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Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

reason.com

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Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#71

Post by buttcoinslol »

kartan wrote: post #28

> Google is promising to bring 50 full-time positions to the area. The company also projects that it will create 2,300 jobs during the 18–24 month construction window. Is this a joke? > State Sen. Andrew Mathews (R–Milaca) and state Rep. Shane Mekeland (R–Clear Lake) recently introduced a bill to provide an additional $20.1 million in state bonds to give the Becker Business Park—where the data center would be built—a…

> The company also projects that it will create 2,300 jobs during the 18–24 month construction window.

The number I've heard so far for project cost is 600 million dollars. You can figure roughly 300-350 million dollars going into the pockets of the local workers directly (2 years of labor [4160 hours] for 2300 people @ 35/hr), which is a rough average of MN prevailing wage determinations for trade workers if you account for the 20 -30 trades that will work on a project like this.

The state benefits by bringing a highly-visible employer to an exurban area, even if it is only 50 full time jobs. They get an anchor tenant of sorts that may attract other real estate development and business in the area.

There are plenty of benefits to be gained on a 20 million investment. Note, most of the labor will be local union tradespeople who pay state taxes and spend their money in the state.

Disclaimer: My company will be bidding one (or multiple) part(s) of the construction part of this project.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#72

Post by Proven »

kartan wrote: post #28

> Google is promising to bring 50 full-time positions to the area. The company also projects that it will create 2,300 jobs during the 18–24 month construction window. Is this a joke? > State Sen. Andrew Mathews (R–Milaca) and state Rep. Shane Mekeland (R–Clear Lake) recently introduced a bill to provide an additional $20.1 million in state bonds to give the Becker Business Park—where the data center would be built—a…

> Like for example to expand green energy

Why? It’s nonsense and if one type of energy is subsidized, others must be taxed even more to make up for the shortfall. It doesn’t make any sense.

> or to give jobs to people in risk of exclusion, or another hundred reasons.

Who is to say who’s “at risk” but the same politicians who you don’t believe can decide fairly?

Just knock it off. Use your own money to fund people you deem to be “at risk”.

It’s horrifying to see (in the comments) how many philosopher kings are on this site.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#73

Post by buttcoinslol »

tw04 wrote: post #40
Gpetrium wrote: post #35

Earlier quoted context omitted.

@kartan, there is a lot of valid reasons to give an incentive such as a tax break to a large company, I will list a few: 1. Brand name corporation in your community, leading to new businesses propping up 2. Increase land-value in the area, leading to higher city taxes 3. Income, corporate and other taxes associated with the company's project & continuous operation 4. Long-term certainty. Most companies wont build a d…

1. There are already dozens of datacenters in Minnesota. They aren't prompting other businesses to pop up because they are self-contained and self-serving. Furthermore there is no "brand recognition" they are giant unmarked warehouses that could be a datacenter or could just be another nameless storage facility. 2. Why would a datacenter increase land value? This isn't a corporate headquarters, it's a datacenter. 3.…

> 5. There won't be 2,000 jobs to build a datacenter, that's wildly exaggerated. And there's no way in hell that the average construction worker is making even half of the number you just stated.

Most union tradespeople make at least $35/hr in MN, a handful make over $40. My company pays the union about $75/hr for a journeyman electrician, which is their full rate with benefits included. Most (or all?) the labor on this project will be union labor, a GC isn't going to take a chance on a non-union sub with 600 million on the line.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#74

Post by Gpetrium »

awakeasleep wrote: post #70
Gpetrium wrote: post #43

Earlier quoted context omitted.

I will bite your response with the hopes you try to keep an open mind to the response you get instead of a preconceived notion of how things work. 1. Data centers are a symbol to a much larger economic schema that impacts quality of service to the area, economic prosperity, among other areas. Minnesota can literally come to prospect business and say "Look, Google, X, Y and Z companies gave us a seal of approval that…

Can you list any data showing datacenters increase land value? Or have boosted an economy? Or are these theoretical benefits?

I just found this pdf from the US Chamber of Commerce that can shed some light on a few questions you may have (HTTPS+Valid Secure Certificate):

Data Centers: Jobs and Opportunities in Communities Nationwide https://www.uschamber.com/sites/default/files/ctec_datacente...

It covers: Initial capital and operational expenditure, economic impact, spillover benefits, etc

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#75

Post by pooloo1 »

buttcoinslol wrote: post #73
tw04 wrote: post #40

Earlier quoted context omitted.

1. There are already dozens of datacenters in Minnesota. They aren't prompting other businesses to pop up because they are self-contained and self-serving. Furthermore there is no "brand recognition" they are giant unmarked warehouses that could be a datacenter or could just be another nameless storage facility. 2. Why would a datacenter increase land value? This isn't a corporate headquarters, it's a datacenter. 3.…

> 5. There won't be 2,000 jobs to build a datacenter, that's wildly exaggerated. And there's no way in hell that the average construction worker is making even half of the number you just stated. Most union tradespeople make at least $35/hr in MN, a handful make over $40. My company pays the union about $75/hr for a journeyman electrician, which is their full rate with benefits included. Most (or all?) the labor on t…

> 2. Why would a datacenter increase land value? This isn't a corporate headquarters, it's a datacenter.

