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Austin city council approves $8.6M grant for Apple facility

post #1 of 22
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The Austin city council approved on Thursday a performance-based grant worth as much as $8.6 million for Apple's proposed plans to expand its offices and create as many as 3,600 new jobs in the city.

Local Austin TV station KVUE reported late Thursday that the council had reached an unanimous vote to approve the incentives. Apple's proposal iinvolves a $304 million investment and more than doubling the size of its workforce in Texas.

"We have thousands of people who are unemployed or underemployed who are looking for jobs, or better jobs than they've got right now, to make a living wage," said council member Bill Spelman. "I think we've got an obligation to make that available to them."

The city's incentives will stack on top of a Texas Enterprise Fund award approved by Texas governor Rick Perry. Apple will receive $21 million over 10 years from the TEF as it expands its local customer support, sales and accounting functions. Travis County is also considering contributing $6 million to the expansion.

According to the report, Apple will become the second-largest private employer in Austin, behind only Dell, if it follows through with the proposal. The company currently employs roughly 3,100 people at its Austin offices.


Apple's facilities in Austin, Texas, via WebProNews.


MacNN reports that the facility will be built on "38 acres of land with at least one million square feet of office space" and will function as a new "Americas Operations center" for the company.

Some critics have questioned whether Apple, which has amassed $100 billion in cash, needs the incentives, but city officials have called the negotiations "very competitive" because Apple was looking into other locales.

"What we are told is that there are other locations under consideration, Phoenix being one of them," said Dave Porter of the Austin Chamber of Commerce, as noted by KXAN.

[ View article on AppleInsider ]
post #2 of 22
Welcome to America in decline, a sad culture where, desperate for crumbs, the state bribes the corporations which own it.
post #3 of 22
I understand why things like this happen, but this is taxpayer money we are talking about. They are paying Apple to build facilities there, Apple, who has billions in the bank. What's NOT wrong with this picture.
Anyway, congrats Texas.
post #4 of 22
Quote:
Originally Posted by rbryanh View Post

Welcome to America in decline, a sad culture where, desperate for crumbs, the state bribes the corporations which own it.

Actually, that is quite normal and isn't a sign of decline. Large companies foreign and domestic routinely expect states and/or cities to grant them incentives for picking their city or town. This goes on all the time, and has for decades. If you are on the city council and you decide to say "no" to a large employer, they're free to take their business elsewhere. And you get nothing.

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post #5 of 22
Although, in the grand scheme of things $8.6 million dollars the potential return far outweighs the cost of this gesture.

Of course, in the current climate it would do Apple well to accept and then return the grant either in cash or a commitment of equipment and funding to the state schools and universities equaling or bettering the initial grant figure.
post #6 of 22
In the long term the grants are peanuts. Austin will get its investment back a thousand fold from Apple in the form of direct and indirect new jobs, new construction, taxes and new businesses that relocate because of and to support Apple.

Government's primary motivation is for it's own survival and well being. There's nothing altruistic about it. Government needs the tax money to survive. Business is the only source of tax money to keep government alive. Without business there's no need for government because there's nothing.

And Apple is the most successful business on the planet right now.
post #7 of 22
Quote:
Originally Posted by Mightymike View Post

In the long term the grants are peanuts. Austin will get its investment back a thousand fold from Apple in the form of direct and indirect new jobs, new construction, taxes and new businesses that relocate because of and to support Apple.

Government's primary motivation is for it's own survival and well being. There's nothing altruistic about it. Government needs the tax money to survive. Business is the only source of tax money to keep government alive. Without business there's no need for government because there's nothing.

And Apple is the most successful business on the planet right now.

Nailed it. Anyone crying wolf about Apple getting change money is focusing on a very skinny tree in front of the forest.
post #8 of 22
Quote:
Originally Posted by alienzed View Post

I understand why things like this happen, but this is taxpayer money we are talking about. They are paying Apple to build facilities there, Apple, who has billions in the bank. What's NOT wrong with this picture.
Anyway, congrats Texas.

This is ridiculous.

Apple is going to spend $304 M in the area and create 3500 new jobs. Let's say those jobs only pay $30 K each - you're looking at $100 M per year in new employment income. Typically, when you consider things that those employees spend money on, there's a multiplier effect, so the total value to the local economy is the $300 M initial investment and roughly $300 M per year in new income.
(http://www.publicnewsservice.org/ind...rticle/18101-1)

Typically, these performance grants are spread out over 10 years. So we're looking at $3.3 B in new income over the next decade.

