An Apple a Day Keeps Cupertino Healthy

When Apple briefly overtook energy giant ExxonMobil as the world’s most valuable company, it seemed investors looked for solace in technology—not necessarily a bad thing for Silicon Valley cities like Cupertino.

But what does Apple's value have to do with the city in which it is headquartered?

“It's always good to have the best company in the world located in your town; that doesn’t hurt your reputation,” said City Manager Dave Knapp. “It is a source of pride that Apple is in Cupertino, and, in a way, they put us in the map.”

The high stock price of a company is essentially the most visible stamp of approval by investors in regards to their confidence in a company. It's something that some see as the most solid sign of good health and longevity in a company, which in turn spells good news for Cupertino.

“The more valuable their stock is, presumably the longer they are going to be in business,” said Knapp, “So that’s a positive.”

There are many factors that make the city of Cupertino solvent and prosperous, but the stock price of Apple doesn’t directly correlate to the economic success of the city.

“If the economy of Cupertino was tied to the stock value of Apple, at least in the short term, we would be in great shape,” said Councilman Orrin Mahoney. “Cupertino’s economy is more tied to other aspects of Apple’s economic input and not to the stock value.”

The aspects that have the most immediate effect on the city are property taxes from their corporate headquarter buildings, which are 5 percent, and sales tax from business-to-business sales, a percentage which is not publicly given. Apple provides more sales tax revenue than any company based in Cupertino.

“When we hear news items that say Apple is doing very well, it also means the city of Cupertino is also doing well, because we generate our revenue from the sales tax,” said Gilbert Wong, mayor.

City services like law enforcement, fire department, library, parks and road maintenance are funded in great part through the revenues that are obtained through sales tax. A strong Apple is seen as a facilitator in easing the funding process of these services during these precarious economic times.

“We are one of the few cities that has increased our library hours, to keep them seven days a week,” said Wong. “We have also increased crossing guards where other cities are cutting back.”

Apple is not the only tech company, of course, contributing to the revenue of Cupertino. Other big names include Hewlett-Packard and the Amazon Kindle Lab 126 subsidiary. 

“We are able to expand these services, not only because Apple is here,” Wong said.

Apple declined to comment on the effects of its stock price on the city of Cupertino.