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Google's Carolina deal
February 09, 2007
More details are emerging about the deal Google was able to get to set up a data center in Lenoir, North Carolina. The Charlotte Observer yesterday reported that the total amount of the tax breaks and other economic incentives granted Google may be far higher than the $100 million previously reported:
The cost of wooing Google to the state's foothills could far exceed initial estimates, with tax breaks and other public incentives potentially reaching $260 million. That makes it one of the richest packages of recruiting perks ever offered in North Carolina, and one negotiated in strict secrecy.
Today, the paper reports that Google was able to get the breaks without actually having to guarantee much in return:
You can find almost anything on Google, but in its deal to build a computer center in Lenoir you won't find a guarantee to create jobs in exchange for local tax breaks.
City and county governments agreed to give up tens of millions of dollars in potential tax payments to help lure the $600 million project to Caldwell County. But the governments set no job-creation or investment requirements, unlike most similar economic development deals, officials said Thursday. City and county boards in December agreed to waive 100 percent of Google's personal property taxes and 80 percent of its real estate taxes for 30 years, which could be worth up to $165 million. Google said it will create 200 jobs by 2012. And local officials will just have to trust them.
Meanwhile, in a letter to the paper, Google's Director of Global Operations, Lloyd Taylor, defends the deal and counters the criticism:
My job is to build and run Google's data centers, and I'm very happy that we've found a new home for our infrastructure in Lenoir. I'd like to thank everyone who helped to make this possible ... I'd like to briefly touch on two issues about which I've heard a lot of questions and comments recently.
First, I'd like to ask for your understanding. We waited so long to "go public" with our plans both for competitive reasons and because we don't want to create a stir during the early phases of a site selection projects where many sites don't end up panning out.
Second, you've probably read about Google getting "$100 million" in incentives to locate in Lenoir. That entire hypothetical 30-year figure consists of tax reductions that put North Carolina on par with other states. That is, those incentives come from reductions in property and sales taxes which don't exist at all in many other states ...
Even with the reductions, we'll be among the largest taxpayers in Caldwell County. Just this year alone, we'll pay millions of dollars of sales taxes on materials and services needed for construction. Plus, we already have paid over $4 million to Lenoir and Caldwell County to cover expenses and community infrastructure improvements.
But, back to our project. Despite the rains, we've made good progress on preparing the site, and we'll soon start with the construction of the first building. We'll regularly update you on our progress in the coming months.
Google seems to be learning that secrecy may not always be the best policy.
UPDATE: Also today, the Raleigh News & Observer published an editorial blasting the secrecy surrounding the Google negotiations and the complicity of government officials. It begins:
What must Google executives have thought when they reviewed the incentives offered by the state of North Carolina and Caldwell County last year in exchange for the company bringing a data center to Lenoir? That reaction must have been something like an after-Christmas sale when shoppers are standing outside a department store awaiting the opening and one declares, "You know, they're practically giving the stuff away!"
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Comments
Google’s datacenters seem to be part of a larger plan – have you seen PBS columnist Robert Cringely’s article on how the search giant plans to be the answer to all our bandwidth needs when the rush of video on the web reaches all Internet users? One thing I wonder, is net neutrality just a tool to make cable and phone companies run into the arms of Google’s amazing caching centers even faster than would otherwise occur?
Posted by: she said, she said ![[TypeKey Profile Page]](http://www.roughtype.com/nav-commenters.gif)
at February 11, 2007 08:37 PM
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