Austin had a choice - not spend $8.6 M and forego the jobs and revenues or spend the money and obtain the jobs. They were not going to get all those jobs and income without spending the money. Furthermore, they're spending money that they will receive from the deal, so it's not like it comes out of current tax revenues.

I really wish all the "Apple has lots of money" people would stop with their nonsense. Apple is not a charity. Nor is the city of Austin. They made a decision on how to invest for the future.
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post #9 of 22
Quote:
Originally Posted by jragosta View Post

This is ridiculous.

Apple is going to spend $304 M in the area and create 3500 new jobs. Let's say those jobs only pay $30 K each - you're looking at $100 M per year in new employment income. Typically, when you consider things that those employees spend money on, there's a multiplier effect, so the total value to the local economy is the $300 M initial investment and roughly $300 M per year in new income.
(http://www.publicnewsservice.org/ind...rticle/18101-1)

Typically, these performance grants are spread out over 10 years. So we're looking at $3.3 B in new income over the next decade.

Austin had a choice - not spend $8.6 M and forego the jobs and revenues or spend the money and obtain the jobs. They were not going to get all those jobs and income without spending the money. Furthermore, they're spending money that they will receive from the deal, so it's not like it comes out of current tax revenues.

I really wish all the "Apple has lots of money" people would stop with their nonsense. Apple is not a charity. Nor is the city of Austin. They made a decision on how to invest for the future.

This is the only intelligent response so far, and well said.
post #10 of 22
Quote:
Originally Posted by rbryanh View Post

Welcome to America in decline, a sad culture where, desperate for crumbs, the state bribes the corporations which own it.

Quote:
Originally Posted by alienzed View Post

I understand why things like this happen, but this is taxpayer money we are talking about. They are paying Apple to build facilities there, Apple, who has billions in the bank. What's NOT wrong with this picture.
Anyway, congrats Texas.

Do you live in Texas? Then it isn't your taxpayer money. I do- and I'm happy. The county pays $8.6 million which it can easily afford (in Texas we have no state tax, so our property taxes are slightly larger- which means the cities and counties get more on the local level). Not to mention it will likely be in tax incentives- which they weren't getting in the first place with them NOT here. And the state is paying $21 million over 10 years (which they get a portion back via the enterprise fund)- and Texas, being the 15th largest GDP in the WORLD all by itself- can easily afford that.

Construction, maintenance, lawn crew, maids, window cleaners, etc are all going to benefit as well. And those new employees will buy houses, clothes, cars, couches, pet food, whatever- it all trickles back. 3600 employees @ an avg home of let's say $150k @ 3% property tax = $16 million a year. Not too shabby.

All this does is make Texas even that much better. I love our state.

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post #11 of 22
Quote:
Originally Posted by Andysol View Post

Do you live in Texas? Then it isn't your taxpayer money. I do- and I'm happy. The county pays $8.6 million which it can easily afford (in Texas we have no state tax, so our property taxes are slightly larger- which means the cities and counties get more on the local level). Not to mention it will likely be in tax incentives- which they weren't getting in the first place with them NOT here. And the state is paying $21 million over 10 years (which they get a portion back via the enterprise fund)- and Texas, being the 15th largest GDP in the WORLD all by itself- can easily afford that.

Construction, maintenance, lawn crew, maids, window cleaners, etc are all going to benefit as well. And those new employees will buy houses, clothes, cars, couches, pet food, whatever- it all trickles back. 3600 employees @ an avg home of let's say $150k @ 3% property tax = $16 million a year. Not too shabby.

All this does is make Texas even that much better. I love our state.

I should have made an attempt to quantify the tax benefits.

Sales tax. We're talking about $3.3 B of extra income over 10 years. Let's say that only 10% of that is actually spent locally. That means $330 M of extra local expenditures. Texas gets 6.25% ($20 M) while Austin gets 2% ($6.6 M).

Property tax. Average property tax in Austin is 2.1%. So a $300 M building is $6 M in property tax per year. In addition, with 3,500 new jobs, there will be at least 1,000 more homes (average of $100 K) so you're looking at an extra $2 M per year. Plus, all those new jobs and Apple campus will increase the average home value, increasing the property tax on the rest of the city.

So even the most cursory analysis shows that Austin will recover this investment many times over. In addition, you have all the added benefits of a vibrant, local economy which will add even more value.
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post #12 of 22
Quote:
Originally Posted by rbryanh View Post

Welcome to America in decline, a sad culture where, desperate for crumbs, the state bribes the corporations which own it.

Given Apple's recent declaration of a stock buyback and dividend, I figured that the taxpayers of Austin just paid for 5 HOURS of the cash giveaway. As an Apple shareholder, I say "Thanks!"

