Nevada Economic Board Signs Off On Apple Tax Breaks But Finds Oversight Authority Limited Under New Law

CARSON CITY – The state Board of Economic Development today unanimously signed off on a package of tax breaks to bring Apple to Reno, but the panel found it had little authority over the deal reached after several months of closed-door negotiations.

The board, chaired by Gov. Brian Sandoval, unanimously recommended that Steve Hill, executive director of the Nevada Governor’s Office of Economic Development, enter into the contract with Apple that will provide an estimated $89 million in tax breaks to the company over the next decade.

Hill, in briefing the board on the agreement with Apple to build a data center and related facilities in the Reno area that are expected to bring $1 billion in investment over the next ten years, said the state authority over the deal was limited once it was approved by the Washoe County Commission and other local government entities.

Hill said the value of the sales and personal property tax breaks has to be put into context, which is that the state will receive between $16 million to $20 million in taxes over 10 years that would not have come to Nevada without Apple’s decision to open the facility in Reno, along with more than 300 well-paying jobs.

The tax breaks can be withheld if the company does not make the minimum required investment, he said.

Sandoval said that despite the limited authority to weigh in on the deal, the review by the board was important because a lot of important questions were raised and answered in the public forum.

He said the agreement is a great deal for Nevada because it is bringing a major company to the state that could have decided to go elsewhere.

“It’s going to provide new jobs and investment into the community,” Sandoval said. “It is perhaps, and I’m hoping that as we go on, will be a catalyst for other companies to come here.”

Apple is expected to start construction as soon as the contract spelling out the agreement is finalized later this month, he said.

“There is no reason to believe that they won’t fulfill all of the promises that they have made both to the Nevada Governor’s Office of Economic Development, to Washoe County, to the City of Reno and the Washoe County School District,” Sandoval said. “I think this is a win all the way around and I for one am very excited and proud to be a part of this first recommendation by the board to put to the executive director to move forward on this project.”

If there is a need to clarify some aspects of the approval process that resulted in the deal, any proposed changes can be taken up with the Legislature when it convenes in 2013, he said.

Board members, including representatives of the private sector, asked many questions during a two-hour review. There was no comment from the public.

Member Ross Miller, who is also the Nevada Secretary of State, asked Hill if there was the opportunity to make changes to the agreement in some areas, such as seeking some assurances that the construction aspect of the project will employ Nevada residents.

Hill said no such changes could be made without starting the negotiation process all over again.

After the meeting, Miller said the new process, created as a result of legislation last year establishing the new economic development office, is a major departure from past practice.

“The role of the board in approving these abatements is very limited,” he said. “And that’s a significant change from the previous process where the commission actually voted and approved these abatements. Our limited role today was to essentially determine whether or not they met procedural requirements.”

Those requirements included whether the company had a Nevada business license and whether they were going to make more than $500,000 in capital investment, Miller said.

“Our role at this point appears to be primarily ceremonial,” he said. “We provide advice and input but don’t have any real substantive oversight over the process.”

The Legislature in 2013 should consider expanding the board’s oversight, Miller said. The board did not have an actual contract to review, only a set of bullet points.

“Make no mistake, these are substantial abatements for a 30-year period,” he said. “And that’s not insignificant. And so we want to make sure that these terms are clearly defined and that the public has a very clear understanding of what we’ve committed ourselves to.”

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Audio clips:

Gov. Brian Sandoval says Apple’s move to Reno could be a catalyst for other companies to relocate:

080112Sandoval1 :11 to come here.”

Sandoval says Apple will live up to its commitments:

080112Sandoval2 :28 on this project.”

Board member Ross Miller says the role of the new board is limited:

080112Miller1 :18 met procedural requirements.”

Miller says the board does not have any substantive oversight:

080112Miller2 :11 over the process.”

Miller says the public has to have a clear understanding of such agreements:

080112Miller3 :13 committed ourselves to.”