Apple considers Austin for key facility

AUSTIN (KXAN) - The computer giant, Apple Inc., has picked Austin as one of two potential sites for its Americas Operations Center, the hub for the company in the Americas that will be second in size only to the company's global offices in Cupertino, Calif.

The city's offer, with the assistance of the state, came together in just two months, according to city officials. Austin will compete head-to-head with Phoenix for the operations center, which is an expansion of Apple's current operations, said Brian Gildea, Austin's economic development manager.

But while Phoenix is mentioned as a possible location for the operations center in Apple's application to the city, no reports have surfaced in the Phoenix media about any type of offer to lure Apple to the city.

Instead, Gov. Rick Perry, Mayor Lee Leffingwell and Apple all have issued statements implying the Austin deal was all but done once the incentive packages are approved by the city and state in the coming month.

“I am thrilled that Apple has decided to more than double their workforce here in Austin through economic development agreements with the city, county and state,” said Leffingwell. “This is a great deal for our citizens, as this will be another cash positive agreement for the City of Austin. Apple has been part of our community for many years and we are proud to welcome their Americas Operations Center, which will have thousands of good jobs available and will grow our economy even more.”

The deal could put another 3,600 Apple hires in Austin during the next decade, bringing the number of employees for the popular high-tech company to 6,735 by 2023.

The two-phase corporate campus, which will built on an additional 40 acres next to the existing Apple customer service center on Riata Vista Circle in North Austin, will be a million square feet of new space.

Apple is expected to break ground on the project in June, with the first phase of the project completed the following year.

According to Apple's commitment to Austin officials, the majority of entry level, staff, supervisor and manager employees will be hired from the local job market. Average annual wages are expected to range from $40,000 to $114,000.

The majority of positions will be entry level, and only a quarter of the jobs can be contract positions, according to an economic development agreement with the city. The city also has set a floor on average annual compensation for those who maintain continuous employment with the company.

The new campus will provide customer support, sales and accounting functions for Apple.

The work force is estimated to pump $15 million a year in purchases into the local economy -- from food to conference to lodging -- that will be subject to sales taxes.

In exchange for Apple’s $304.5 million capital investment to build a new campus and create these jobs in Austin, the city has offered Apple a performance-based grant investment of $8.6 million over a 10-year period. Gildea said no other project has equaled that total in his three years working at the city.

According to a spreadsheet the city created for the project, Apple will bring an additional $89.7 million in revenue to the city over the next 14 years. Costs of the project, in terms of expanded city services would be $75.2 million, leaving the city with a $14.5 million profit projected over the next 14 years. That profit includes the incentive package being offered by the city.

Apple, which already has 3,100 employees, initially approached Austin officials with plans for a potential expansion. The city ranks such projects for economic incentives on a 100-point matrix. A project must earn 60 points to be considered for a potential incentive. Apple scored a perfect 100 points, based on its goals and investments.

According to the economic development agreement between Austin and Apple, Apple will invest at least $56.5 million in property improvement by the the end of 2015. An additional $226 million must be invested in new improvements, machinery and equipment by the end of 2021.

A presentation on the proposal will be provided to the City Council at a Special Called meeting on March 15. Council members will consider the proposal on March 22.

Gildea said City Council must pass its incentive package for Apple to be eligible for a $21 million incentive being offered by the state's Texas Enterprise Fund . At that point, Gildea expects Apple to measure the Austin offer against whatever might be offered by Phoenix.