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?

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.

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 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.

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?

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.

What risk are taxpayers taking?

They're taking on growth with an abatement on revenue

Is this tax break being extended to all small businesses with 50 or so employees in the city? If not, why? Why is Google special when it needs it the least? Tax incentives create an unfair business environment and hurt local business. In reality, taxes on everyone else will likely rise

Google's argument, according to a link posted upthread, is that its investment of hundreds of millions of dollars in the construction of a data center will drastically improve the value of the lot that it's building on, and it wants a 20 year abatement on the increased value it is itself generating on the land.

It's not at all clear to me how or why taxes on everyone else will likely rise.

That's what happens every time they give big business an exception in my city. Fedex was the most recent. A city commissioner literally asked the Fedex rep at a commission meeting if they would still come without the tax incentive and they replied yes. The commission then still proceeded to pass the incentive. They see 20 years of tax free growth while property taxes go up for everyone else.

Google has to spend the money on the data center regardless if it gets the tax incentive or not. Whether the city gives them $15M in a free ride until then is what is in question.

It's basically spitting in the face of your new neighbors. The $15M is not important to the success of this data center and it will be a drain on the town for the first two decades.

How exactly is this a drain on the town? People keep saying things like this and it is not at all clear how that could be happening. The opposite seems likely: Google building a huge data center here will, in fact, be an economic boon (marginal or significant, we can debate).

This isn't money the county is paying Google, or that Google is somehow taking from the town. It's a data center built on an empty field in the middle of nowhere, connected directly to a wind farm run by an otherwise struggling power company that owns the land Google is using.

The middle of nowhere? Do you even know the area at all? It's right next to the twin cities which has a metro population of 4 million people, home to many multi billion dollar companies (Cargill, Target, Best Buy, 3M, United Health Group, U. S. Bancorp, General Mills, shall I go on?).

Many things in a small city are supported solely by property taxes, to which Google would not contribute at all for at least two decades yet gain all of the benefits from. This is not fair to anyone else in the city who is paying those taxes for those benefits. It's better to just not have them exploiting the city's resources for free.

It's about an hour northwest of Minneapolis. A vacant lot in Dekalb or Manteno might be "right next" to Chicago in the sense that Ulaanbaatar "isn't right next to" Chicago, but: a vacant lot in Manteno is the middle of nowhere.

You can just drive around it in Google Maps to get a sense of it, and where it is. I stand by my assessment of the value of this land.

It's a drain on the people currently living in the town, because the high paid employees will mostly be imports and drive up local cost of living, more than they will drive up the income of people not employed at the facility.

It's maybe a boon for the town as a corporate entity, or as a statistical aggregate, but it's not likely a boon for the existing constituents of the town if it comes with a significant tax abatement.

Google has to move in somewhere, tax breaks or no tax breaks, its a net loss for america as a nation, and a massive net gain for google.

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.

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.

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?

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.

I don't think either Becker specifically or Minnesota more broadly has a better alternative than to demand the property tax and, presumably, let Google build elsewhere. I also agree that if the property tax breaks were the only incentive that Minnesota was offering, it would be a clear net positive to offer those tax breaks. But the need for a bonding bill makes the trade-off less straightforward, since it requires Minnesota to commit funding directly, instead of just foregoing tax revenue that it "should" (but wouldn't) receive.

I live in Minneapolis and hadn't heard about the proposal until I saw this thread, so I'm inclined to think the outrage is mostly manufactured. To the extent that it's real, it's probably driven by the fact that Wisconsin seems to have gotten fleeced by Foxconn.