Google-NASA Partnership Backlash

Morgalyn writes "Apparently having more jobs moving into the area isn't enough for Santa Clara County. They want some revenue from Google, and are peeved that they are avoiding paying property taxes by building on government land. According to a representative of the county, 'If public land is being used for private purposes, the tenants should be paying local property taxes... We have $30 million in unfunded retirement liabilities. We need the money.' They aren't getting the land for free according to NASA: 'Google will not save any money by building on our property. They have to pay full ground rent based on fair market value and all the municipal-like services we provide like police, fire and garbage.'"

Comments

Alternative.

[HugePedlar]

I suppose if they find government land tax too much of a burden they could always try here: http://www.lunarintl.com/

Google Searching For Tax Break? (news article)

[Oh the Huge Manatee]

From this morning's San Jose Mercury News (URL: http://www.mercurynews.com/mld/mercurynews/news/12 798126.htm )

Is Google's NASA campus a search for a tax break?

By Jessica Portner and Julie Patel, Mercury News

Just how sweet of a deal will Google get by building a major research park on a so-called federal enclave at Moffett Field that sits just beyond the reach of local tax assessors?

Depends on whom you ask and how you slice it.

NASA/Ames Research Center's Michael Marlaire bristles at the suggestion that his agency's planned partnership with Google, unveiled last week, would provide a tax shelter for the Mountain View-based Internet giant.

Terms of the deal are in the works, but Marlaire said Friday that Google would help build the 1 million-square-foot project, upgrade infrastructure, pay fair-market rent and shell out about $4.5 million a year to NASA/Ames for services, such as fire, police, sewage and other utilities.

``I don't want people to think they are coming here for a sweetheart deal. That is not what is happening,'' said Marlaire, Ames' director of external relations. ``Google isn't going to save a dime for coming here.''

The company might pay less, however, if it builds services that other Ames tenants, such as universities and small tech start-ups, could use, he said.

Still, some local officials, such as Santa Clara County tax assessor Larry Stone, say such a setup would cost local taxing bodies like schools, nearby cities and the county up to $3 million in annual property tax revenue.

Google pays about $850,000 in annual property taxes on the 34-acre site it leases in Mountain View for its world headquarters, Stone said. The company would escape paying local property taxes by building its research center and up to 2,000 homes in NASA's research park, which sits on part of the former military base that local taxing bodies can't touch. State and local tax rules are invalid on land classified as a federal enclave.

Bustling neighborhood

NASA/Ames envisions a bustling 95-acre neighborhood to sprout up around the park -- complete with shops, cafes and parks -- where the chatter on the street is nanotechnology and supercomputers. Like a McDonald's and other shops already located on Moffett Field, those retailers also would probably be off-limits for local taxes, Stone said.

NASA has already prepared a 900-page environmental impact report that paves the way for the project. Mountain View officials will watch closely from the city right outside NASA/Ames' gates. But they won't have much say over the process, which the federal government alone controls and laid out in a 2002 study on the proposed mega-R&D campus.

Bayfront property

NASA's review looked at environmental impacts on air, land, water, traffic and storm water, as well as other issues. It calls for on-site housing and bike paths to reduce congestion and pollution, but environmentalists worry that NASA will overlook many of the ecological and traffic issues on the sensitive bayfront property.

``Nothing against Google, but this plan would have significant impacts,'' said Lenny Siegel, executive director of the Center for Public Environmental Oversight.

Mike Braukus, a spokesman at NASA headquarters in Washington, said the Google project appears to be the biggest of its kind for NASA, whose leaders say they want to transform Ames into something akin to a Silicon Valley company. The two sides have set a February deadline to arrive at a final deal.

Google would join university research groups and small start-ups that also rent space from Ames. Most pay about $4.50 per square foot a year for police, fire and other services.

