Google’s Silicon Valley Expansion Green-Lit Without Tax Breaks (1)

Google is extending its Silicon Valley reach with a $111 million purchase of a cluster of downtown San Jose, Calif., properties the city is selling without taxpayer backing.

The tech giant isn’t receiving subsidies or tax breaks under the deal for the city-owned land near a transit center. That’s unlike projects involving Tesla Inc.’s giant gigafactory making batteries for the company’s Model 3 sedan in Nevada, for which the company received a $1.3 billion tax and incentive package, or Amazon.com Inc.’s expansion for satellite headquarters in New York and Virginia, which gave the company $1.5 billion and $573 million in perks, respectively. Compare that with Wisconsin giving Foxconn, which makes Apple’s iPhone, $3 billion in incentives.

“They never asked for any breaks. They were never offered any, but remained engaged and willing to push on,” San Jose Mayor Sam Liccardo said during a marathon session in which the City Council approved the sale very early Dec. 5. “This is a striking contrast to what we’ve seen in other parts of the country,” he added.

“In an era where cities are upping the ante on public subsidy for private corporations,” Liccardo and council members said in a Nov. 29 memo to the council, “San Jose has the opportunity to establish a new paradigm—a collaborative model where corporations ‘give not get.’”

The vote came after nearly eight hours of testimony and a delayed vote while protesters who oppose the sale disrupted the meeting—including chaining themselves to chairs—resulting in police clearing the chambers. Council members and Liccardo returned to an empty chamber but for the media to unanimously approve the sale.

The memorandum of understanding means the parcels, largely parking lots, will be transferred to Alphabet Inc.’s Google LLC by Dec. 31. The price tag includes parcels owned by the city and formerly owned by the Redevelopment Agency.

The mixed use development is expected to provide more than 20,000 jobs and annual receipts of $10.6 million in property taxes and about $4 million in sales taxes. The project is 13 miles from Google’s Mountain View, Calif., headquarters.

“We look forward to continuing to engage with the community and City of San Jose to form a joint vision for the proposed development,” Javier Gonzalez, South Bay policy lead for Google, told Bloomberg Tax in an emailed statement Dec. 5.

Transit-Centered

The Silicon Valley Leadership Group, whose members include Google, Apple, and Facebook, back the plan, as does labor. The plan was crafted after 21 public meetings, Liccardo said during seven hours of public comment. Protesters argued that more tech jobs would further push out working-class residents.

Workers and residents will reach the development via buses, light rail, CalTrain, Amtrak, and the extension of the San Francisco Bay Area Rapid Transit District train system. San Jose’s general plan for the area near Diridon Station calls for retail, office, residential, and public spaces.

The properties sold for market value after Google and the city in June 2017 began negotiating an exclusive agreement.

The project in 2019 will enter its second phase, which is expected to last at least two years, Kim Walesh, deputy city manager and economic development director, told the council. It will be 10 years before the project is completed.