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Business leader: Apple deal gets an ‘A’ for return on investment

This news story was published on August 31, 2017.
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Datacenter to be built in Waukee

DES MOINES – John Stineman, head of the nonpartisan Iowa Chamber Alliance, penned a column in The Des Moines Register Thursday laying out why last week’s Apple announcement is not only great for the state’s reputation as a worldwide technology destination, but also is a sound investment by state and local leaders.

From the column:

Let’s look at the facts.

  • Apple pledged a $1.3 billion investment to build a high-capacity data center that will start with two buildings (totaling 400,000 square feet) with potential for more. The data center will employ 50 Iowans directly, and according to Apple will create more than 550 construction and operation jobs (a conservative estimate compared to most data centers).
  • The State of Iowa pledged $19.65 million in tax-credit incentives to help bring the deal in the door.
  • The City of Waukee abated the property taxes on the project by 71 percent for 20 years, totaling $187.44 million in abated property taxes.
  • All told, it’s a total of $207.8 million in state and local incentives and a total of $1.3 billion in investment in Iowa.

For starters, this deal doesn’t cost Waukee or its taxpayers a single penny. The “investment” by Waukee is foregoing only a portion of a massive increase in its tax base. The proposed Apple site is currently used as farmland, and is taxed as such, bringing in less than $100,000 annually. Once Apple purchases the site, Waukee will yield $3.75 million annually in property taxes from the same land. That’s $74.9 million in new property taxes during the abatement period. And in the first year after the abatement, the city will get $13.2 million or more per year — assuming no increase in valuation.

The net cost for all of this for Waukee? Zero. It is literally all upside.

The decision to award $19.65 million in state incentives is not easy. It never is. It’s the taxpayers’ money. And unlike Waukee’s “all upside” proposition, for the state it’s a strategic investment.

Gov. Reynolds had to examine what the return on investment would be for all Iowa taxpayers.

It’s not just about 50 high-quality jobs. It’s about spurring economic activity through a capital-intensive project to create more jobs, more investment, more business and consumer spending, and more overall growth. The growth the project generates needs to be able to pay the taxpayers back with a demonstrated return on the taxpayers’ investment.

The governor knew that the project was guaranteed to generate no less than $19.65 million in sales and use tax — so the taxpayers are made whole just in the construction phase of the data centers.

Read the full column here.

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7 Responses to Business leader: Apple deal gets an ‘A’ for return on investment

  1. Anonymous Reply Report comment

    September 4, 2017 at 9:04 am

    After reading the A -apple deal in the globe today I might assume the A could have been in my lower trouser area for the Iowa property owners and anyone who pays public servants fatcats.

  2. Anonymous Reply Report comment

    September 4, 2017 at 9:00 am

    No that dullard said some worth county elected officials could be corrupt . Like the theft of someones inheritance (farm) by shady means.

  3. Anonymous Reply Report comment

    September 3, 2017 at 10:07 am

    Partial abatement of property taxes means an INCREASE in your property taxes and lowering of city/county reserve funds. Blow it out your corporate owned azz. TIF = RIPOFF – if not used for public improvements – sounds good on paper but costs taxpayers 1 million+ per job created. Look it up – google/gaggle?

    • Anonymous Reply Report comment

      September 3, 2017 at 11:28 am

      A tax abatement does not necessarily mean a increase in taxes for others, particularly in cites which have dynamic economies.

      I can tell you what does result in property tax increases – having decades worth of population decline where you know have fewer people to pay for infrastructure (like is Mason City or Worth county). This scenario is much, much worse than using tax abetments or other financial incentives to create a growing, robust economy.

      BTW, aren’t you the dullard who tried to claim that Central Springs School paid property taxes?

    • Anonymous Reply Report comment

      September 3, 2017 at 11:34 am

      Just noticed another error in your post. You said this deal would lower city/county reserve funds?

      This Apple project is still ADDING dollars to city/county/school district funds, even with the abatement. So by its mere existence, the city/county/school district will be receiving more funds than if the Apple Facility did not exist. Where the city/council/school district places those funds (whether in a reserve or general fund is immaterial to this conversation).

  4. Anonymous Reply Report comment

    September 3, 2017 at 8:22 am

    According to the Globe 9/3/17 this was a royal screwing for Iowa taxpayers but the elected officals $$$$$$$ would say – It’s a win win – yea! for their pockets and the corporations they are lobbing for. – 15% approval rating for elected officials = 15% are 100% honest ?

    • Anonymous Reply Report comment

      September 3, 2017 at 9:41 am

      Almost all of the incentive dollars are a partial abatement of property taxes. This is a excellent deal to leverage $3 billion dollars in investment (and despite the abatement, the project is still adding dollars to the coffers that otherwise would not be there).