Monday, January 7, 2013

Rotten Apple

Any wonder why I'm mad?

Last June, Apple scored a sweet publicly funded bailout plan to build a new data storage facility in Northern Nevada. That plan was agreed to on certain conditions. One of them is the completion of a business and fabrication center in Downtown Reno. Yet so far, there's still no business center in Downtown Reno.

"The project is being proposed to be completed this year," said Craig Willcut, the president and CEO of United Construction during a Reno Planning Commission meeting in late September when the project was still in the approval phase. "The tenant is planning on occupying in December, so it's a fast-track project."

Today, the land where Apple is expected to build a 15,000 square foot building in downtown is still undeveloped. An approved building permit for the project has been sitting at Reno City Hall since late October waiting for a contractor to pick it up and pay $38,961 in permitting fees, according to Reno officials.

Willcut said he could not comment on the project and calls to developers working on the project did not return phone calls seeking comment.

So what does the delay mean? Who knows.

Regardless, Apple's plan for downtown Reno is to use the Tourism Improvement District known as the Tessera District the Reno City Council approved in 2009.

By setting up shop within the district, Apple would be able to purchase its computer servers for the data center while benefiting from a 75 percent sales tax break on purchases made within the district. Data centers require regular computer server replacements, a cost that adds up over time.

Apple promised to open this business center in Downtown Reno. And the construction firm hired by Apple promised to complete and open this business center by December 2012. Yet it's January 2013, and there's still no business and fabrication center in Downtown Reno.

Is this just an innocent SNAFU? Or is there something more sinister to this? I'm reminded of what we discussed back in August.

Remember, Apple is being given $89 million worth of tax breaks. The state discounted 85% of property taxes for up to 30 years. The state also discounted all but 2% of the state sales tax for at least 4 years and up to 12 years. And Washoe County reduced Apple's effective county sales tax to a mere 0.5%. Apple got quite the sweet deal... And there's still no official contract? [...]

So we're willing to shower all this corporate welfare on Apple, but we're not willing to invest in our own people? We're willing to give Apple all the tax evasion bailouts welfare "special deals" it wants, but we're not willing to look out for our own long term economic health? Nevada, we have a problem. And it's more serious than you think.

This is why progressives and other tax reformers are so frustrated by what's been happening in Carson City. Apple scored an $89 million sweetheart deal. And Brian Sandoval touted this as "economic development". Yet so far, there's been little progress on the actual construction of at least one of Apple's promised "job creating" facilities.

What does Nevada have so far to show from the Apple bailout? That is, what does Nevada have to show other than the fact that Nevada is willing to reward companies for (mis)using our state to evade taxes elsewhere? (This is when we look at California.)

Yet when it comes to investing in real, good policies to encourage long-term economic health, Nevada is still very far behind. While Nevada government continues to dole out corporate welfare, it still can't provide the public infrastructure that's actually necessary for companies to start and grow here.

This is the chronic dysfunction that's at the center of Nevada government. And that "Gang of 63" in Carson City will need to get serious about fixing this if we're to ever have a functioning economy.

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