Randy Nickel, the founder of Nxar, a start-up software company that rents a tiny workspace of a few hundred square feet at Ames, said his company's one-year lease

Re:Google Searching For Tax Break? (news article)

[surprise_audit]

Still, some local officials, such as Santa Clara County tax assessor Larry Stone, say such a setup would cost local taxing bodies like schools, nearby cities and the county up to $3 million in annual property tax revenue.

Now, see, that's the bit I have trouble with - it's going to cost Santa Clara $3M?? The land/buildings/whatever wasn't being used anyway, right?? If NASA went out and acquired the land specifically to rent it to Google, then OK, I'd see their point. If NASA's owned the land for a long time, it's entirely up to them who uses it.

Even if Google was going to give up some other property in Santa Clara county to make this move, that other property would still exist and garner property taxes for the county.

WAh, wah, wah, bitch, whine, moan. We have a right to that money. It's ours, and Google's stealing it by using NASA property. Moan, bitch whine.

Benefit and loss?

[plnrtrvlr]

OK, so Google isn't locating it new venture on public property, and the article seems to indicate that it wont be using any public services It is unclear (by the article) who will be providing actual sewage services, though it does state that Google will have to construct them. Has anyone in the county bothered to do a benefit and loss comparison with what remains? How many new employees will be purchasing fuel, lunches, snack food, stopping for groceries on their way home, paying sales taxes as they do? How many people will relocate to the area and build new homes, paying property taxes and school taxes? How many new jobs will be created in the service economy of the area to support these people working and moving to the area? Here in upstate NY it would be afairly safe bet that most any town/county would welcome an arrangement where a large company movs to the area, doesn't consume services and so doesn't pay for them, but adds significantly to the local tax base in terms of jobs and consumption. Think about it, If it is such a terrible deal for the area, then why would they even want the Ames research facility there inthe first place? Why would any town, county or state want any government installation located within their borders? Most places with a military base near them shudder at the thought of a base closing, and it's because such bases contribute greatly to the local economy without adding to the service load. Furthermore, most places meter such services as water with a built in assumption of "what goes in must come out" and bills the water and sewer together based upon that assumption. Somebody needs to get their facts together as to what new jobs will be created and do a side by side benefit and loss comparison before they start screaming about the lack of tax revenue. One million square feet of development could easily employ enough new people to more than make up for the property tax loss.

This is how the system works

[putko]

This is how the system in the USA works. The idea is that local communities can't tax the Feds or impose regulations on them. Otherwise they clearly would, and it would lead to chaos. E.g. the City of Berkeley would tax the hell out of the Feds, until they agreed to make the whole country a nuclear free zone, or cut off all business with Myanmar (Burma). That's how things went after the Revolution and until the formation of the United States -- there was terrible fights like this between states and the feds.

So the feds have property that they control. Then they turn around and provide this to private companies (typically contractors). Theoretically, because the contractors get the services for free, the market price of the rent should be higher. E.g. suppose a contractor has a choice: fed property or a neighboring plot that is otherwise the same, but comes with taxes. The market price of the fed property will be higher by the cost of the crap that the company avoids.

Google theoretically shouldn't save any money by doing its stuff on govt property: the price should be higher than on state-controlled or country-controller property, all things being equal.

Onen neat place to see this is the NV/CA border on Lake Tahoe. The same pile on the NV side costs more, because taxes are lower.

So the "problem" is due to the law, not Google. Unless they get that property for below-market costs (perhaps due to corruption), there's nothing awful going on here. Perhaps you think we need to change our constitution to make it possible for states to tax the feds, but that's another issue, and it doens't involve Google.

Why is it Google's problem to fix?

[whoda]

We have $30 million in unfunded retirement liabilities.

Piss poor planning on the part of Santa Clara county doesn't make this mine, yours, or Google's problem.

If they want/need more tax income, they can go and get Prop 13 repealled. Freezing a giant part of the states tax income, and then trying to increase services year after year is not a winning plan.

Question on the article...

