Apple, Inc. has entered into a 15-year property tax exemption agreement with the City of Prineville and Crook County for its newly planned data center in Central Oregon.

In the agreement, Apple committed to a minimum investment of $250 Million on the 160 acres of land it purchased in February for $5.6 Million.  It also committed to a minimum of 35 jobs with wages at least 150% of the county average.  The data center will be constructed in one of Crook County’s enterprise zones.

In return for the property tax exemption, Apple has agreed to pay local governments a $150,000 per year project fee, which will be split between the City of Prineville and Crook County.

The exact amount of the benefit to Apple is uncertain, and depends on the amount Apple actually invests in the project.  Google received a similar tax break on a $1.3 Billion data center and the tax break is valued at more than $24 Million annually.

In addition to Google and Apple, Central Oregon has attracted other data centers for companies such as Facebook, Microsoft, Amazon and Yahoo.  To encourage additional internet-based companies to locate in Oregon, lawmakers adopted legislation in 2012 to exempt large data centers from certain property taxes, such as taxes on the company’s intangible property.  According to Rep. Tobias Read (D-Beaverton), this legislation will encourage even more internet-based companies to locate their data centers in Oregon.  While data centers are not typically large employers, they have become an integral part of Central Oregon’s economic development strategy.  Crook County, where the new Apple data center will be located, has an unemployment rate of approximately 15%, the highest in Oregon. City and County officials believe that these data centers will spur other development in the surrounding region.

We are starting a new series of blog posts to explore the role of TIF across the United States. The series, entitled “50 States in 50 Weeks,” will include an exploration of TIF policy, legislation and innovative projects throughout the country. Our first post will look at the country’s largest TIF supported project:  New Mexico’s Mesa del Sol Development.

Mesa del Sol is a master-planned, mixed-use development which encompasses a twenty square mile tract of greenfield space south of Albuquerque.  Over the last few years, infrastructure has been constructed at the Project and, according to the Mesa del Sol website, the first houses will be available for occupancy this spring. Approximately 27% of the Project’s 12,900 acres is expected to include 38,000 units of mixed-income housing.  Mesa del Sol will also include a nature preserve, community centers and recreational facilities. Along with these residential amenities, the remaining development will contain retail, corporate and industrial sectors, such as Albuquerque Studios, one of the nation’s largest media production companies, and Advent Solar, a solar technology company. The developer expects to create approximately 60,000 jobs as part of the project.

New legislation was passed in New Mexico in 2006 broadening the availability of tax increment financing. To assist the Project, the City of Albuquerque and the State of New Mexico have pledged tax increment for public infrastructure costs (TIF is known as Tax Increment Development or TID in New Mexico and Tax Increment Development Districts are known as TIDDs). As part of TID, the state, counties and municipalities can pledge up to 75 % of future gross receipt tax (GRT) and ad valorem property tax increment for a maximum period of twenty-five years to repay bonds used to finance development projects.

Currently there are five TIDDs designated in Mesa del Sol with a total pledge of $500 million available to the project from both New Mexico and Albuquerque. The five distinct TIDDs will receive money in separate phases corresponding to the construction timeline, which is anticipated to be 50 years. Based on information from the New Mexico Taxation and Revenue Department, TIDDs in Mesa del Sol will receive approximately 60% of the 6.75% GRT generated by the Project, comprised of 67% of both the municipal dedicated GRT and the City’s share of State GRT and 75% of the State GRT. Mesa del Sol began receiving GRT distributions in January 2008. In FY 2011, it received approximately $890,000 in GRT increment; however, much of the retail planned for the Project must still be constructed.

As part of its obligations, Mesa del Sol must pass an annual test to guarantee the Project is cost neutral for the City. The development must also maintain its plans for a sustainable water supply, pedestrian-friendly environment and offer affordable housing.  TID funds will be used to construct roads, water systems, schools and libraries, among other components of the Project.