Data centers require backbones to provide their services. Becker sits outside the range of most ISP's, in addition to no fiber connection; Monticello being the closest with fiber. I suspect there will be a substantial contract for laying fiber here, thus further increasing value of the land.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#76

Post by supernovae »

buttcoinslol wrote: post #71
kartan wrote: post #28

> Google is promising to bring 50 full-time positions to the area. The company also projects that it will create 2,300 jobs during the 18–24 month construction window. Is this a joke? > State Sen. Andrew Mathews (R–Milaca) and state Rep. Shane Mekeland (R–Clear Lake) recently introduced a bill to provide an additional $20.1 million in state bonds to give the Becker Business Park—where the data center would be built—a…

> The company also projects that it will create 2,300 jobs during the 18–24 month construction window. The number I've heard so far for project cost is 600 million dollars. You can figure roughly 300-350 million dollars going into the pockets of the local workers directly (2 years of labor [4160 hours] for 2300 people @ 35/hr), which is a rough average of MN prevailing wage determinations for trade workers if you acc…

Every data center I visit is always established in an economically depressed area by design. No one wants their data center costs to be increased because of massive commercial growth outside the scope of needing internet and power.

The bulk of data center jobs are for 50 trade skill type people but all of the brogrammers and developers will be in major cities working remotely since no one these days gets or needs access to any facilities and it won't be long before those 50 people are replaced by robots. This is google after all.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#77

Post by tptacek »

bilbo0s wrote: post #60
tptacek wrote: post #53

Earlier quoted context omitted.

Help me understand. If Google moves in and pays property taxes, the county will see an additional $15MM (over 20 years). If they move in and don't pay property taxes, the county will not see that money. If they don't move in at all , the county will still not see that money. Game-theoretically, how is the county better off if Google doesn't move in?

No no no no. I'm not speaking game theoretically here, because there are a good many more factors that go into determining a "win" than the financials. Now from a money perspective, they won't get money from Google if Google DOES NOT move in, and they won't get too much money from Google if Google DOES move in. This is because the expenses on the infrastructure improvements to support a 600 million dollar data center…

I'm sorry, I'm lost. What are the expenses Becker (and the county) will incur if Google sites here? All we've identified so far is a 20MM bond for a waste pipe extension from the site, which doesn't appear to be part of Google's demand.

Wisconsin coughed up (IIRC) over a billion dollars in direct infrastructure spending to support Foxconn. Nothing like that appears to be happening here; it looks like here we're just talking about property tax money, which Minnesota was not already expecting to receive, that they'll forgo in order to get Google to site here and not in Ohio.

You refer to the expenses in infrastructure Becker will incur if Google sites here. What expenses are those? Becker isn't building the data center or even clearing the land: the land is owned by Excel Energy, which is selling it to Google, and Excel is also providing the power for the data center itself. What is the county spending to make this happen?

Help me understand why Becker would turn this down? How do they stand to lose anything if Google plops a data center down here?

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#78

Post by luminiferous »

awakeasleep wrote: post #70
Gpetrium wrote: post #43

Earlier quoted context omitted.

I will bite your response with the hopes you try to keep an open mind to the response you get instead of a preconceived notion of how things work. 1. Data centers are a symbol to a much larger economic schema that impacts quality of service to the area, economic prosperity, among other areas. Minnesota can literally come to prospect business and say "Look, Google, X, Y and Z companies gave us a seal of approval that…

Can you list any data showing datacenters increase land value? Or have boosted an economy? Or are these theoretical benefits?

In addition to Gpetrium's comment, there is this report by Oxford Economics that has been linked to elsewhere in the comments: https://static.googleusercontent.com/media/www.google.com/en...

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#79

Post by tptacek »

tfehring wrote: post #64
tptacek wrote: post #57

Earlier quoted context omitted.

That's the answer I'm looking for. Thanks. But that's not necessarily happening, right? And the deal might not be limited to tax breaks. State Sen. Andrew Mathews (R–Milaca) and state Rep. Shane Mekeland (R–Clear Lake) recently introduced a bill to provide an additional $20.1 million in state bonds to give the Becker Business Park—where the data center would be built—a facelift. Is Google actually demanding that? Do…

Of course the infrastructure investment would benefit the Becker area in general and potentially attract other employers, but it seems vanishingly unlikely that Minnesota communities other than Becker would come out ahead on this investment. It may be a net positive for the state as a whole, but it's not just a matter of deciding whether to take less of Google's money or none at all - there are winners and losers, an…

The argument against the waste pipe bond (what Reason describes as a "facelift" for "Becker Business Park", which appears to be an empty field) seems straightforward and I'm not really litigating it. Sure: the state maybe shouldn't pay for that.

The argument against the property tax break is less clear to me. Like, all things being equal, I'd rather Google pay more tax than less tax. But it's not at all clear to me what Minnesota's BATNA is here. They can demand the property taxes, and Google can site elsewhere. Google will be fine, and Minnesota will be out a data center. I don't think a data center is an economic miracle or anything, but it's hard to believe it could possibly be a net negative for rural Minnesota.

I don't have a strong opinion about this story, I just want to understand the outrage a little better.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#80

Post by erentz »

buttcoinslol wrote: post #71
kartan wrote: post #28

> Google is promising to bring 50 full-time positions to the area. The company also projects that it will create 2,300 jobs during the 18–24 month construction window. Is this a joke? > State Sen. Andrew Mathews (R–Milaca) and state Rep. Shane Mekeland (R–Clear Lake) recently introduced a bill to provide an additional $20.1 million in state bonds to give the Becker Business Park—where the data center would be built—a…

> The company also projects that it will create 2,300 jobs during the 18–24 month construction window. The number I've heard so far for project cost is 600 million dollars. You can figure roughly 300-350 million dollars going into the pockets of the local workers directly (2 years of labor [4160 hours] for 2300 people @ 35/hr), which is a rough average of MN prevailing wage determinations for trade workers if you acc…

> 2 years of labor [4160 hours] for 2300 people @ 35/hr

It says 2,300 jobs created over 18-24 months but not the duration of those jobs so we have to be careful assuming that’s 4160 hours per job.

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