Why is Apple Getting Tax Incentives?

HomeCity of AustinCity CouncilWhy is Apple Getting Tax Incentives?

Austin Won Apple Without Competition ‘The Arizona Republic’ Reported

Updated Friday, March 16, 2012 6:13pm

The Arizona Republic, that state’s largest newspaper, yesterday reported that Phoenix was never in the running to attract the Apple Inc. facility for which Texas has committed tax incentives, and both Austin and Travis County are considering doing likewise.

Governor Rick Perry is offering Apple $21 million in incentives over 10 years and the City of Austin is considering sweetening the deal with $8.6 million, according to the Austin American-Statesman. Travis County is also considering incentives.

Those incentives were based on the premise that Apple was considering Phoenix and Austin.

However, The Arizona Republic’s story published yesterday reported Phoenix “never had a chance” because the proposed site was on state land and “state trust land did not excite them” (Apple), so there was no Phoenix site reasonably in contention.”

“According to (Phoenix) Deputy City Manager David Krietor, who oversees the city’s economic development efforts, Phoenix did not even know Apple was considering the city until it was too late,” the Republic reported. When he found out, he hustled to clear obstacles for a site, to no avail. “The state Commerce Authority said we had been crossed off the list,” Krietor said, “but we didn’t even know we were on the list. In retrospect, we had no chance to make our case.”

The Statesman has reported that Apple plans to spend $304 million on land, buildings, and equipment for a 38-acre campus to be built in two phases at West Parmer Lane and Delcour Drive in northwest Austin. The new campus would create some 3,600 jobs at an average annual wage of nearly $64,000, 93 percent of which would be local hires, Mayor Lee Leffingwell told the Statesman.

Tax incentives are designed to woo companies when there is genuine competition for a business that promises to bring investment and jobs.

So why is Apple in line for millions of dollars in tax incentives?

Two prominent Austin men are asking that question and warning the mayor and county judge not to waste tax money to woo a company already committed to coming here.

Ed Wendler Jr., president of E.W. Development Co., and attorney Bill Aleshire of Riggs Aleshire and Ray PC, e-mailed Mayor Leffingwell and Travis County Judge Sam Biscoe this afternoon about the report that there really is no competition for the Apple expansion in Austin.

“Neither the Travis County Commissioners Court nor the City Council has voted in a public meeting to extend any tax abatements to Apple,” the statement said. “But, if The Republic (Arizona) news report is correct, Apple has already decided to come here. Granting a tax break to a company after they’ve chosen to come here is not an inducement for economic development, it’s an unlawful (and stupid) gift of public funds. With Mayor Leffingwell’s leadership, that’s exactly what Austin did with the F1 race as well, a race New Jersey got for free.”

Efforts to reach Mayor Leffingwell for comment late today were unsuccessful. The mayor’s policy director, Amy Everhart, said, “Our understanding is they (Phoenix) are in competition. You’ll have to talk to economic development because the mayor would not be aware of the details.”

Melissa Alvarado, media contact for Economic Growth and Redevelopment Services, initially said the department director and economic development manager were not available for comment. Alvarado later e-mailed a statement saying:

“We can’t confirm or deny the reports. We have no way to verify the information because we’re not privy to the specifics of what the company is considering as its options, but what we can say is that the company informed us from the beginning that Arizona and other locations (not disclosed) were under consideration, which was the impetus for the proposal.

“The city did a practical analysis as it would do with any economic development proposal and the return on the investment for this project would be over $14 million. Our main focus is the merit of the project and bringing those jobs to Austin.”

“This tax kickback game is one you should stop playing,” said Wendler and Aleshire’s message to the mayor and county judge. “It is unaffordable, unnecessary, and a betrayal to current residents who suffer instead of gain from the net results. Because Austin throws tax breaks around like candy from a parade float, it’s become almost malpractice for company representatives not to play this game as well. And it’s a risk-free bluff the companies can play because they are never required to swear an oath that without the tax kickback, the company will go elsewhere.

“Sell Austin, if you must, for its unique quality, but don’t sell us out,” the statement said.

Travis County Judge Sam Biscoe also was not available for comment.

To read The Arizona Republic story, click here.

To read the Statesman editorial, click here.

Disclosure: Bill Aleshire is attorney of record for two open-records lawsuits against the City of Austin, both of which are still pending.

This report was made possible by contributions to The Austin Bulldog, which operates as a 501(c)(3) nonprofit to provide investigative reporting in the public interest. You can help sustain this kind of reporting by making a tax-deductible contribution.

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