[NYTr] Google Under Scrutiny for Alleged Tax Dodge
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San Francisco Chronicle - Sep 30, 2005
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/09/30/BUG7IF01SR1.DTL
Google under scrutiny
Officials say it's dodging taxes by building on federal land
by Dan Levy, Chronicle Staff Writer
Google's blockbuster partnership with NASA Ames Research Center is
leaving local officials, environmentalists and Silicon Valley
landlords feeling left out of the party.
Google and NASA announced a working agreement Wednesday that could
result in the Internet giant building a complex of up to 1 million
square feet on NASA-owned property adjacent to Moffett Field near
Mountain View.
But in light of the deal, city and county officials say they are
looking for ways to make Google contribute more to local government
coffers.
"Any for-profit entity of (Google's) magnitude using land owned by the
people should not escape paying their fair share," said Larry Stone,
Santa Clara County's tax assessor. If Google were to build its campus
on county land, he estimated, it could generate as much as $3 million
in property tax revenue.
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."
NASA Ames is a self-contained federal entity, however, and not subject
to local jurisdiction, including property taxes.
When asked how he would compel Google to pay more to the county, Stone
replied: "I don't have a clue yet. But I will."
The Google/NASA Ames enterprise could become a new intellectual and
commercial hub in the valley.
The estimated $300 million development would allow scientists and
technology experts to collaborate on areas ranging from supercomputing
to biotechnology and nanotechnology, and convert the knowledge into
information that would be made available to the public.
Given those lofty goals -- and the fees that Google will pay for the
privilege of building at NASA Ames -- space agency officials disputed
the notion that the company is dodging Uncle Sam.
"The idea that Google would be coming here not to pay taxes is
ludicrous," said Michael Marlaire, NASA Ames' director of external
relations and development. "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."
The company will also have to build infrastructure such as sewers and
roads, and pay for improvements to existing utilities, Marlaire said.
Lenny Siegel, director of the Center for Public Environmental
Oversight in Mountain View and a longtime Moffett Field watchdog,
lauded Google's achievements but wondered whether it should be doing
more for the community.
"Why should they be exempt from local taxes when they're creating
demand for local services?" Siegel said. "If Google brings in 4,000
people to Moffett, there's no transportation capacity to handle that.
Google and NASA have to do a better job of working with the cities and
with the broader public
"Everybody loves Google, but they won't like Google if there's
gridlock on local highways and rents jump," Siegel said.
Silicon Valley landlords tried to land Google as a tenant, but they
came up short, lacking the huge amount of space the company sought to
build a custom-designed headquarters.
"Google had very specific parameter they were trying to stay in, so
that limited our opportunities," said Phil Taylor, senior vice
president at Sobrato Development Co., one of the leading landlords in
Silicon Valley.
"Anytime there's a build-to-suit project, it's unfortunate, because
existing space is not taken off the market," he said. "In fact, it
tends to add space to the market when the company moves into its new
buildings. From that standpoint, it's not good for vacancy rates."
Google says it will continue to lease its Mountain View headquarters
and remain in other locations in the area. The vacancy rate in the
valley is about 15 percent for office space, 20 percent for R&D space.
Real estate brokers said that Google simply found the best deal it
could. The company values employee interaction among its workforce and
tries to maintain a high quality of work life, which the new complex
could provide.
"Every company has its own strategy," said Jeff Nochimson, senior vice
president of Colliers International.
Marlaire, the NASA Ames official, did concede, however that Google
might be required to contribute more in the end.
"We'll work closely with the county assessor to see if there are any
other sales taxes or use taxes that could be applied," Marlaire said.
)2005 San Francisco Chronicle
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