Apple Inc. has announced it will create a $304 million operations center in Austin after being attracted by the “new Silicon Valley” of Central Texas and acquiring funding from the city and state.
A unanimous vote by city council approved $8.6 million in tax breaks for Apple when the company comes to Austin, which qualified the company for a $21 million incentive from Gov. Rick Perry’s state-funded Texas Enterprise Fund, a project designed to attract high-technology companies.
Austin Mayor Lee Leffingwell said he is very excited about the opening of Apple’s “Americas Operations Center,” which will be creating 3,600 management, distribution and advertising jobs in Austin.
“It’s a huge deal to have a top ranked company like Apple come here,” Leffingwell said. “Our tax payers will be making $14.6 million off of sales and property taxes related to the facility and put more people to work.”
Apple was also attracted to Austin because of the resources offered to the area by the large number of highly trained students coming out of the University of Texas, said Austin City Council member Bill Spelman.
“What brought Apple was the fact we have an elite computer science and electrical engineering department,” Spelman said. “This facility is going to be a backroom for our stock, and they know we have the people who can fill the positions, and the University was a big part of that.”
The vote came after a week of debate and negotiation with Apple on the necessity of using tax breaks to attract a company the size of Apple to Austin.
Leffingwell said the tax breaks were absolutely necessary in negotiating with Apple.
“If the city didn’t participate, the state grant would not have happened,” Leffingwell said. “I think if they had not approved the tax breaks, then Apple would have looked elsewhere. A company like Apple doesn’t tell us who they are in negotiation with, and they could have had 10 other offers.”
Leffingwell also said the contract with Apple was performance based and the company would have to meet benchmarks for job creation and job benefits.
While bringing a high-end employer like Apple to Austin is good for the city, tougher negotiations should have happened, said mayoral candidate Brigid Shea.
“Right now we are giving the signal that we are pushover to companies wanting to come here,” Shea said. “There hasn’t been initiative from the mayor’s office to be a tough negotiation on these issues.”
The city is giving money away to companies while also saying that Austin doesn’t have the funds to provide for basic services, Shea said.
“In 2011, the mayor’s office waived $4.3 million in fees for Marriott when it decided to open a new building downtown, fees that would have otherwise gone to the city,” Shea said “That same year it closed its pools and said it didn’t have enough money for the Trail of Lights or to take care of our parks properly.”
Shea said many Austinites are angry about giving away money to a company she claims would have come anyway.
“People are angry that we giving a tax write-off to the biggest company in the history of the world,” Shea said.
“Why are we giving away money if we don’t have the money to provide basic services.”