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I think the negative reaction has something to do with the ROI for the tax money forgone? From the article: > After construction wraps, with 18 remaining year

I think the negative reaction has something to do with the ROI for the tax money forgone? From the article: > After construction wraps, with 18 remaining years of tax abatement, there will be a $270,000 tax shortfall for every full-time position created. It's not as bad as Wisconsin's Foxconn cluster-F, but for a rural area, 15k a year per person is not peanuts. Difficult to make that up someplace else. (Well, not "difficult" from a technical perspective, you can just raise taxes on people in the rest of the state. But politically speaking, what if the people in the rest of the state figure out what you're up to? That's what happened in Wisconsin.)

tptacek 8y ago
Thanks! I feel like I'm still not understanding. The tax breaks Google is asking for are city and county property taxes. If Google doesn't move in, the county isn't getting that money anyways. What's the "shortfall" here?
- bilbo0s 8y ago
  The shortfall represents the money not present assuming that Google DOES move in. If Google moves in, and they maintain the current tax rates on people currently living in that municipality, then the shortfall is about 15k per Google head. If Google DOES NOT move in, there is no shortfall at all. Of course, they can just increase the taxes on people already there in residence. But again, rural area. Not a lot of money. So I expect it'd be more likely for them to try to get money from the state coffers to cover the shortfall. Not really sure what the plan is to cover the shortfall in the event that Google moves in using the subsidies outlined.
  - tptacek 8y ago
    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?
    - bilbo0s 8y ago
      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 for 18 of those 20 years is higher than the $15 million bucks they're gonna get from Google. Those expenses are, obviously, not there if Google does not site a data center in that municipality. So if you want a, sort of, game theoretical optimum, then the question people on both sides of the issue should be answering are: 1 "What are the benefits to this municipality, or to the state, of Google moving in?" and 2 "What is the value of those benefits in tax dollars?" If the answer to 2 is greater than or equal to 15K per Google head, then you break even or profit. If it's not, then you lose.
      - tptacek 8y ago
        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?
        supernovae 8y ago
        Why should taxpayers have to take the risk for Google if the opportunity and reason for Google to be there is already there? If it's already win-win for everyone, why even have the tax abatement? Google being the extremely profitable company it is, shouldn't need to create liabilities for a market it's trying to promise jobs too. a lot changes in 20 years and if its anything like the telco industry it will mean they will rely on these incentives for everything they do in the future because people seem willing to give it to them.
- tfehring 8y ago
  The infrastructure improvements needed to support the data center will be paid for by $20.1 million in state bonding - that is, they'll be paid for over time by Minnesota taxpayers at large. So there's no "shortfall" for Becker or Sherburne County, but only because the rest of the state is picking up the tab.
  - tptacek 8y ago
    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 the benefits of that investment accrue solely to Google? The sponsor of the bill claims to be supporting it whether or not Google selects Becker.
    - tfehring 8y ago
      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, and it's not trivial to see how things net out. > The sponsor of the bill claims to be supporting it whether or not Google selects Becker. Well yeah, why wouldn't he? He has plenty of political capital since Minnesota's recently elected governor, a Democrat, is pushing for lots of ambitious legislation. And what's not to like about spending other people's money in your own community?
      - tptacek 8y ago
        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.

tptacek 8y ago

Thanks! I feel like I'm still not understanding. The tax breaks Google is asking for are city and county property taxes. If Google doesn't move in, the county isn't getting that money anyways. What's the "shortfall" here?

bilbo0s 8y ago
The shortfall represents the money not present assuming that Google DOES move in. If Google moves in, and they maintain the current tax rates on people currently living in that municipality, then the shortfall is about 15k per Google head. If Google DOES NOT move in, there is no shortfall at all. Of course, they can just increase the taxes on people already there in residence. But again, rural area. Not a lot of money. So I expect it'd be more likely for them to try to get money from the state coffers to cover the shortfall. Not really sure what the plan is to cover the shortfall in the event that Google moves in using the subsidies outlined.
- tptacek 8y ago
  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?
  - bilbo0s 8y ago
    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 for 18 of those 20 years is higher than the $15 million bucks they're gonna get from Google. Those expenses are, obviously, not there if Google does not site a data center in that municipality. So if you want a, sort of, game theoretical optimum, then the question people on both sides of the issue should be answering are: 1 "What are the benefits to this municipality, or to the state, of Google moving in?" and 2 "What is the value of those benefits in tax dollars?" If the answer to 2 is greater than or equal to 15K per Google head, then you break even or profit. If it's not, then you lose.
    - tptacek 8y ago
      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?
      - supernovae 8y ago
        Why should taxpayers have to take the risk for Google if the opportunity and reason for Google to be there is already there? If it's already win-win for everyone, why even have the tax abatement? Google being the extremely profitable company it is, shouldn't need to create liabilities for a market it's trying to promise jobs too. a lot changes in 20 years and if its anything like the telco industry it will mean they will rely on these incentives for everything they do in the future because people seem willing to give it to them.
tfehring 8y ago
The infrastructure improvements needed to support the data center will be paid for by $20.1 million in state bonding - that is, they'll be paid for over time by Minnesota taxpayers at large. So there's no "shortfall" for Becker or Sherburne County, but only because the rest of the state is picking up the tab.
- tptacek 8y ago
  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 the benefits of that investment accrue solely to Google? The sponsor of the bill claims to be supporting it whether or not Google selects Becker.
  - tfehring 8y ago
    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, and it's not trivial to see how things net out. > The sponsor of the bill claims to be supporting it whether or not Google selects Becker. Well yeah, why wouldn't he? He has plenty of political capital since Minnesota's recently elected governor, a Democrat, is pushing for lots of ambitious legislation. And what's not to like about spending other people's money in your own community?
    - tptacek 8y ago
      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.