I've got no doubt that the city of Austin will quickly come out ahead, but I think there's no need for a municipality to risk the cash when it's such a trifling amount to the recipient.
post #13 of 22
Quote:
Originally Posted by macFanDave View Post

Given Apple's recent declaration of a stock buyback and dividend, I figured that the taxpayers of Austin just paid for 5 HOURS of the cash giveaway. As an Apple shareholder, I say "Thanks!"

I've got no doubt that the city of Austin will quickly come out ahead, but I think there's no need for a municipality to risk the cash when it's such a trifling amount to the recipient.

You're looking at it completely backwards. Whether it is a trifling amount to the recipient is completely irrelevant. What matters is whether it's a good deal for Austin or not.

Apple is going to put the facility wherever it makes the most economic sense. They will factor in labor costs, real estate costs, taxes, and any incentives given by the city. If you want to win all those jobs, you'd better have a competitive offering when putting all of those things together. It doesn't matter if Apple has a trillion dollars in the bank - they're going to look for the best deal.

From Austin's perspective, the evaluation is simple - do we get enough back to justify an $8 M investment? The answer is clearly 'yes' as shown above. (Plus, as I read it, it's not an $8.6 M investment - it's UP TO $8.6 M, with the amount depending on results).
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post #14 of 22
Quote:
Originally Posted by alienzed View Post

I understand why things like this happen, but this is taxpayer money we are talking about. They are paying Apple to build facilities there, Apple, who has billions in the bank. What's NOT wrong with this picture.
Anyway, congrats Texas.

Some have mentioned this already, but maybe not as clearly, and the article also isn't clear. This is not cash being paid out by Austin to Apple. Apple is not receiving any money from the city (not sure about the other deals mentioned about the county and state). This deal is a reduction in future taxes that Apple would normally have to pay. If Austin didn't want to do it they would have the same amount of money in the near term, but less jobs. However by giving the tax reduction grants they get the jobs now in addition to tax money later on.

It works this way with just about any large business across the nation. All the car dealerships in my home town north of Chicago moved out in the mid to late 1990s because the fast-developing town next door offered them huge tax incentives to relocate. The city government in my town wouldn't match the incentives so the car dealers left. My town lost the future tax revenue and all they have to show for their boneheaded decisions are large patches of concrete and rundown buildings where the dealerships used to be. Austin made a very good decision.
post #15 of 22
Quote:
Originally Posted by GregInPrague View Post

Some have mentioned this already, but maybe not as clearly, and the article also isn't clear. This is not cash being paid out by Austin to Apple. Apple is not receiving any money from the city (not sure about the other deals mentioned about the county and state). This deal is a reduction in future taxes that Apple would normally have to pay. If Austin didn't want to do it they would have the same amount of money in the near term, but less jobs. However by giving the tax reduction grants they get the jobs now in addition to tax money later on.

It works this way with just about any large business across the nation. All the car dealerships in my home town north of Chicago moved out in the mid to late 1990s because the fast-developing town next door offered them huge tax incentives to relocate. The city government in my town wouldn't match the incentives so the car dealers left. My town lost the future tax revenue and all they have to show for their boneheaded decisions are large patches of concrete and rundown buildings where the dealerships used to be. Austin made a very good decision.

You are correct. The AI article simply called it a 'grant' which usually means a cash payment. When you check the Austin papers, it's a tax reduction - so it' s no brainer.
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post #16 of 22
Quote:
Originally Posted by jragosta View Post

This is ridiculous.

Apple is going to spend $304 M in the area and create 3500 new jobs. Let's say those jobs only pay $30 K each - you're looking at $100 M per year in new employment income. Typically, when you consider things that those employees spend money on, there's a multiplier effect, so the total value to the local economy is the $300 M initial investment and roughly $300 M per year in new income.
(http://www.publicnewsservice.org/ind...rticle/18101-1)

Typically, these performance grants are spread out over 10 years. So we're looking at $3.3 B in new income over the next decade.

Austin had a choice - not spend $8.6 M and forego the jobs and revenues or spend the money and obtain the jobs. They were not going to get all those jobs and income without spending the money. Furthermore, they're spending money that they will receive from the deal, so it's not like it comes out of current tax revenues.

I really wish all the "Apple has lots of money" people would stop with their nonsense. Apple is not a charity. Nor is the city of Austin. They made a decision on how to invest for the future.

I agree that from a practical standpoint, it's proper for Austin to pay the $8.6 million. But it was obnoxious for Apple or any company to ask for it and I personally think that any direct payments or tax breaks to a corporation of this kind should be illegal.

