Travis County Commissioners Court

May 1, 2012 - Item 24
Agenda

View captioned video.

24, Consider and take appropriate action on Economic Development Agreement with Apple Inc.
we note that (this item may be taken into executive session pursuant to consultation with attorney and economic development negotiation section.

>> good morning.

>> good morning.

>> would you like me to open this up?

>> please.

>> I wanted to just do a quick recap of where we're at.
what we've done since meeting with the Commissioners court last week.
just as a refresher, the key terms to the apple agreement that you have before you and that was included in the posted agenda materials was approved by the Commissioners court, those key terms, on April the 17th.
in the agreement that you have before you today still reflects those terms. To recap those key terms, apple is planning to location an operations center, a major operations center in Travis County.
as part of that, they are -- they are planning a phased investment that is valued at $282.5 million.
part of the agreement maintains that they maintain their existing job place of 3800 employees and new job creation of 3685 employees.
the rebate terms from the ad valorem taxes are 60% over 10 years related to the new construction associated with the new site and 40% over five years with a possibility of an additional rebate of 5% should they attain leed certification for their facility or should they hire another 5% for hiring at least 50% of Travis County residents in those new jobs.
now, as a result of the testimony last year, we took very detailed notes.
both -- both planning and budget office staff as well as the county attorney's office.
we've made a number of revisions to the agreement and those are all reflected in the -- in the documents that you have before you.
and we tried to strengthen and clarify the language wherever we could in response to some of the points that were made.
we did add a liveable wage component as well.
that was one of the additional features that -- that is now in the contract.
we're ready to answer any questions or there is also an apple representative in the audience who can certainly answer any questions as well.
thank you.

>> I think we received a copy of the revised reporting form last night.

>> that's correct.

>> did we make that available to judge aleshire and mr. Wendler.

>> yes, sir, we did.

>> court members, comments, questions?
so in response to the public -- sorry.

>> I had a couple of questions, but go ahead.

>> go ahead.

>> I was about to say in response to comments we received last week, we did make some changes and to some of the other comments I guess we responded to the person who gave the recommendations.
reasons why we thought that -- that the recommendation would not be incorporated into the revised document.

>> yes, we did that.
we got that out on late Thursday of last week.

>> okay.

>> last Thursday.

>> Commissioner Eckhardt?

>> on the annual report form, I haven't had a whole lot of time to review it.
but just at first blush a couple of questions.
I know that there was an issue with regard to apple not actually owning the -- the real property and the improvement.
will we ask for the -- for the ownership status of the real property and the improvement?

>> yes, I believe we will.
and we actually clarified the agreement to indicate that that -- that that's a condition of -- in other words, it must occur as part of the agreement.

>> and I probably just missed it, but where is it that the -- that the percentage of Travis County employees or Travis County residents -- I see.
how many full-time employees are residents of Travis County?
and with regard to the definition of full-time employee, does that include their contract employees or is it just apple employees?
in c.

>> I believe we split it out.

>> there's a split out in the contract jobs with regard to average salaries and to benefits, but I don't think it's split out with regard to percentage of Travis County residents.
I could just be missing it, though.

>> the total employees that we ask on that reporting form includes a contract employees, then we asked apple to -- to split out those contract employees and we will do the calculation to make sure that they are at the -- at the percentage.

>> right, but what I'm asking about is the Travis County residency five percent.
because it's -- it appears that it could be unclear in c, 3 c, whether that's -- that's how many full-time employees of apple are residents of Travis County or how many full-time employees credited under the agreement are residents of Travis County.
and it might just be --

>> yeah.

>> it's -- it could just be a semantic thing of clarification.
I just -- it seems a little unclear.

>> okay.
yeah, under c, how many -- on the reporting form, how many full-time employees are residents of Travis County, complete this section, if company is requesting additional 5% incentive outlined in 5.2.2.
so that the ambiguousty in that state -- I was wondering if the term full-time employees includes the term contract employees.

>> it does.

>> third we might want to clarify that.

>> we can do that.

>> in terms of 3 i, are contract employees meeting salary requirements as outlined, I'm wondering are we also asking, again perhaps I missed it, whether the contract employees are meeting benefits requirements?

>> I think that's included in salary requirements.
we can just make that salary and benefit requirements.

>> that would do it.

>> okay.
those were my questions.
on the form.
I also had a couple of questions for mr. Lundguard of apple.

>> hello.

>> hi, mr. Lundguard.

>> can you tell us your title with apple.

>> I'm jason lundguard, I'm

>> [indiscernible] western united states.

>> could you tell the court the demographic break down of your current 3100 person employee base in Travis County?

>> no, that's not information that we make publicly available.
apple, of course, is committed to maintaining a diverse workforce.
we are an equal opportunity employer.
we have internal programs in place to make sure that we recruit and retain talent from underrepresented -- underrepresented communities.
federal contractor, they have strict standards in place we are required to meet as far as establishing and maintaining those programs, that should give the county some level of comfort that we are in good --

>> would you tell the court the geographic distribution of your workforce.