[tkrotchko]

If google is *renting* the building, how would they be liable for any special taxes related to coming to the county?

I get that by moving to a federal building on federal land they don't get money from the federal government for property tax.

But think of the alternative. Google rents some space from "Joe's Management Company". There still is no additional revenue from taxes. I'm not a tax expert, and I can't even spell "CPA", but this article seems to have a flawed premises.

It's all so confusing

[Crixus]

Apparently it's OK to give Walmart tax-free access to land to build ugly stores with low-paying jobs, but it's not OK to do this?

Our system is incredible. People can't afford to pay their bills and taxes, and cities need the tax revenue.

This will all reach critical mass within the next 50 years, and it will be ugly.

Lucas Did This As Well - Presidio

[meehawl]

Moving onto "federal" land to dodge local responsibilities is as old as the hills. Or last year, in fact, if you consider the relocation of the George Lucas Dark Empire into the federally owned Presidio in San Francisco. By doing this, Lucas manages to dodge paying local, state and city payroll taxes. Meanwhile, it gets to rent out around 200,000 square feet of its Presidio space. If it gets a high market rate of $30 per square foot this will bring in maybe $6 million a year -- $200,000 more than the rent Lucas will pay for the entire 23-acre lot. And of course, it then gets to dodge local and state taxes on rent profits as well. Swete deal for everyone except the citgizens of San Francisco.

Cry me a river

[hotspotbloc]

Greg Perry, a member of the Mountain View City Council, echoed that sentiment. "If public land is being used for private purposes, the tenants should be paying local property taxes," he said. "We have $30 million in unfunded retirement liabilities. We need the money."

Over the last few years the real estate prices in Mountain View have skyrocketed almost solely because of Google and their cash rich employees (like $2m USD for a nice three bedroom house that would cost ~$400k in a typical "farm belt" community of the US). As prices rises, surrounding values rise and real estate tax revenue rises (to a certain point). Mountain View is now enjoying a major cash influx but yet they want more like most other government entities.

The conflict echos of many past economic conflicts: Company A (the City of Mountain View) is well seasoned, controls the market and has become fat, lazy and leech-like from the lack of competition. While they do many good things they are unwilling to fix the major flaws that are bleeding them dry like, for example, a vastly overstaffed police department unwilling to cut a single position. Company B (Google) is the new upstart, flexible and lean, that is creating wealth for themselves and those that support them. The City of Mountain View has seen quite a few local businesses created to support Google and Google employees that generate millions of dollars each year in tax revenue.

It's a bit like the City of Cambridge, MA vs. MIT and that other school. While they do pay into the local coffers what would be a somewhat appropriate tax for their real estate the City still wants more. But what would Cambridge be like without them? How many local businesses with their high paying research jobs would be there without the talent these schools recruit? While these schools generate less direct tax revenue from their properties then their commercial counterparts they do generate, IMO, much more overall indirect tax revenue. Will MIT every move off of Mass. Ave. because of high taxes: doubtful. Google, on the other hand, could easily leave Mountain View for greener, and cheaper, pastures.

Like it or not "free market" forces can not be denied. If Mountain View becomes too rich for Google they will move elsewhere like so many other businesses and Mountain View will be left as a rotting shell like so many other US cities that have lost their major private employer. Be it to another city, state or county they will move. It's happened millions of times in the US since the early 1970's.

Here's my suggestion for Google employees: take one weekend and everything you buy locally buy with $2 bills. For those outside the US the $2 bill, while rarely used, is legal tender. $2 bills stand out and the massive influx of them will get noticed. Each $2 bill used that weekend is an advertisement for Google's economic force in the community. Those $2 bills will spread to many, many people that think they have no connection to Google. I suspect the media would latch on to the story too.

Google brings in a ton of money to Mountain View and IMO their positive economic impact needs to be taken into consideration when judging what their fair tax responsibility should be. City officials in Mountain View need to take a moment to imagine their city without Google and where they'd be.

