It’s a pretty sweet deal.
Apple announced last week it would spend $1 billion to construct a new eastern headquarters in Research Triangle Park in exchange for $846 million in state grants and $20 million in county property tax breaks over the next three decades.
In other words: we’re giving them nine apples to get 10.
It’s the largest incentive package of this kind that North Carolina has ever awarded, but officials maintain it’s well worth the price tag due to the economic growth the tech giant could bring to the region, which Apple claims will be worth $1.5 billion.
But others worry it will only exaggerate the Triangle’s burgeoning affordability crisis and ultimately could cost taxpayers more in the long run on education and infrastructure updates to accommodate the growth.
“I think it’s great news. Does it bring challenges with it? Yes,” Raleigh Mayor Mary-Ann Baldwin told the INDY. “We already have a housing shortage and we are really going to have to focus on how we build supply to keep up with demand.”
But it’s not that simple, says Samuel Gunter, executive director of the North Carolina Housing Coalition.
“Even when that supply and demand is in some sort of balance, it never works for folks at the lowest end of the income spectrum, those folks at 30 percent area median income and below,” Gunter says. “As housing prices are going up, incomes at the bottom aren’t. So while there may be some jobs that are added that are better-paying jobs, or are going to raise the area median income, the folks that work for minimum wage are still making minimum wage.”
Apple’s RTP hub is part of a $430 billion expansion the company is planning nationwide that will create 20,000 new jobs. In the Triangle, that includes the construction of a new million-square-foot research campus next to Highway 540 near the border of Cary and Morrisville. The $552 million headquarters will bring with it the creation of 3,000 new jobs, which Apple says will pay an average salary of $187,000.
That’s about three times the current average wage in Wake County—$63,966 in 2019—but according to Duke Sanford School of Public Policy professor John Quinterno, it’s probably too good to be true.
“The reason the average is so high has to be that they’re planning to move some high-level executives out here, and those outliers are going to pull up the average for everyone else,” Quinterno told the INDY. “These are good jobs, but they are not necessarily that superstar salary level.”
That’s not the only reason Quinterno is skeptical. For him, the biggest sticking point is the sticker price—why should North Carolina dish out massive subsidies to a company that, in all likelihood, was probably going to come here anyway?
“It’s all wasted money at that point, whether it’s a billion dollars or a hundred dollars in subsidy, if you are providing an incentive for a company to do what it was going to do in the first place, that’s not an incentive,” Quinterno says. “That’s essentially then directing money that otherwise would be public money available for public purposes to invest in roads, schools, and parks.”
It’s no secret the state’s power brokers had been courting Apple for years and Apple already owned the land in RTP. Nor is it secret that several high-level executives at Apple have extensive ties to the Triangle. Tim Cook, Apple’s CEO, earned his MBA from Duke University. Jeff Williams, who has served as Apple’s chief operating officer since 2015, graduated from Sanderson High School and has degrees from NC State University and Duke.
“As a North Carolina native, I’m thrilled Apple is expanding and creating new long-term job opportunities in the community I grew up in,” Williams said in a press statement. “Apple has been a part of North Carolina for nearly two decades, and we’re looking forward to continuing to grow and a bright future ahead.”
If that future looks anything like Austin—where Apple announced it would also open up a new billion-dollar campus—it may be not so bright, Gunter says. Austin recently passed a policy to essentially criminalize homelessness in the rapidly growing city.
“Austin is a couple of years ahead of us and I don’t think Austin did a good job at all of preparing for that growth that was coming,” Gunter says. “You get to the point where your communities are so overpriced and then you start locking folks out of them.”
Housing prices in the Triangle were already on the rise, pre-pandemic, and with lending rates at historic lows, prices are continuing to skyrocket, with some markets seeing 10 percent spikes in value, year over year. According to the online real estate market company Zillow, the median home price in Raleigh has ballooned by nearly 28 percent since 2015.
While Raleigh did pass an $80 million affordable housing bond last year, Baldwin says more needs to be done on the policy and land use fronts to ensure growth keeps up with demand. That will likely mean greenlighting more density in neighborhoods that may balk at change.
But the growth could also catalyze essential projects for the region, such as commuter rail, which Baldwin sees as a positive.
“I see it as a catalyst for all these things we need to do,” Baldwin says. “Now there’s a sense of urgency.”
The deal also includes a 50 percent county tax break on property taxes for improvements to the site for the next 30 years, more than twice the duration usually awarded.
When the INDY asked why the Board of County Commissioners agreed to extend the subsidy beyond its usual policy, board member Sig Hutchinson replied glibly, “to get the deal.”
“I see it as a catalyst for all these things we need to do. Now there’s a sense of urgency.”
“These things are anything but cut and dried and these are very, very sensitive negotiations with the most significant and successful tech company in the world,” Hutchinson says. “I’d say this is the biggest thing that’s happened in the Triangle. This is comparable to IBM deciding to move here in the ‘60s.”
Likewise, the state’s incentive package, known as a Job Development Investment Grant (JDIG), is also historically huge, and Quinterno says that leaders’ willingness to cave to Apple’s demands constitutes a form of corporate welfare. These sorts of deals—negotiated in secret and not by elected officials in many cases—aren’t even considered politically controversial anymore. They are just accepted as the status quo and set a dangerous precedent.
“No other public spending request would occur on say-so,” Quinterno says. “Nobody at the legislature says, ‘Why do we need more money for school teachers? Because school teachers say so.’”
David Rhoades, spokesman for the North Carolina Department of Commerce, says the historic deal was deemed necessary because it qualified as a “transformative” project, a relatively new category of the grant. However, Rhoades emphasized Apple gets the money only if the company makes good on its promises to add jobs and invest in the community.
“It is indeed transformative in nature and it’s going to bring not just the benefits of the company itself but other companies and other jobs will be created because they are here and will attract others,” Rhoades told the INDY.
Still, Quinterno says, the waived taxes will come out of taxpayers’ coffers to ultimately accommodate the growth that the deal will bring to the school system which must accommodate new students, and to new infrastructure to support more cars on the road commuting to the new tech hub.
“Apple will be insulated from those costs, but more of them will be borne by everybody else,” Quinterno says.
If the county and state can shell out a combined $866 million to bring Apple here, Gunter says taxpayers should be demanding more to ensure the security of existing residents.
“Don’t let anyone deceive you that the resources aren’t there. It’s a matter of political will,” Gunter says. “If you can scrape together those public resources to recruit a company, you can also ensure the folks at the bottom end of the economic spectrum who are working are able to live and thrive in your community.”
Follow Senior Staff Writer Leigh Tauss on Twitter or send an email to ltauss@indyweek.com.
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