>> that's not something that I can provide at this point, either.

>> will you provide it?

>> no.

>> we would like to work with apple to help you achieve whatever diversity goals apple does have.
we would also like your help in providing employment to our neediest Travis County residents and we have some wonderful workforce training programs that I think that you would find are training up some excellent candidates for the very jobs that you bring.
will apple enter into a partnership with Travis County to -- to provide job opportunities to those economically disadvantaged but well trained individuals?

>> obviously, as we have gone through this process, there has been a lot of attention paid to hiring of economically disadvantaged individuals.
it's something that while it no longer is a performance element in the contract, it's something that throughout this process we've been engaging in conversations with the programs that the county has pointed to.
those conversations have been very productive so far and we -- we're going to continue those moving forward.
and, you know, we're happy to listen to suggestions from the county about any programs that they feel are -- might be particularly valuable and result in a strong partnership with apple and the workforce training program.

>> is apple interested in -- in -- does apple continue to have any interest, I know there was some interest early on, in including some mutually agreed upon goals for the hiring of economically disadvantaged but well trained Travis County residents into apple positions?

>> no.
I think as we were discussing this, that was brought up in the context of a different deal structure.
something that as the negotiations progressed was removed from the deal to reflect the new structure that was laid out and negotiated between the county and the company.
so we're happy to -- we're happy to continue to partner with the groups that and programs that share our commitment to helping provide a diverse and qualified workforce.
that's something that we're willing to do.
but I don't think it's appropriate to include as a performance metric in the deal.

>> and mr. Lundguard, did you have any comments on the April 28th new york times article detailing how the effective tax rate for apple is something less than -- slightly less than 10%, considerably lower than other -- your other corporate peers?

>> I'm not qualified to comment on our corporate tax structure.

>> well, this is a tax rebate deal that we're discussing.

>> yes, as it relates to this particular tax rebate deal, I would point out that Travis County is going to receive an excellent economic benefit from the course of this deal.

>> but we are foregoing --

>> let's let him finish his answer.

>> right.
it's structured as an economic agreement deal, which it will result in apple investing more than $280 million in Travis County.
as your web loci analysis points out, Travis County will receive over $15 million in economic benefit from the course -- over the course of this deal.
that does not include economic benefit that goes to Travis County health, Austin community college district, Round Rock independent school district, it also does not include the economic benefit that will be received ongoing at the end of the deal that was -- those buildings that we put in place are going to remain here, they're going to increase the property tax revenue coming to Travis County.
I think it's an excellent deal for Travis County and something that -- that I urge you all to support.

>> could you tell me who within apple is qualified to comment on the 10% effective tax rate and how it relates to our foregoing 60% of taxes for 10 years and 40% of taxes for an additional five?

>> I think there was actually a -- a quite in-depth response that our company put out and I believe also appeared in the new york times, so I would refer you back to that.

>> I'm actually more interested in how it relates to our circumstance.
rather than the response to the new york times.
more globally.

>> what is your question about how it relates to your circumstance?

>> well, the new york times article laid out fairly clearly about the chasing of locations that had the lowest possible tax consequences for apple.
and since the state of Texas ranks I believe 40 -- 43rd in overall tax burden, that would appear to make us a high candidate for apple's location.
so my concern is with regard to an additional tax rebate, even above and beyond what is already a -- a low tax environment.
whether that -- I would like apple's comment on the tax strategy there.

>> I think you know I think that I have -- I have fully answered the question.
I think apple --

>> what I'm asking for is someone who can -- you said that you didn't feel that you were qualified to answer the question.
can you give me a name of someone to contact at apple who could comment on it?

>> I would refer you, if you are interested, to our press department.

>> and who there?
since you are the governmental relations person, I'm hoping for a --

>> I would be happy to follow up with you offline and provide that information.

>> that would be great.
but to reiterate, you will not provide, have not and will not be providing demographic information about your current employees or the geographic distribution?

>> all of that information and the -- the geographic distribution is something that obviously that there's a five percent portion of the agreement we're going to be moving forward and applying to receive that five percent.
that's something that will be verified by county staff annually.

>> actually I'm asking for a geographic distribution, not merely whether they live in Travis County, but where in Travis County they live, because we do see a geographic dispersion of opportunity and poverty that's troubling in our communities.
it would be very helpful to know the actual distribution.
not just whether someone lives in Travis County or not.

>> no.
that is not something that we are willing to provide.

>> thank you.

>> court members, any other questions for mr. Lundguard?

>> yes, judge.

>> Commissioner Davis.

>> thank you, judge.
how are you doing, mr. Lundguard, are you doing all right today.

>> yes.

