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

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

#81

Post by tptacek »

abakker wrote: post #63
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…

This is a very good discussion, back and forth. I think it is worth asking who should be capturing the economic benefit here. A tax break for google in this case is allowing google to capture the economic benefit it creates for the public. Not giving it a tax break allows the public to capture that economic output. While I very much agree that this project will add value to the economy, if google is given a $15m tax…

it's 15MM over 20 years, right? $750k/year? Against the economic activity from building a huge data center, that seems like a drop in the bucket?

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

#82

Post by supernovae »

pooloo1 wrote: post #75
buttcoinslol wrote: post #73

Earlier quoted context omitted.

> 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.

Centurylink is already passing through there. They already have 1gb internet for 65.00/month there. That's cheaper than what I pay here in Austin.

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

#83

Post by tptacek »

abakker wrote: post #68
asdfasgasdgasdg wrote: post #67

Earlier quoted context omitted.

> Those justifications you lay out are real, but if you pay google for them in the form of a tax break it all balances out. It doesn't create value from nothing. Only under the assumption that $15M is the exact maximum amount that the city would pay for the listed benefits (i.e. the exact break even number). Probably it is worth more than that to the city (or else they probably wouldn't do the deal), so the reality i…

>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—a far shorter period than the 20 years of tax relief they're requesting. After construction wraps, with 18 remaining years of tax abatement, there will be a $270,000 tax shortfall for every full-time position created. I read that paragraph from the artic…

I read that too and don't understand it at all. Do you? By "shortfall", do they simply mean "if we charged full property taxes to Google, the revenue we'd get would be much more than the taxes we'd get from the 50 FTEs at the data center"? "Shortfall" suggests money the city and county would essentially be "spending" to have the data center, but that's not what's happening, right?

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

#84

Post by hexane360 »

hayd wrote: post #66
abakker wrote: post #63

Earlier quoted context omitted.

This is a very good discussion, back and forth. I think it is worth asking who should be capturing the economic benefit here. A tax break for google in this case is allowing google to capture the economic benefit it creates for the public. Not giving it a tax break allows the public to capture that economic output. While I very much agree that this project will add value to the economy, if google is given a $15m tax…

Maybe, it could also mean that Google go to another state who will offer a tax incentive, and the state loses out. Or, as AOC would say: saves $15m.

"the state loses out" assumes that the public makes money off the deal. If not, just spend the $15m on programs that actually benefit them.

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

#85

Post by chrisco255 »

supernovae wrote: post #76
buttcoinslol wrote: post #71

Earlier quoted context omitted.

> 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 acc…

There's no need to disparage software devs as brogrammers, especially in this context.

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

#86

Post by chrisco255 »

abakker wrote: post #63
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…

This is a very good discussion, back and forth. I think it is worth asking who should be capturing the economic benefit here. A tax break for google in this case is allowing google to capture the economic benefit it creates for the public. Not giving it a tax break allows the public to capture that economic output. While I very much agree that this project will add value to the economy, if google is given a $15m tax…

You presume they don't have other options. If they don't give any incentive, then they just go somewhere that does offer incentives. Wisconsin or North Dakota or whoever else will take them.

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

#87

Post by chrisco255 »

kartan wrote: post #69
alehul wrote: post #36

Earlier quoted context omitted.

The only way seems to be to either to completely outlaw these negotiations, or create a standard rate (i.e. if the project will bring 100 jobs, the cities have the option but not the obligation to offer $10m in various forms of tax breaks— or maybe capped at $10m). The trouble is that, at a higher level, this unwillingness to play ball may just result in the companies fleeing to other countries rather than other stat…

> this unwillingness to play ball may just result in the companies fleeing to other countries rather than other states If they could they will do it. But it is not possible as you need data locality. If your data center is in China, it cannot compete in speed with a local data center. And this is true in different ways for a lot of businesses. That is one of the many reasons why all business are not already in India…

Well, small companies don't have a need to build large multi million dollar data centers, for one. Data centers, we can all agree, are kind of like a utility that favors scale. But there's lots of businesses and industries where this is true.

