A tax incentive package potentially worth tens of million of dollars that enticed Apple Inc. to build a $1 billion campus in Austin, Texas, has an extra sweetener.
Apple can create less than three-fourths of the initial 4,000 jobs it has pledged and still be eligible for incentives, according to a copy of the agreement obtained by Bloomberg Tax. That package includes a $25 million state grant and a 15-year-long, 65 percent property tax cut.
Apple has a target of creating an average of 600 jobs every two years to qualify for the property tax abatement, according to the economic development agreement between Apple and Williamson County—a region about ten miles north of Austin. But the company only needs to meet 70 percent of that goal to start getting a payback.
Greg LeRoy, executive director at Good Jobs First, a Washington-based policy resource center that analyzes tax incentives, said Dec. 14 that the agreement sets a “very low bar.”
“Apple would lose a pro-rated share of the tax rebate if it created between 70-99 percent of the jobs, but it wouldn’t lose the whole 15-year deal,” LeRoy said. “I still consider 70 percent to be a low bar for a long-term shortfall. Apple could fall short for 15 years and still keep the basic deal, albeit trimmed.”
In a Dec. 13 news release, Apple said its new campus “will initially accommodate 5,000 additional employees, with the capacity to grow to 15,000.”
A representative from Apple didn’t immediately respond to a request for comment on the economic development agreement.
Dec. 18 Debate
Apple announced Dec. 13 its plan to invest $1 billion in its new Austin campus.
“Apple is proud to bring new investment, jobs and opportunity to cities across the United States and to significantly deepen our quarter-century partnership with the city and people of Austin,” Tim Cook, Apple CEO, said in a news release.
The 133-acre campus is also a part of Apple’s pledge to create 20,000 new jobs in the U.S. by 2023.
Kasia Tarczynska, a research analyst at Good Jobs First, told Bloomberg Tax there is no way to estimate how much the company could benefit from the 65 percent property tax abatement but that it would “probably be in the tens of millions of dollars.” Tarczynska said the agreement will be debated by Williamson County officials Dec. 18, but she doesn’t expect there will be any roadblock to the plan’s approval.
“These type of agreements are typically sprung onto the public. There probably won’t be much public discussion, and it should be quickly approved,” she said.