>> good, good.
you know, I've been very I guess vocal about ensuring that there's outreach to the community and especially the impoverished community, people that really -- that really are looking for job opportunities.
I have not yet heard you say that you wouldn't be doing that, that you would turn your back on these type of individuals within Travis County.
I haven't heard that from anybody from apple.
I understand that -- let me ask you this question.
you have -- you have organizations, such as a.c.c., such as workforce solutions, such as capital idea, such as american youth works, and others, american -- african-american men and boys,

>> [indiscernible] foundation, those type of organizations who have -- who have done a lot for this community as far as preparing individuals for employment opportunities.
let me ask this question, is there any prohibition why you, apple, cannot continue to use or utilize these persons for employment opportunities?
because I think it's very important that this community hear from apple to -- to let them know that these particular organizations will be used if the persons, of course, are qualified to do a certain task that apple requires.
there is a -- there is a job description that I had received basically looked the and it looked, basically talked about apple support services, apple care, g.e.d., other specialized training or high school equivalent, just the entry level situation.
the question that I need to ask you, is will you do continue to use these particular organizations that I have mentioned, or others, there may be others, as far as those organizations preparing themselves, or preparing the persons, rather, for employment opportunities with apple.
let me hear what you have to say about that.

>> yeah.
so the -- you know, the organizations that you mentioned, we've been having talks with capital idea, we've been having talks with the workforce solutions, we've been having talks with Austin community college, you know.
I think where we are on that is we're obviously interested to hear more about the programs they currently have in place.
how that measures with the skill sets needed at apple.
but really it's good go to be a two-way conversation.
it's not just what is your currents program.
it is what is your current program, what's it is curriculum, how can that be altered or tailored to provide exactly what not just apple, but other employers in the area need.
so that's -- that conversations that are ongoing, something that we're -- you know, we view as a -- you know, an opportunity to continue working with those organizations, moving forward and -- and again from what we have heard so far, it sounds like there's -- there's a very broad pool of qualified candidates coming through those programs, that's something that we obviously would like to avail ourselves of.

>> I had an opportunity to speak for -- to the first graduating class of young persons who had acquired certain technological skills, of course they are moving on to other skill sets.
but those particular individuals, young persons, were very, very inspired, anxious to do something positive in this community.
and that was with the african-american men and boys harvest foundation.
I have some -- a representative come here, I just want this to publicly hear exactly how there may be a coordination between what you are employing and what they are able to do as far as making sure that -- that that relationship between apple and segments of this communities who -- who -- who have been perceived as being forgotten, which is really not the case.
I would like for them to -- if the african-american men and boys representative, would you please come up forward, please.

>> not at this time, hold on.
not at this time.
mr. Lundguard is here, anybody else got questions for him?

>> okay.
well that's -- okay, thank you, judge.

>> just a comments a comment.
I think in our conversation we did have discussion about the economically disadvantaged people who -- who need some opportunities.
and in that discussion, I think that I mentioned capital idea, a.c.c., st.
edward's, those huston tillotson, that would probably have some -- some young people who would be ready for additional training and wouldn't have to start from scratch.
but they would bring certain skills to the job.
in that conversation, I thought that you heard that we were willing to continue conversations with them.
and I want to take you at your word.
that that will occur.
certainly there are some tremendous issues that we have to address here.
some wonderful things happen in Travis County that really attracts companies to come here.
and yet we still have pockets of folks who continue to be left out.
and so consequently, this court really, really thinks about -- about programs and training programs that we can get into and as you heard, one with our juvenile department, that we're -- that we're also trying to -- trying to bring kids out of -- out of despair and out of, you know, dead end situations that they may be in now, and bringing them forward to be eligible for some good things that are happening in this community.
so I will take you at your word that you are going to continue those conversations with them and -- and because I think the -- sometimes the hope is just something that we can really offer some of our folks.
that there is something for them to do that's better in the future.
thank you.

>> thank you.

>> any other questions for mr. Lundguard?
thank you very much, we appreciate it.

>> actually one, one.
I was wondering if you're in a position to be able to commit to apple's local hr, human resources, working with Travis County's gen program, the gainful employment model so that we can end should you are that our workforce training program are actually training people appropriately with the jobs that you offer.

>> I'm familiar with the gem program, I cannot commit to --

>> Austin academy, Austin area urban league, capital idea, goodwill, skill point, vaughan house, workforce solutions.

>> again, I don't know -- given your question, I don't know what that commitment would entail.
so I'm -- again, I'm happy to any information that you have about the gem program, please send it my way.
you have my contact information.
or you can route things through county staff.

>> perhaps the better division to work with would be the hr department.
your local hr department.

>> where all of this will be going, yes.

>> can you provide a name and a contact for that.

>> you have my contact information.
I can route it to our hr department.

>> it would be great if I could just have a contact, the hr department, rather than having to go through the intergovernmental relations person for the western united states.
that's your title, right?

>> no, it's not.

>> I'm sorry.
that's --

>> that's --

>> thank you, mr. Lundguard.

>> could I have your title then please?