It's one thing to ask for infrastructure improvements - if for example, the new Apple facility required expansion of a road or a new or improved exit off of the highway or additional bus service or something of that nature - but I don't think companies should receive cash payments or tax breaks from localities, especially when most governments are so poor and Apple is so rich. While this one looks like a good deal for Austin, in many cases, taxpayers just wind up footing the bill in the form of decreased services or increased taxes. That $8.6 million could pay for 57 new starting teachers for three years.

It's one thing to act on behalf of the corporation. It's quite another to be a corporate bully and take advantage of people because we're in a poor economy with high unemployment, especially for a corporation with the kind of profits that Apple has. But it is nice to see Apple spreading out the corporate infrastructure outside of California.
post #17 of 22
Quote:
Originally Posted by zoetmb View Post

I agree that from a practical standpoint, it's proper for Austin to pay the $8.6 million. But it was obnoxious for Apple or any company to ask for it and I personally think that any direct payments or tax breaks to a corporation of this kind should be illegal.

It's one thing to ask for infrastructure improvements - if for example, the new Apple facility required expansion of a road or a new or improved exit off of the highway or additional bus service or something of that nature - but I don't think companies should receive cash payments or tax breaks from localities, especially when most governments are so poor and Apple is so rich. While this one looks like a good deal for Austin, in many cases, taxpayers just wind up footing the bill in the form of decreased services or increased taxes. That $8.6 million could pay for 57 new starting teachers for three years.

It's one thing to act on behalf of the corporation. It's quite another to be a corporate bully and take advantage of people because we're in a poor economy with high unemployment, especially for a corporation with the kind of profits that Apple has. But it is nice to see Apple spreading out the corporate infrastructure outside of California.

Good thing you're not in charge.

II'd hate to invest in a company which said "we have plenty of money in the bank so we're not going to try to get the best deal we can get."
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post #18 of 22
I don't have a problem with either side in this, but you're either a capitalist or you're not.
post #19 of 22
Quote:
Originally Posted by rbryanh View Post

Welcome to America in decline, a sad culture where, desperate for crumbs, the state bribes the corporations which own it.

This culture is sad and declining because of sentiment such as yours. Apple doesn't owe anyone a job. It is a privilege, not a right, to have a great job at a great company. If you want to do better, start your own company and end your juvenile whining. Hopefully, your shareholders will oust you from your role as CEO when you don't seek out tax incentives and try to save money for your company.
post #20 of 22
Quote:
Originally Posted by zoetmb View Post

I agree that from a practical standpoint, it's proper for Austin to pay the $8.6 million. But it was obnoxious for Apple or any company to ask for it and I personally think that any direct payments or tax breaks to a corporation of this kind should be illegal.

It's one thing to ask for infrastructure improvements - if for example, the new Apple facility required expansion of a road or a new or improved exit off of the highway or additional bus service or something of that nature - but I don't think companies should receive cash payments or tax breaks from localities, especially when most governments are so poor and Apple is so rich. While this one looks like a good deal for Austin, in many cases, taxpayers just wind up footing the bill in the form of decreased services or increased taxes. That $8.6 million could pay for 57 new starting teachers for three years.

It's one thing to act on behalf of the corporation. It's quite another to be a corporate bully and take advantage of people because we're in a poor economy with high unemployment, especially for a corporation with the kind of profits that Apple has. But it is nice to see Apple spreading out the corporate infrastructure outside of California.

Actually, the citizens benefit because more folks have money to spend on things like entertainment and larger/better homes with increased property value and more energy efficient technology. The city is spending money now to make more money later on sales and property taxes. I hate the republican and democrat parties for different reasons, but the latter seem to have their mind boggled by really basic economic concepts, and it is frustrating to no end.
post #21 of 22
Don't be fooled these positions, especially CCare are more than likely Temp to hire. It's a sad sight but that is how Apple operates via temporary/contracted agencies with shady operations i.e. VOLT I hope this is not the case with Apple with this commitment.

Yes I am disgruntled APPLE fanatic and it was VOLT that ruined my dream
post #22 of 22
Quote:
Originally Posted by Macmanjimmy View Post

Don't be fooled these positions, especially CCare are more than likely Temp to hire. It's a sad sight but that is how Apple operates via temporary/contracted agencies with shady operations i.e. VOLT I hope this is not the case with Apple with this commitment.

Yes I am disgruntled APPLE fanatic and it was VOLT that ruined my dream

VOLT has one of or the highest permanent hire rate(s) of any temp agency. Sounds like you simply didn't make the cut and are blaming Apple/VOLT. You can reapply at VOLT 6 months after your assignment has ended, so long as you weren't let go for misconduct. Step up your game and try again.
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