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Wednesday, April 17, 2013, 01:54 am PT (04:54 am ET)

Apple building new downtown Reno facilities to support its iCloud data center

The struggling downtown of Reno, Nev., is about to get an infusion of investment when Apple begins construction of new support facilities to manage the iCloud data center now being built 20 miles away.

Downtown Reno


Apple in Reno



Apple initially opened its Braeburn Capital subsidiary in Reno in 2006, tasked with managing the company's rapidly growing pile of cash.

The company also operates a retail store in the Summit outdoor mall in the south end of Reno.

Apple's largest project in the area, however, is its new $1 billion iCloud data center that includes both a large, rural parcel of land within the nearby Reno Technology Park and plans to build new supporting facilities on the edge of downtown.

Will Apple turn off Reno's blight?



Reno's downtown is dominated by a string of major casinos, surrounded by a number of vacant older properties and lots of empty parking lots.

Efforts to enliven its downtown with a convention center, a regional transit facility, the Reno Aces baseball stadium and new condominium towers ran abruptly into an economic downturn that stalled further development.

Downtown Reno


Last year, the city, county and state worked together to approve a deal that welcomed Apple's investment with sales tax breaks (the state has no corporate taxes).

"This is the most significant economic news we've had in our region in over 15 years," proclaimed Greg Ferraro, the head of a public relations firm representing Apple at the meetings.

To earn those tax breaks, Apple agreed to not only build a new data center at the nearby RTP, but also develop supporting facilities for it within one of the most blighted areas of Reno's downtown named the Tessera District.

Reno's city government had earlier sought to lure in new development for Tessera by issuing STAR bonds backed by sales taxes, but several years later the area remained mostly empty lots and abandoned motels."This is the most significant economic news we've had in our region in over 15 years."

A few months after approving an incentives package for Apple, Reno's city council unanimously upheld a decision by the city's Planning Commission to deny a special use permit for a new strip club at Fifth and Eureka, a few blocks away from where Apple has plans to build.

Rejection of the strip club was noteworthy, given that downtown Reno is otherwise flush with adult entertainment, including the risqué Wild Orchid club south of downtown. Local journalists agreed that the rejection was likely linked to the Apple deal.

How much public funds are going to Apple?



The local television station, KRNV News 4, aired a report in January complaining that "after scoring $89 million of your tax dollars for the promise of bringing more business to Northern Nevada, Apple may be running behind schedule on the project construction."

The first problem with the report is that Apple didn't "score" an amount of "your tax dollars." Instead, the state exempted the company from paying taxes on sales related to the project.

"Critics often incorrectly cite the use of taxpayer dollars as the incentive when, in reality, all we really offered Apple is a discount on the taxes they will pay for a period of time," stated Mike Kazmierski, the head of the Economic Development Authority of Western Nevada in a report by SFGate.

"So, they pay less in taxes, but we don't give them any taxpayer dollars. The other option is to not reduce the taxes we take from them and end up with 100 percent of nothing."