>> can we move --

>> I'm sorry

>> [multiple voices]

>> can we make some of those chairs available.
leroy, if you all would just sit on the front row and be available.
dixon and other representatives from african-american men and boys.

>> could I get mr. Lundguard's title?

>> others, if you have come on this item, and would like to give comments, please come forward at this time.
we will break for lunch at 12 noon.
that's 30 minutes from now.
african-american, men and boys.

>> good morning, Commissioner, it's a great opportunity for us to be here and to share a little bit.
we do hope that the proposal being presented by apple is a proposal that would benefit all of the persons here in Travis County.
as we are noting, in Travis County, we are emerging to have two counties, two cities, one very affluent, sophisticated and another very impoverished, we would not be true to ourselves if we did not remember those who are less fortunate than us.
because our city cannot be great until all of us are great.
what we want to do is we want to provide an opportunity for all of Austin citizens to be able to enjoy all of the amenities and all of the things that Austin and Travis County can afford.
the way that they can do that is by giving them opportunities for employment.
and we do hope that this endeavor will provide that opportunity for so many who need something.

>> good morning, I'm janet johnson.
Commissioners.
chief operating officer for the african-american men and boys harvest foundation.
and we would like to investigate partnership opportunities with apple to look at a workforce development training opportunity for the lower wealth, lower resourced citizens of Travis County that we do serve, as reverend dixon has eloquently put it, we are passionate about the lower wealth, lower resourced or disenfranchised communities that walk through our doors every day.
and to see a child on the hip and, you know, a mother or, you know, someone who just lost a job who has maybe a limited skill set, we want to, you know, join hands with apple in working towards developing the type of applicant and employee that you see desirable, so that we can ensure more of our east corridor residents in Travis County do have equal opportunity, as you've stated, and diverse, you know, opportunity to enter those doors to give an input that would be significant to the advancement of your economic goals here.

>> okay.
and thank you so very much for those comments.
again, I was so impressed with the work that you have been doing.

>> yes, sir.

>> with working with our young persons in this community and of course teaching them to -- teaching them the skills that's necessary for them to succeed.
here's another opportunity for that to happen.
I just wanted to make sure that you were not left out of this process because I did not want anybody in Travis County to think, imagine, that I would be supporting a -- a rebate for someone who would turn their back on the persons that are impoverished and poor, have not had an opportunity, even though they required the skill set at a particular job set.
I wanted apple to hear this today.
along with the public out here, no -- no, I'm not going to turn my back on the folks in this community and we're going to see if you can -- if you can educate 'em and get them to the point where they get the skill set they need, I have no heard apple say that one time that they wouldn't look at employment opportunities for those that get the skill set.
you can do that, teach, instruct these young persons to get those skill sets with the requirement that apple is suggesting.
I think that we're going in the right direction.
but diversity in this community.

>> thank you all very much.

>> thank you.

>> if you would like to give comments during this -- on this item, please come forward.
give us your name and we would be happy to get your comments.
we got four chairs available.
so far only two speakers have indicated an interest in taking advantage of this opportunity.
all right, we have our third one, we have one seat available.
come forth.
okay.
mr. Wendler.

>> judge Biscoe and Commissioners, my name is ed wendler.

>> you all are probably tired of seeing bill and I up higher.

>> tired would be too strong of a word.

>> last week when I introduced myself, I said that I was going to change my name to don quixote, because I felt like I was jousting windmills.
this week I feel more like I'm in the really terrible movie of bill and ed's excellent adventure.
don't go rent it, because it's horrible.
thanks for listening to us, I really do appreciate it.
while I may not agree with you, on -- on incentives for apple, or that contractually the taxpayers interest are well protected or that contractually everything possible was done to require that apple hire people from all areas of town, or hire people that -- that are in need of a job, I want to publicly praise you.
unlike the city of Austin, you at least had a public process where taxpayers could weigh in and since you made some of the changes that -- that bill and I suggested, not nearly enough of them, but I assume that you were listening.
so I want to thank all of you.

>> thank you.

