Apple and the city of Cupertino have reached an agreement that will see the tech giant paying more taxes to the city as part of the deal for its new Apple Campus 2 project.
The new deal is up to receive final approval Tuesday night. If approved, Apple’s tax increase will actually come from a reduction in the percentage of the tax rebate the city gives Apple each year, according to a report from the LA Times.
Under its current deal with the Apple, the city of Cupertino gives back about 50% of the sales taxes it receives from Apple-related purchases. From now on that number will only be about 35% of sales taxes.
Here’s what Cupertino Mayor Orrin Mahoney had to say about the new tax agreement:
“This item was one of many negotiated between Apple and the city of Cupertino as part of the development agreement. The Apple 2 campus is expected to have long-term impacts on the city with respect to traffic and other issues and Apple agreed to a financial offset for some of those impacts.”
The city originally agreed to the tax rebate back in 1997 – when Apple was on the brink of bankruptcy – in exchange for Apple moving more sales within the city. Its hard to forecast how much the tax deal will cost Apple going forward, however if you look to 2012 the company generated $12.7 million in sales tax but the city of Cupertino gave $6.2 million of it back.
Under the new agreement the city would have kept $1.8million more, which is a nice pay bump for a city with only $51.4 million in projected general fund revenues.
Apple plans to finish its campus by 2016, however its questionable whether they’ll meet that deadline. Over 20 buildings still have to be demolished off the property. Apple also plans to turn the area that is currently 80% concrete to 20% grass into 80% grass and 20% concrete with orchards of new trees and vegetation throughout the campus.
Source: City of Cupertino
Via: LA Times