where the county would like to to be, but that the Apple deal was a step in the right direction to make sure those who have been left out of the larger workforce will now be included.
He added that workforce training can make Apple's jobs more accessible to more residents.
Commissioner Margaret Gomez said Travis County's investment in job training programs gives her hope that residents can experience upward mobility.
Commissioner Karen Huber said that while she had a problem with the system in which different parts of the nation compete to offer tax incentives for economic development, "in this instance, seldom does a community get an opportunity to work with a company of the global significance of Apple."
She went on to say that the deal is not about the company's cash reserves or whether another city was vying for Apple's business, but rather what Apple can bring to the Travis County community.
