August 2, 2012
Apple Negotiates Tax Breaks For Nevada Data Center
Michael Harper for redOrbit.com — Your Universe Online
News broke in June that Apple was planning to build one of their green data centers in Reno/Sparks, Nevada. The resulting center and business park will cost an estimated $1 billion over the next ten years. Yesterday, the Nevada Board of Economic Development endorsed a deal which has been negotiated by the state to bring the Cupertino company into the towns of Reno and Sparks. According to the Associated Press, the deal offers $89 million in tax breaks, the largest in Nevada´s history.The endorsement of the Board of Economic Development, however, is largely seen as nothing more than a gesture, as the board doesn´t have the authority to change the agreement.
Nonetheless, the Governor of Nevada, Brian Sandoval has called the deal a “win,” saying Apple´s push towards Northern Nevada could bring in other businesses as well.
"If we had not implemented that statute we would not have Apple here," said Steve Hill, head of the Governor's Office of Economic Development, speaking to the Associated Press.
As the story goes, Governor Brian Sandoval and Mr. Hill were touring a cheese plant when they heard Apple was in town scouting out new areas to build out a new data center. Apple execs and Mr. Hill have been in talks since February to bring this deal to completion.
The Apple plan includes a 350-acre data center just outside the city of Reno in Sparks, Nevada to house their iCloud servers. Apple will also build a purchasing and business center in a run-down area near downtown Reno. All told, Apple´s presence could bring up to $340 million in economic activity over the next 10 years.
In addition to bringing the Apple name to the California/Nevada border, Reno has also been promised 35 data center jobs at $25 an hour, as well as the use of 200 local contractors. Apple could also spend upwards of $400 million in the first 4 years and up to $2 billion in 30 years. Nevada will get anywhere from $16 to $20 million over the next 10 years in taxes from Apple.
Though Apple will be writing some large checks to the Nevada government, they´ll be receiving some tax breaks for moving to the area. The iPad maker will get an 85% tax break on their property taxes, while the city of Reno has pledged 75% of their share of taxes to Apple for their proposed downtown business center.
Now, Apple and Nevada wait for the approval of these heavy tax abatements to move forward with the plans. According to Mr. Hill, Apple has already met all of the qualifications for the tax breaks.
These deals haven´t been made with unanimous approval, of course. Ross Miller, Nevada´s Secretary of State, questioned the 30-year tax deals.
“My daughter, who´s in kindergarten, will be my age and still subject to the deal approved today,” Miller noted.
There is a “claw-back” clause in Apple´s agreement, however, which makes the company responsible if investment and hiring targets are not met. Apple doesn´t appear to be worried about this, however, promising a $400 million investment in Reno and Sparks, Nevada.