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Travis County finally approves economic agreement with Apple

Wednesday, May 2, 2012 by Elizabeth Pagano

More than a month after the city inked its deal with Apple Inc., Travis County Commissioners have given their final approval to a contract with the computer giant. Commissioner Sarah Eckhardt offered the lone vote against the agreement which provides for up to $6.4 million in tax rebates over the next 15 years.


Apple has already secured $8.6 million in tax breaks from the city and $21 million from the state’s Texas Enterprise Fund.


In return, Apple is promising to bring 3,665 jobs to Austin by the end of 2025, which will more than double Apple’s current Austin workforce of 3,100.


In the past week, the county has secured additional guarantees of a minimum salary for workers and minimum wage for contract workers. Though there has been an emphasis on creating local jobs, in the end, the incentive for hiring more than 50 percent from within the county amounts to a five percent, optional, increase in their base discount of a 60 percent reduction in taxes for the first 10 years and a 40 percent discount for the last five years of the contract. There is a similar five percent bonus for building the planned facilities to LEED certification standards.


Apple will develop the office space in two phases, developing about 200,000 square feet in phase one, and 800,000 square feet in phase two. The total investment is estimated to be about $282.5 million.


Most of the discussion at the Commissioners Court centered on the hiring of economically disadvantaged employees, a performance measure that was not included in the final draft of the contract.


“I am disheartened that we have not established strong enough conditions with regard to employing Travis County residents, particularly those most in need of these jobs that are very well suited to them,” said Eckhardt, before voting against the deal.


“I think that Travis County should pick up its efforts,” said Judge Sam Biscoe. “I am not sure how many of our employees live outside the county, but I know the number is large… We could hire more economically disadvantaged here in Travis County, and we ought to. We could probably provide more leadership.”


“It would seem to me that based on what we have heard, the county, the city and the state could do a better job graduating otherwise unqualified persons from some job training program where they meet not only Apple’s criteria, but criteria of other major employers in the area,” said Biscoe. “I take Apple at its word, that if we help generate qualified applicants from economically disadvantaged groups, then they will do the right thing.”


Jason Lundgaard, Apple’s local and state governmental affairs manager for the west coast, told the commissioners court that he would be “happy to listen to any suggestions from the county about any programs that they feel might be particularly valuable and would result in strong partnerships with Apple.”


Lundgaard fielded questions from Eckhardt who asked for demographic and geographic breakdowns of Apple’s current Austin workforce, and was denied on both counts. Eckhardt’s questions about Apple’s national tax strategy, as featured in this past Sunday’s New York Times also went unanswered


“I’m not qualified to comment on our corporate tax structure,” said Lundgaard. “As it relates to this particular tax rebate deal, I would point out that Travis County is going to receive an excellent economic benefit from the course of this deal… It will result in Apple investing more than $280 million in Travis County.”


“Travis County will receive over $15 million in economic benefit over the course of this deal. That does not include the economic benefit that goes to Travis County Health, Austin Community College District or Round Rock Independent School District. It also does not include the economic benefit that will be received, ongoing, at the end of this deal. Those buildings that we put in place will remain here. They are going to increase the property tax revenue coming to Travis County. I think it’s an excellent deal for Travis County.” said Lundgaard.


Former County Judge Bill Aleshire, who had previously expressed doubts about the deal, reiterated his concerns that the agreement was not tight enough to punish Apple for failing to meet the goals set out in the incentive agreement.


Promises to employ the poor in Austin often are a cruel hoax, Aleshire said. County leaders should give special consideration to making sure everyone could enjoy the fruits of the deal for the richest company in America.


“I’m done trying to convince you to improve the wording of this bad deal. You’ve made this deal with no tax abatement or tax rebate policy in force, because the County’s policy expired last September,” Aleshire said. “Perhaps you and the public will see why you should have a smart, focused policy in place at all times, and not approve tax incentive contracts that contradict that policy. In the next few weeks, you’re going to consider your new policy.”


According to Aleshire, the incentive agreement had been tightened in a number of ways based on his comments in prior weeks, providing more specificity to terms such as “completion date, construction delay and contract employees.” Annual reporting on Apple’s progress also will be made available to the public.


Commissioners agreed it was time to get a new policy in place. But most seemed satisfied that the agreement was sufficient to guarantee compliance. Leroy Nellis said Apple’s failure to invest even one dollar less or one job less than required would give the county the right to draw back $2 million of the incentives offered to the company. That drawing back of the incentive is frequently referred to as a “claw-back” provision.

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