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.'"

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 [mercurynews.com] )

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

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.

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.

Re:Complaint rings a little hollow

[xPsi]

Personally, I'd welcome a larger Google Presence in my area - it would raise the local IQ average by a couple of points, and make the area that much more attractive to other tech ventures...

I understand what you are saying in theory. However, although you qualify your statement with "in my area", I'm guessing you aren't familiar with the geography of the area that is being discussed. By making a move to Moffett, Google is literally moving down the street. They are already located in Santa Clara (read: Silicon) Valley and probably wouldn't consider being anywhere else anyway. This area of the country, historically and presently, is no stranger to "other tech ventures" and the presence of Google probably doesn't raise the average IQ of the city/county at all. While Google certainly is a bunch of very smart folks, this techie-smartness is average for this location of the country/state. Remember, this is a place used to dealing with the likes of Apple, Yahoo, eBay, Motorola, National Semiconductor, nVida, Intel, HP, NASA, Lockheed, FMC, not to mention Stanford, Berkeley, etc. etc. etc. (all of these places are within a stone's throw of, or in the case of NASA, right on, Moffett field).

You're still way off

[robla]

This house [realtor.com] isn't even the cheapest I found that meets/exceeds the spec, at $85k. However, I took something from near the middle of the list to avoid trotting out this 5 bedroom house selling for $35k [realtor.com] and claiming it was representitive.