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.'"

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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

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.