You've got it backwards

[John Jorsett]

I think in most cases, property taxes are collected by the local municipality, and it's really their primary form of income.

Sales tax is usually state-wide. So all that added commercial activity in the area is going to California, not the local municipal governments.

Actually, post-prop 13, the state ends up with the property tax revenue. The state doles it back, less its 'cut' to the counties and cities, though some are "more equal than others" in what they get. What the counties and cities get is most of the sales tax. That's why you see cities doing everything humanly possible to get more retail businesses built: they get more sales tax revenue for every one of those.

Paying NASA is just paying NASA.

Paying NASA is paying the federal taxpayer. I don't know about you, but I pay lots of federal tax and anything that reduces federal deficits I'm in favor of.

The city is now going to have to deal with issues such as increased traffic, upgrading public utilities, etc., and they're not going to get the money to handle it. I'm not surprised that they are ticked off at this.

The city is going to get lots of new, very high-paying jobs. Those people will pay sales tax, buy homes and pay property tax, and in general add to the prosperity of the area. The city is getting a good deal, on balance. However, like many governmental entities in California, they've also bloated their payrolls and overpromised on their benefits, so they think it's up to taxpayers to bail them out. Rather than cut payroll or benefits to fit reality, they're looking at any way possible to shake more money out of the pockets of the people. That's why they're ticked that somebody might be able to escape their clutches.

Google is winning big, and at the expense of the local people.

Exactly the opposite.

Re:Complaint rings a little hollow

[ScentCone]

"Do no evil" --- isn'that the motto?

Well, yeah. But in modern parlance, that pretty much means "Pretend to hate and be aw-shucks embarassed that you and your fellow employees are making a profit on all that hard work and investment." But leaving that aside, how is it "evil" for them to come in, spend a fortune on setting up facilities (including municipal-type expenses - RTFA), and stationing a pile of employees in a place that does indeed sound like it could use some invigorating? It can't possibly be a negative for the local economy and tax base, no matter how advantageous it is for Google to build this up on that federal land partnership.

Why does one class of people, a class that you correctly point out is less educated and less well-off, pay for municipal services, while the upper classes do not?

But the services they're using are the municipal-type services that will be provided by the federal management, and Google will be paying for those. In my neighborhood, just by-the-way, I pay a hugely disporportionate amount of money into the local tax base, relative to what I use. My "class" of people (dual income, middle-of-the-road IT-industry-grade income) pay the vast majority of the taxes, but the largest (by far) users of those resources are the poorer famlilies who choose to have lots of kids. There's nothing even close to equitable about that, but that's a separete discussion (well, sort of).

They way this works, or at least supposed to work, you see, is government of the people, by the people, for the people.

Except, when one person is taxed heavily for the out-of-balance benefit of other people, you get government of the people, by the people, taxing some people, for different people. If Google's expanded presence in the area is a net drain on the economy, you've got something to fuss about. But we all know that what they'll be doing there will be nothing but stimulus for the local economy and the tax base.

You're an ass because you argument essentially reduces to "poor people should be so lucky to have nice rich neighbors like that to buy the coffee they make." In your words, it will "raise the local IQ average by a couple of points."

Don't you get it? I want it for my own sake. I'm one of the lower-IQ people that would be glad to have more bright, innovative people creating, producing, and thinking in the community around me. Do you really think that everyone is the same as everyone else, or that we should all be in cookie-cutter jobs providing the same services back and forth in some sort of zero-sum-game paradise of mediocrity? I'm glad there are musicians better than me, writers better than me, physicists better than me, airline pilots better than me, Google software engineers better than me, and people who are willing to take a starter job making lattes, too. That doesn't mean I think there's some latte/Google caste system, other than those which people make for themselves.

"Poor" people will hopefully be sending their kids to school with the kids of a woman that spends her day thinking for a living at Google. That's where the cultural osmosis takes place, and it's a good thing.