>> I'll be brief and just focus on one section of the contract.
which is the

>> [indiscernible] back section.
I think it's the most important financial section of this contract.
the way to think about a claw back section is that it's a money back guarantee, just like any consumer would get on a product.
and the idea is that when you buy a product and it's sold to you, with certain representations and promises about it's quality, size, shape or durability, a lot of times we'll ask for a money back guarantee.
generally the bigger the purchase, the more the consumer worries about that guarantee and how important that is.
in this case, basically we were making, the county is making 7 to $8 million purchase, what you are really buying is jobs and future tax base.
and you are paying for that with tax rebates.
and as consumers we all take risks when we buy products.
and we try to minimize that through guarantees.
but I think that a governmental entity shouldn't be in the risk taking business at all.
because it's tax dollars that you are investing or that you are using to buy these products, tax dollars are hard to come by.
and there's lots of uses for 'em.
and so if you are going to spend tax dollars to buy something, especially when you are spending 7 to $8 million of tax dollars, you ought to give guaranty that the product that you are buying is actually a good product.
the riskiest part of this agreement is that apple is really not committing to build a tax base today.
the apple representative who was here a minute ago said that they were going to invest $300 million and part of the bargain was that you got to tax that $300 million after the rebate period.
there's actually nothing in the contract that requires them to build that.
unlike a samsung plant where they committed to build the plant today and you gave them tax rebates, in this case what apple is committing to do is to build most of the building in the year 2021, roughly 10 years from now.
and in the interim, the county continues to pay tax rebates.
and unlike the annual yearly targets, you can't vet them each year.
so you are stuck in the situation of giving them tax rebates every year for 10 years and then you may discover that they've changed their mind about building the plant.
so that tax base that everyone is talking about is not contractually required by the contract.
the guaranty that you are getting is really the claw back provision.
generally in a negotiation when someone makes a promise to do something in 10 years, the very first question that the person on the other side of the negotiation asks is how do I know that you will really do that?
what insurance do I have that you will really build a building 10 years from now?
and generally, in business negotiations, you require some guarantee of that.
and the county is very used to using guaranties.
it happens all of the time.
as a developer, if I come in here with a subdivision, I said that I'm going to build the streets, you require that I give a letter of credit to make sure that I do that.
if I walked in here and I said: "please approve my plat, I'm going to build a subdivision, but I want to wait for 10 years until I build the streets," every department head in this county would start raising red flags.
they would want an absolute guarantee that 10 years from now I actually performed under that contract.
the claw back provision that you have now just says that you will get two years of the rebates back.
that's not a money-back guarantee.
that's like you are watching tv at night and someone comes on and says "if you buy this product, I'll give you a 25% -- if you don't like it, send it back and I'll give you 25% of your money back and you have to pay all of the shipping and restocking fee." and I don't even think that -- that I don't think the county would buy a vegematic from ronco with a 25% guarantee.
you are spending 17 to $18 million on this, I think that you ought to have a really good clawback provision that guarantees that the obligation to build the plant occurs 10 years from now.
if you don't do it, lots can happen in 10 years.
especially in the tech industry.
and if you don't get a guaranty or at least require that we get our money back, you could end up 10 years from now having given them rebates for 10 years and your only remedy is to get two years back.
I just don't think that's a -- that's a great business deal.
I don't think it ensures or guarantees that the taxpayers investment is protected.
so thank you.

>> thank you.

>> thank you.
judge aleshire?

>> good morning, judge, members of the Commissioners court.
I don't want to appear to be negative.
in the remarks that I've made to you in the past or now either.
I make these criticisms out of love and concern that I know you share for where we're headed in this community.
a news story this morning about this apple contract says that your contract remains firm, that apple must hire the 3,665 new employees by 2025 in the first batch of 300 new jobs by 2016.
but that's not quite true.
you still have a provision in this contract that says that if apple fails to deliver the jobs or new taxable value, you will consider lowering the requirements to something apple can comply with.
and another provision that says that if apple experiences the construction delay, you will let county staff extend the hiring schedule without even having the item on the Commissioners court agenda.
why in the world would you do that?
you wouldn't do that with a road contractor.
you wouldn't do that with a human services contractor.
and this morning we heard informal words about commitment by -- new commitments by apple to cooperate with local workforce training programs. Commissioner Eckhardt, I think that it's too bad that apple won't be more forthcoming with information about its current workforce and where they came from and whether they came through these workforce training programs and what the demographics are.
I think it's too bad, I think it's too bad for apple as well as for the taxpayers.
that they wouldn't reveal how they've done so far in the years they've been here.
and trying to hire people who are underprivileged.
and then we won't just have words here spoken in the Commissioners court that have no legal effect or have no sense of reality and truthfulness to them.
if apple has done well, it would be good to reveal that and have assurance to this community that's worked well for them.

>> and to repeat it with other corporations.

