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Williamson tax incentives for Apple could double

Bob Sechler
bsechler@statesman.com
This is a view of the main entrance of Building 1 of Apple's existing North Austin campus off Parmer Lane. The company has announced plans to invest $1 billion to build a second campus nearby. [RALPH BARRERA/ AMERICAN-STATESMAN]

Apple Inc.’s planned new corporate campus in North Austin has been touted as a $1 billion project by everyone from Apple executives and local business leaders to Gov. Greg Abbott.

If the campus actually lives up to that billing, however, Apple could receive more than double the original estimate of $16 million in taxpayer-funded incentive payments that Williamson County has agreed to provide the company.

That's because the $16 million figure is based on an assumption that Apple won't come close to reaching a $1 billion investment during the 15-year term of the incentive deal, according to Williamson County documents obtained by the American-Statesman, even though Apple cited its plan for an "investment of $1 billion to build a new campus in North Austin" in the first sentence of its official announcement of the project last month.

Still, county officials said they don't consider it particularly noteworthy that the cumulative value of incentives for Apple could top their estimate if the company merely does what it has said it's going to do, because a higher figure would correspond to more tax revenue for the county.

"It is an increasing amount of revenue for the county no matter what the upper-end" value of the incentive ultimately totals, said Cynthia Long, a Williamson County commissioner.

Under the contract with the county, Apple is required to invest $400 million in the campus — not $1 billion — and hire 4,000 workers, in exchange for annual rebates totaling 65 percent of its county property taxes. Williamson County will keep 35 percent of the county property taxes paid by Apple, so the county's revenue will rise along with the property value despite the rebate.

Apple — one of the most valuable companies in the world with a recent market capitalization topping $730 billion — also has been pledged a total of $25 million for the project from the state-run Texas Enterprise Fund.

Work on the new campus, which will be near Apple's existing North Austin campus on Parmer Lane, will begin this year, the company has said, although the first employees aren't expected to start moving in for 30 to 36 months.

Williamson County officials previously released details of their Apple agreement. But they hadn't publicly given a potential range for the value of the financial incentives the county will provide, instead pegging the figure at "approximately $16 million" in a December news release when the Commissioners Court approved the deal.

The county provided a chart to the Statesman containing estimates of Apple's tax payments under the deal and the county's projected revenue, after the newspaper filed an open records request seeking the county's financial analysis of the agreement. When added up, however, the cumulative value of the annual financial incentives to Apple documented in the chart totaled about $13.5 million —  not the $16 million that the county cited in its news release.

Connie Odom, the county's spokeswoman, said the $16 million figure was "thrown around by a lot of people" during the early stages of wooing the project and then was inadvertently included in the news release. The chart adding up to $13.5 million is what the Commissioners Court reviewed before its vote in December, she said.

The $13.5 million forecast is the more refined figure, Odom said, but noted that it's still a rough estimate.

She said the county has been more focused on the amount of tax revenue the deal could generate, instead of the amount of the incentives payments.

"From the county's perspective, we are looking at how much we are going to collect in revenue because of the agreement," she said. "And the county will collect more revenue (from Apple) the faster they progress and the faster that they grow."

The figures in the county's chart are based on an assumption that the appraised value of the planned Apple campus will approach $400 million by the eighth year of the deal, before reaching it in the 10th year and remaining at that level through the 15th year. It also assumes no change in Williamson County's property tax rate during the 15-year agreement.

Based on that scenario, the cumulative value of the financial incentives to Apple would top $33 million if the projects ramps up to $1 billion at an identical pace. The portion of Apple's tax payment that the county would get to keep works out to a cumulative total of slightly more than $18 million on that basis, compared with about $7.2 million under the county's assumption of a smaller Apple investment.

Williamson County's financial incentives to Apple would climb if the project reaches $1 billion even faster, or if the county's property tax rate is increased. If either happens, however, county revenue from the deal also would rise.

An Apple spokesman declined to comment on the potential value of the incentive agreement.

Former Williamson County Judge Dan Gattis, who presided over the December vote by the Commissioners Court approving the Apple agreement, didn't return phone calls seeking comment. His term expired at the end of 2018.

Long noted that the site of the new Apple campus has had an agriculture exemption and previously generated little tax revenue.

"I looked at this as kind of a 30-year view of Apple moving into Williamson County," she said. The development should generate millions of new tax dollars for the county even after the 15-year incentive deal ends, she said, as well as an improved quality of life for residents through the addition of good-paying jobs in proximity to a major employer.

Current County Judge Bill Gravell Jr., who took office this month, agreed, saying in a written statement that the project's benefits will be felt "for decades to come."

But Greg LeRoy, a Washington, D.C.-based critic of taxpayer-funded corporate incentives, said Williamson County likely could have gotten those benefits for free, because academic research indicates incentives "almost never determine where a company relocates."

He also said the county's estimate of its tax break for Apple fits a pattern of local governments nationwide downplaying how much they stand to give away when they make such agreements.

"Politicians want to maximize the perceived benefits and minimize the perceived costs," said LeRoy, executive director of a nonprofit group called Good Jobs First that tracks incentive deals.

Long disputed that contention.

“There is nothing anybody was trying to hide in any way, shape or form" in Williamson County, she said, adding that she hasn't previously been asked about the potential range for the total value of the Apple incentives.