Austin City Council unanimously approved an economic development agreement with an $8.6 million tax incentive with Apple Inc. on March 22, creating a pathway for Apple to receive more state and county incentives and moving the Cupertino, Calif.–based maker of the iPad one step closer to building a new campus in Northwest Austin.

Apple is proposing to build a $282 million, 1 million-square-foot operations center at Parmer Lane and Delcour Drive and hire 3,635 new employees at an initial average salary of $54,000. As part of the agreement, 93 percent of the jobs will be hired locally. Jason Lundgaard, manager of state and local government affairs for Apple, said the positions would include human resources, accounting and customer support.

If the company completes both phases of construction by Dec. 31, 2021, hires 3,600 new employees and retains its existing 3,100 employees at Apple's current Northwest Austin campus, located at 12545 Riata Vista Circle, it will be eligible for tax rebates amounting to $8.6 million.

"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.

Benefit to the city, county

City staff estimate the economic benefit of the deal would be about $89.8 million, with total costs, including the money spent on government services for the new employees, amounting to about $75.2 million. Even with the $8.6 million tax rebate, the city will net about $14.6 million.

"That $8.6 million in tax revenue does not exist today and will only be created if Apple locates its operation in Austin," said Gary Farmer, chair of the Greater Austin Economic Development Corporation.

With City Council approving its incentive deal, Apple is eligible to receive a $21 million state investment over 10 years. That money would come from the Texas Enterprise Fund, which is used to attract businesses to the state. As part of the arrangement, Apple must agree, as it did with the city, to maintain its 3,100 existing employees at the Riata Vista campus, which the company moved to in 2004.

At the county level, Travis County Judge Samuel Biscoe said March 23 that the county is prepared to offer an 80 percent rebate on new real property taxes for 10 years. He said this amounts to about $7 million, but the county will still net about $5.4 million. County commissioners met to discuss and vote on the deal March 27, after Community Impact Newspaper went to press.

"We've had about three conversations before, and I think the majority of the court is supportive," Biscoe said, adding the county has known about the Apple deal since January.

Apple's expansion

The company's new building will be constructed in two phases. The first phase will add 200,000 square feet of real property and 650 employees, and it must be completed by Dec. 31, 2015. Apple would be eligible for its tax rebates one year after receiving its certificate of occupancy.

The remaining $226 million investment would be 800,000 square feet, which will have to be completed by Dec. 31, 2021, and will accommodate the remaining 2,985 employees.

Michael Foulkes, Apple's director for state and local government compliance, said this would be the first new facility Apple will build outside of California, but the company has projects around the country.

At the urgence of members of the Austin-based Workers Defense Project and area construction workers, council amended the agreement to include a requirement that Apple comply with all state and federal laws on construction, safety and minimum wage and that the company work with the Workers Defense Project in an effort to meet the obligation.

Benefit to the community

Once Apple begins hiring, the city will start to see the benefits roll in around 2016, city staff say.

At Apple's other sites, Foulkes said indirect benefits include smaller businesses such as restaurants, dry cleaning and hotels opening near the new campus to offer services to employees.

"Our people work hard at the company," he said. "They tend to spend a lot of their time on goods and services near where they work. They'll be doing a lot of things locally."

Even the housing market will see the effects of employees having higher-paid jobs and being able to afford to buy a house near their work. Chad Proctor with Realty Austin said it could take six months to a year after the new hires before those real estate benefits emerge.

"It will increase sales," he said. "You'll have more folks and the same supply, and there will be an increase in demand."

Proctor said neighborhoods in close proximity to the new property, such as the Angus Valley neighborhood located between Duval Road and Parmer Lane, would see a boost in interest as new Apple hires will probably want to live close to work.

Even with a potential increase in residents, Angus Valley resident Karol, who asked Community Impact Newspaper not to print her last name, said she does not see any negatives with Apple's expansion. Because the neighborhood does not allow traffic to cut through to Parmer, she said they would not have issues with any added traffic.

"Plus, it's a good company," she said. "People don't like change, but this is a good change."

Correction: We incorrectly reported that the 80 percent rebate on new real property taxes from Travis County would amount to $19 million. The actual amount is close to $7 million.