>> and to encourage it elsewhere and to show by example.
but secrecy is not an example of anything.
then on the other hand if they haven't done so well, it would be a warning to the stewards of public funds.
your contract specifically does not permit termination of the contract.
if apple fails to have a net increase in employees here by cutting back on the current 3100 jobs, yeah, there's a section that requires them to have the 3100 jobs, but it specifically excluded from the two provisions in the contract that permit you to terminate the contract if they fail to -- if they fail to do what they promise to do.
if apple were to decide to use only contract employees, instead of full-time employees with full benefits, your contract still gives them 95% of the tax rebate.
but I'm done trying to convince you to improve the wording of this bad deal.
you've made this deal with no tax abatement or tax rebate policy in force since the county's policy expired last September.
perhaps you and the haven't will see why you should have a smart, focused policy in place at all times and not approve tax incentive contracts that contradict that policy.
in the next few weeks, you're going to consider your new tax abatement policy.
taxpayers can only hope that you are not going to use this apple contract as an example of what your new policy will permit.
in a community with the attractions Austin has to offer, tax incentives should be used sparingly and wisely reserved for those companies who bring a lot of good, permanent jobs here in the next few years.
one or two or three years.
the sad truth is that your contract doesn't require apple to bring the first job here.
until March the 2017.
almost five years from now, but gives a 15 year tax kick back to apple.
too often promises to poor people in Austin that they'll get a job as a result of tax breaks for big, rich companies turns out to be a cruel hoax.
like the national tax policy debate we're having, the trickle down benefits fail to reach those people deep in the well of despair.
this failure is one reason Travis County has a high and growing poverty rate and we must ask our leaders to give special effort to share the enormous fruits of economic development, because it's not happening on its own.
and such is the case with the tax benefit you are giving today to the richest company in america, because if a poor person gets a job with apple between now and January 2031, the first time you can fully enforce your five-year clawback provision, it will not be the result of anything you required in this contract.
so I truly hope that you will view your vote today for the apple contract as something that you have done special for apple because you think apple is special.
and not because you think this contract represents good public policy that will help the least among us be better off.
and I do sincerely thank you for your patience and openness in listening to the diverse points of view about this important issue, thank you, judge.

>> thank you, judge aleshire.

>> thank you.

>> mr. Pena.

>> good morning, judge.
gus pena, native east Austin night, proud united states marine corps veteran, proud graduate of albertson johnston high school.
I have heard a lot of rhetoric.
I was not able to make the other public meetings I was told once this issue is in executive session, there will be no vote, no discussion, but there was.
I could have filled this area up with veterans, people who need jobs, youth.
how many times have I mentioned about hiring the youth?
how many times have I mentioned that we have a high unemployment rate here in Austin, Travis County?
how many times have I told you that November and December '07 I called the Austin state of Texas, specifically here in Austin, john hockenyos and also angelou angelos says we're not in a recession, the newspaper says since '07.
I have been many titles, work for the state, city, county, federal governments, one of most appreciated titles is discrimination complaints about the department of justice.
I want equity.
I ran for councils on the platforms of the senior citizens, youth, the poor, don't anybody tell me what low ses level is in the poverty and the city and county.
I know.
I can tell you about being homeless, about veterans losing their homes and jobs.
veterans not being employed.
youth that graduate from high school are not being employed.
we have an opportunity here to bring some disability to Austin Travis County.
there are issues that I don't agree.
there are issues that I don't agree with.
I worked with the at cap program at juvenile probation, Austin Travis County advocate program, to have and give hope and jobs for our youth.
I was given the title of youth and senior citizen advocate when we ran for city council.
we need jobs, we need opportunities, we need people to dialogue.
judge Biscoe and Commissioners, I just heard a statement a while ago that mr. Aleshire had been given some sort of response or some sort of information from y'all.
okay.
isn't that discriminatory?
what about the public?
why didn't they divulge it to us, give it to us, also, we're taxpayers.
I'm not as smart as some of you all are.
I think that I'm not dumb.
give us an opportunity to work with you all closely?
sarah, I can tell you where the poverty is, you all won't listen to me.
I can tell you the unemployment is, you all won't listen to me.
neither will the city council.
I was supposed to have run for the city council this year, I cannot because I'm trying to get my son to graduate.
okay.
what kind of future does our people have, bring jobs in, with good -- a good wage, liveable wage, so they can sustain their livelihood.
okay.
I have spoken with these people.
and I get good vibes and good feedback.
I respect bill aleshire.
bill, how many times did we tangle when you were a county judge?
many times, right.
I won most of them.

>> [laughter] but the issue is this --

>>

>> [indiscernible]

>> god bless you, bill.
we need jobs.
we need to have a better dialogue.
but you know what?
I have worked with -- and mike can tell you, sometimes I clash with the chambers of commerce.
but you know they've been straightforward with me.
the guy from apple, mr. Lundguard, has been straightforward with me.
a guy that has been -- well, you know times you are a nobody.
I believe in that, let's work together to bring a fair, equitable, performance process issue and process here in Austin Travis County.
to bring in jobs for our people.
we can't wait anymore.
we're losing too many people.
you want to go in a tour with me to show you where poverty is?
I'll take you there.
that man right there, Ron Davis, has been a big help to the county.
judge, I love you, man, because you've been one of the best, too, also.
this guy, judge Biscoe I love him because he's helped out a lot of people whereas a lot of people have not.
let's work together with them bring, you know, jobs into Austin that pay good jobs with benefits.
let's just not talk political rhetoric.
I'm sick and tired of it.
our people are dying.
kids are going into backs, four cartels here in Austin that recruit at elementary school level.
can't have that.
judge?
vote appropriately.
let's work together on these issues.
I'm not sorry for my statement here, but I support apple, I support the chamber of commerce, also, there are some issues that you need to work on.
you will do it.
we elected you to do it is best interest for the public taxpayer, do it, include us, also, thank you very much.