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

#88

Post by supernovae »

smallgovt wrote: post #38
JohnJamesRambo wrote: post #32

https://www.statista.com/statistics/267606/quarterly-revenue... https://www.theverge.com/2018/1/2/16842876/google-double-iri... This company doesn't need tax breaks, it actually needs to pay more taxes. We have to stop this idiotic behavior. There's a word for what the tax breaks are- bribery.

I don't think corporations should be allowed to negotiate tax breaks like this, but I think labeling this as bribery is disingenuous because it is neither illegal nor dishonest.

You're right, it's not illegal. However, I would say its dishonest. Let's be real. Corporations exist solely to make money. Why should taxpayers fund the winners? Who gets to choose that Google deserves taxpayer dollars and for what reason?

If you read the sales marketing pitch for new data centers they talk about billions in economic viability - if that were indeed true to the extent that the marketing material wants you to believe then corporations would fill that datacenter void and compete with one another to do so.

Because they're asking for incentives seems to suggest that the viability isn't there or that the corporations have so much control that they not only impose their will upon employees but not the governments and municipalities they operate in because there is potential for some long tail tax opportunities that Google doesn't take a risk on but the towns do. That's what ticks me off. Nothing in life is guaranteed but here we are guaranteeing google that they will win.

There was a time when a big city in NJ could do no wrong building HUGE telco buildings with no windows and huge tax incentives. It ended up building a downtown no one wanted to live or work in and the city has no money because the corporations exist tax-free and the city actually has to carry their liability even those services are being shut down, abandoned or aren't worth the promise they sold to the city to begin with.

Mostly because companies realized its cheaper to quit city and move to another if there is free money on the table

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

#89

Post by abakker »

tptacek wrote: post #83
abakker wrote: post #68

Earlier quoted context omitted.

>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—a far shorter period than the 20 years of tax relief they're requesting. After construction wraps, with 18 remaining years of tax abatement, there will be a $270,000 tax shortfall for every full-time position created. I read that paragraph from the artic…

I read that too and don't understand it at all. Do you? By "shortfall", do they simply mean "if we charged full property taxes to Google, the revenue we'd get would be much more than the taxes we'd get from the 50 FTEs at the data center"? "Shortfall" suggests money the city and county would essentially be "spending" to have the data center, but that's not what's happening, right?

https://www.taxnotes.com/editors-pick/google-seeks-20-years-...

that seems to be a much better article, but still doesn't elaborate on that "shortfall". The Taxnotes article makes this seem like a much better deal for the down, and a much more reasonable ask from google. They are effectively asking that they be granted a reduced increase in taxes on the proposed vast increase in property value from the value of their development"

>The county assessor valued the land at $1.76 million, and the city estimated that the property's market value upon completion would be $41.6 million. Local real estate taxes on the property are around $16,476 and are estimated to jump to $328,726 after the facility is built. Jet Stream requested property tax breaks for 20 years for the data center, but not school district tax abatements.

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

#90

Post by admax88q »

chrisco255 wrote: post #86
abakker wrote: post #63

Earlier quoted context omitted.

This is a very good discussion, back and forth. I think it is worth asking who should be capturing the economic benefit here. A tax break for google in this case is allowing google to capture the economic benefit it creates for the public. Not giving it a tax break allows the public to capture that economic output. While I very much agree that this project will add value to the economy, if google is given a $15m tax…

You presume they don't have other options. If they don't give any incentive, then they just go somewhere that does offer incentives. Wisconsin or North Dakota or whoever else will take them.

Data centre placement is driven by a heck of a lot more than tax incentives.

If they're looking to build a data centre in one place its because it fits their huge list of criteria. Tax breaks are just icing on the cake. They want a data centre here regardless.

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