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Council approves $8.6 million Apple development agreement

Friday, March 23, 2012 by Josh Rosenblatt

As expected, the City Council approved an economic development agreement with Apple Inc. yesterday that will set in motion the computer giant’s investment of more than $282 million to build 1 million square feet of new office space in North Austin. Under the terms of the agreement, Apple will create at least 3,635 jobs in Austin in return for $8.6 million in property tax rebates from the city over 10 years.

Council voted 6-0 in favor of the agreement, with Council Member Laura Morrison absent due to illness.

Those incentives would be in addition to $21 million the state of Texas agreed to give Apple out of the Texas Enterprise Fund earlier this month and approximately $6 million in real estate abatements from Travis County. County officials said they would take up the issue after the city had made its decision.  

According to city documents, staff estimates the net benefits the city will receive from the agreement to be $14.5 million over 10 years.

Apple’s push for incentives came at a strange time for the company. Earlier this week, the company announced it had $100 billion in cash on hand and that it would be paying nearly $10 billion in dividends to stockholders over the next year. In addition, the company has come under fire for reports of poor working conditions at plants in China owned by one of their major suppliers.

When looked at together, those news items appeared to some at yesterday’s Council meeting to be proof that Apple may not be the kind of company Austin should be in business with, and it is hardly in need of $8.6 of Austin’s much-needed tax revenue.

Longtime Council agitator and current mayoral candidate Clay Dafoe said, “I don’t think this resolution brings equity to our taxpayers here in Austin. Apple is one of the wealthiest corporations in the world. This is a perfect example of corporate welfare that comes through this Council and is passed at the expense of we the people. We’re giving Apple a corporate handout that doesn’t need it.”

But Gary Farmer, a representative of Opportunity Austin, praised the agreement, saying it would bring “very strong jobs indeed” to Austin and provide any number of “intangible benefits” for the city.

“Apple is a marquee company and a global name,” Farmer said. “And I think Apple, by selecting Austin, has validated us as a very good place to live, work, and play — a very good place to come and create a career, have a family, have a life, and enjoy what we enjoy. That’s a very powerful message that will resonate around this country, if not around the globe.”

Many of those in attendance at yesterday’s meeting, including several representatives from the Workers Defense Project, raised the issue of Apple’s labor record and demanded that any agreement with the company include provisions for fair wages, fair labor practices, and benefits.

According to Apple, the average annual wage for a worker employed under the agreement in 2012 will be $54,000, rising to $73,500 by 2021. In addition, all employees, including all non-Apple contract employees, will receive health, dental, life, disability, and vision insurance; paid holidays; and employee training.

Taking up the cause of those concerned about the project’s labor guidelines, and saying the agreement was a “good thing I think we can make better,” Council Member Mike Martinez made an amendment to the proposal to guarantee fair labor practices at the new Apple site. That proposal stated, “Apple will comply with all applicable state and federal laws related to construction, including laws related to labor, equal employment opportunities, safety, and minimum wage. Apple agrees to make commercially reasonable efforts to work with the Workers Defense Project in an effort to meet this obligation.”

Representatives of Apple said they were amenable to such an amendment.

Council Member Kathie Tovo, who has voted against similar economic incentive packages in the past, said that though she had been struggling with her decision on the Apple agreement – particularly, she said, when “we are challenged in so many areas of our budget” – she decided in the end to support it because of what it would mean for Austin jobs.

“I think Apple is a really good company,” she said. “I think it does bring many good-paying jobs to Austin; it does provide domestic partner benefits and meets some of the other city values we have in terms of creating career paths for individuals. So while I do have some concerns about providing an economic incentive package, I think it will represent a good thing for Austin.”

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