>> thank you, mr. Pena.

>> is the reason that the employment schedule has the first 300 new full-time jobs in December of 31, 2016 that that's how long it's estimated for the first phase of the facility to be constructed?

>> yes, that's correct.

>> just for the record, we did leave some authority in the contract for the county executive of planning and budget.
and what did we leave in, what did we take out?

>> the only piece I believe that we left in, it is in section 5.1.2 b 3.
and it is basically if there is a construction delay, that results in basically a delay to bring on the jobs in a timely fashion, because the facility is not there, then the county executive has the ability to work with the company and -- and modify the -- modify the contract.

>> so how do you see that working?

>> the way that I would see that working is -- is in terms of the construction schedule itself, looking at factors that, for example, would be beyond the company's control and it would be probably primarily related to permitting, now in terms of keeping the court informed, the county executive that you see before you here right now, would certainly keep the court informed about what was going on.
so there would be regular reporting and I would not be making those modifications in a vacuum.
I would certainly be keeping y'all fully up to speed as to what was going on, what the rationale was and, you know, fully investigating those avenues and communicating them with you before anything was -- was -- administratively modified between the county and -- and the company.

>> okay.
mr. Nellis, how do you see the clawback provision working?

>> well, the provisions in the contract not only include those five year provisions at the end of the project, but as judge aleshire, mr. Wendler pointed out, they do have withholding provisions on an annual basis.
and whether or not the five-year clawback or recapture provision has a whole lot of teeth, I would like to give you an example.
if in fact apple puts $282,499,999 worth of construction on the ground by the end of the contract period, and miss the investment by one dollar, this contract allows for that Commissioners court to require apple to repay over $2 million.
in my opinion, that has some teeth to it.
now, I have used an extreme example and we know that if apple gets to 282 million, that they are going to make sure that they get the investment.
and I can assure you that over the last several years in working with the samsung agreement, that we have gone in staff for the court and ensured that they meet the investment and I think that you know what happened on the samsung agreement was they far exceeded with their currents fab the requirements under that agreement.
but there are teeth in the five-year clawback.
and I can say if they miss the employment, under this agreement, by one employee, over that -- over the terms of the contract, they can lose five years.
they can hire all of them except one employee.
and lose over two million.
so in my opinion, I think that you've got a clawback that -- that will ensure that apple will -- will complete the requirements.

>> any other questions from staff?
move that we approve the proposal's agreement.

>> second.

>> plus the attachments.

>> second.

>> discussion on the motion?

>> just to comment, judge.
I don't fall to apple or any corporation for seeking out the most qualified employees from as far away as the employer is able to attract talent.
that is free market at work.
but when an employer asks that they receive preferential tax treatment from a taxing entity, I think it's entirely appropriate for the taxing entity to demand conditions with regard to employment.
and that those conditions include employment for individuals who are within that taxing entity and are most in need of the type of employment the employer provides.
I am disheartened that we have not established strong enough conditions with regard to employing Travis County residents, particularly those most in need of these jobs that are very well suited to them.
and I will vote no, therefore.

>> it would seem to me that based on what we have heard, the county, the city, and the state, could do a better job of graduating otherwise unqualified persons from some job training program where they meet not only apple's criteria, but the criteria of other major employers in the area.
we have gone round and round over that issue and not been able to be persuasive.
I'm taking apple at its word that if we help generate qualified applicants from economically disadvantaged groups, then they will do the right thing.
at the same time, I think that Travis County should pick up its efforts.
I am not sure how many of our employees live outside of the county, but I know the number is large.
last time we looked at take-home vehicles, a lot of county employees with the authority to take home county vehicles, which we pay for maintenance, gasoline, everything, the whole ball of wax, the number was large, so I have no reason to think that doesn't apply across the board.
we could hire more economically disadvantaged here at Travis County.
we ought to.
we ought to probably provide more leadership.
so I'm taking apple at its word and I'm also hoping that the Travis County Commissioners court, the city of Austin and state of Texas develops a good working relationship with apple so as we do a better job of doing the right thing, apple will follow our lead.

>> judge?
with that, I agree with a lot that you have said.
I agree with what I heard from the apple representative, lundguard.
he -- I don't think that he will go on record before this Commissioners court as far as -- as far as not fulfilling the outreach effort that I think is so critical to address -- to address the economically disadvantaged.
I think the persons in this community, the organizations that work within Travis County, such as workforce solutions, such as the capital idea, such as the american youth works, and others, such as the african-american men and boys harvest foundation, those groups are bona fide, they are real, they deal with Travis County residents on a day-to-day basis.
they are not the only ones.
so I would have to take exactly what he said at heart that they would hire those persons that have been educated and have reached and met the skill set that I think any employer ought to have out there when they hire somebody.
they have certain skills -- there are certain skills that you have to have for a job description.
I took him at his word for what he said.
of course that does penetrate into the impoverished area of this community that we have realized.
there's some things that are happening here right now, I think gus pena brought up a lot of good points.
there's some things that are happening east of i-35 that you would not believe.
take precinct 4 for an example, who have some of the highest unemployment, the highest impoverished rate of poor persons in all of Travis County.
precincts is in the same -- precinct 1 has some of the same similar regards to a great extent.
and these particular organizations reached throughout all -- reach throughout all of Travis County.
of course we help fund some of these particular organizations.
for the services.
we purchase services from them.
and to hear that apple will reach into the -- into economically disadvantaged, they pull persons in this community, I applaud them for it and assure if they require the skills, job opportunities will be made available for them.
of course we have a ways to still go.
when companies come in here and want to locate and maybe seeking rebates or either tax abatements.
we still have a ways to go.
it's not a situation whereby it's etched in stone, it may be this, it may be that.
it's no set situation.
I think everything is kind of individually done sometimes.
but of course we will work on coming up with an economic development policy that will kind of guide us a little better in the future as far as what we would like to acquire and as far as some of these incentives as we go through this.
but again, I would like to applaud apple for choosing Austin, Texas to locate and of course I would like to also welcome those persons that have come down and testified.
judge aleshire and others that have come down here to hear all different views and all different sides because that's what all of this is all about.
hear what the community has to say about what you're doing.
so -- but with all of that, withstanding all of that, and hearing what apple has said, with the number of jobs that they bring to this communities and also employing the impoverished community, economically disadvantaged in this community along with that, with the required skill sets, there's no way in the world I'm not going to support this motion.
in fact I second the motion so I'm going spoke support it.

>> Commissioner Huber.

>> I have already released my position statement, I won't go into detail on that, it's available.
I would like to add a couple of remarks.
first of all, the much ado about the taxing issues at the -- at the federal and state level.
I'm -- not just apple, but global corporations, is an issue that we do need to address at the federal and state level.
that is -- I would think that the fact that the focus has been on that in recent weeks presents a prime opportunity for apple to step up and really demonstrate to us in this partnership how they do work with the community, how the community does benefit from their presence.
but I would also say that this is a partnership.
I think one of the tendencies here is to try to get certainty out of specific commitments.
but when you are working over the long haul with a global corporation, with the opportunities that apple brings, there's no way that Travis County can understand or know the internal workings of a private organization of global capacity like apple.
by the same token, there is no way that apple can understand our needs, our opportunities, the dynamics of our community, so it's incumbent on us to develop and form a strong partnership here.
I believe that's in the offing, I believe that's on the table.
I think apple has indicated that, I think that we have indicated our interest in doing that, it's a two-way street.
so I applaud apple for their interest here.
I believe this project, this company's coming here will benefit us far beyond what the economic analysis offers up.
so I will be voting in favor of it and I do intend to play my role in helping develop that partnership out.

>> Commissioner Gomez?

>> I just want to kind of pick up on what has already been said, just very briefly.
one is that I think we need to work on our economic development policy.
and we do need to have some things in there that will avoid us being on a -- on a, you know, picking at each other, but rather become partners, make it very clear to companies who want to come here that we want them to be our partners.
I totally agree with what, you know, that partnership.
and especially when this community does have a reputation of -- of thinking of everyone across the -- across the county.
and so that needs to be clear in our policy.
the other thing is that I do know about what occurs in precinct 4.
I have taken those tours.
and I have seen those children in the schools who need people from our community to -- to go in there and help them with their studies.
help them with reading, the fundamentals.
and so we -- I know leroy calls on us to do that continuously, and I wonder how many of us follow up on that.
if we're really, really serious about these issues, then I think all of us have an obligation to step up and do what needs to be done.
so I look forward to working with leroy some more, whenever he gets back on that trying to recruit mentors and I would like to see our leaders take those tours to see those pockets of poverty.
it's not -- they are not in our minds, we didn't make this up.
they exist.
and so a lot of these -- we know what makes a child successful.
you read and you do math and you do homework and we involve their parents.
but it's those very basic steps that we need to kind of really, really make a commitment to.
and so -- so we don't have a policy for that.
but perhaps we need a dual policy for ourselves for leaders and see how much we are willing to commit and put all of those words into action.
so we have a lot of work to do ourselves as well.
so thank you.

>> we heard different numbers.
is the financial incentive 6 million, 7 million or $8 million?

>> well, if -- it depends.
for example, if just the base rebate is achieved, the 60/40, it's -- excuse me, it's $5.4 million over the 15 year period.
if -- if it goes all the way up to 70/50, it's 6.4 million.

>> so 5-4 versus 6-4.

>> all in favor?
show Commissioners Davis, Gomez, Huber and yours truly voting in favor.
those opposed in Commissioner Eckhardt.
move that we recess until 1:30.

>> second.
all in favor?
that carries unanimously.

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