Ann Arbor officials believe $1M in free parking provided to Google has paid off
Six years after rolling out the red carpet for Google Inc., Ann Arbor officials maintain the seven-figure incentive the city offered to convince the Internet giant to lay roots downtown was worth it.
"I think it was important to get Google here," Mayor John Hieftje said. "They were the brand name that has really allowed us to build a tech campus around them."
Downtown Development Authority Director Susan Pollay agreed the more than $1 million in free parking the city provided to Google employees has paid off. She said Google helped plant the seed for what downtown is starting to see: the emergence of a tech-savvy creative class.
City records show more than $1.2 million was spent from the city's Economic Development Fund before it was dissolved in 2011. Most of it went toward free parking for Google employees, though $104,742 was shown budgeted for work on the city's Fuller Road train station project.
Angela Cesere | AnnArbor.com file photo
Hieftje and Pollay stood behind those statements last week even in light of the fact that Google has created only a fraction of the jobs it planned to bring here by now, and the company now is tied up in a dispute with the state of Michigan over $3.1 million in unpaid state business taxes.
"We have no indication that locally Google has been anything but a good citizen, and no indication that there is anything that has changed that," Hieftje said on Thursday.
Google has been mostly quiet about the state tax dispute, but a spokesperson told AnnArbor.com it stems from an outstanding issue related to 2008 and 2009 corporate tax returns. The company is working through an appeals process and hopes to resolve the issues with the state soon.
The Google parking deal
After Google announced its desire to establish an office in the Ann Arbor area in 2006, then-Gov. Jennifer Granholm endorsed efforts by local and state governments to offer incentives.
Google promised to hire 1,000 employees by 2011 in exchange for tax credits from the Michigan Economic Development Corp. worth more than $38 million over 20 years.
Google co-founder and 1995 University of Michigan graduate Larry Page greets U-M President Mary Sue Coleman during the spring commencement ceremony in Ann Arbor in 2009.
File photo | AnnArbor.com
The city believed Google would bring significant economic and social benefits, eventually leading to the creation of thousands of new jobs, an increase in tax revenues, an increase in customers at local businesses, and partnerships with the University of Michigan and local technology firms.
Instead of offering local tax incentives, the City Council went on record in January 2007 saying it would provide free parking for Google employees in cooperation with the DDA.
The council followed through in June 2007 by establishing an Economic Development Fund and transferring $2.18 million from the city's general fund to the new fund.
The city committed to pay for up to 400 parking spaces for Google employees for up to four years, through December 2010, at an estimated cost of more than $2 million.
The council also indicated it was interested in using a small portion of the fund to investigate the viability of supporting regional light rail service.
The city initially was planning to spend as much as $600,000 a year for Google parking, but given that the company hired only a fraction of the employees it projected, nearly half the money set aside for Google parking went unspent, and the city saved hundreds of thousands of dollars.
City records reviewed by AnnArbor.com show more than $1.2 million was spent from the Economic Development Fund before it was dissolved in 2011. Most of it went toward Google parking, though $104,742 was shown budgeted for work on the city's Fuller Road train station project.
The fund still had a balance of $967,161 when council closed it down and returned unspent monies to the city's general fund in 2011.
Tom Crawford, the city's chief financial officer, confirmed in 2011 that Google no longer was getting free parking from the city. When it was, he said, it was based on new hires.
AnnArbor.com filed a Freedom of Information Act request with the city last week asking for records showing the hiring numbers on which the city relied.
MEDC officials estimated in 2006 that the establishment of a sales and operations center in Ann Arbor for Google's AdWords online advertising program would not only create the 1,000 direct jobs Google projected in its first five years, but also more than 1,200 spin-off jobs.
Since then, Google has been hesitant to reveal the exact number of workers it employs in Ann Arbor, generally giving estimates instead of specifics.
John Hieftje
AnnArbor.com learned in 2011 that Google was quietly contracting with a global outsourcing firm to bring contract employees into the Ann Arbor office at wages lower than required under the state's tax credit program. Google has declined to comment on the details of that.
Council Member Stephen Kunselman, who supported giving Google free parking in 2007, said he still thinks it was a good move for Ann Arbor.
"It was good seed money," he said. "But the reality is they didn't come here because of the Ann Arbor City Council. They came here because of the University of Michigan."
Kunselman thinks Google's decision to locate in the Ann Arbor area had more to do with the fact that Google co-founder Larry Page is a U-M graduate and Google already had a deal with the university to digitize the entire print collection of the University Library.
That said, Kunselman believes the free parking incentives helped convince Google that throwing anchor in the downtown was the right move, whereas the office could have been set up in a research park on the outskirts of town or somewhere out in the townships.
Kunselman said he's going to reserve judgment on the tax lien issue since he doesn't know all of the details at this point, but he expects Google will pay any amount rightfully owed.
Google leases space inside McKinley Towne Centre at 201 S. Division St. City officials said the taxes on the downtown Ann Arbor building are being paid.
"I don't think Google is in financial trouble," Hieftje said. "They're a big company, but they're obviously having a dispute with the state."
AnnArbor.com filed a Freedom of Information Act request with the state last week for a full accounting of the actual worth of state tax credits and incentives received by Google since 2006, as well as records related to the tax lien filed against Google by the state.
A spokesman for the MEDC said on Wednesday there's no relationship between the tax lien and the job creation agreement the state reached with the company in 2006.
Google's impact in Ann Arbor
Hieftje said it was the city's hope that a downtown "tech campus" eventually would form when the city helped lure Google to Ann Arbor, and now it seems that's panning out.
California-based tech firm Barracuda Networks recently moved hundreds of employees to office space on Maynard Street with plans to keep growing.
Another tech company, PRIME Research North America, also recently signed a long-term lease for 16,000 square feet of space on the second floor of the old Borders building on Liberty Street, joining Barracuda in creating a new tech hub at the corner of Liberty and Maynard streets.
Google uses its rooftop deck at the McKinley Towne Centre at 201 S. Division St. to host a variety of events and provide a pleasant space for its employees.
Steve Pepple | AnnArbor.com file photo
LLamasoft, a supply chain software designer, is another high-tech company laying roots in downtown Ann Arbor. It was reported in October, as the company signed a lease for an additional floor of the First National Bank Building, that it had grown from 40 to 150 employees in two years.
"We saw Google as the beginning of a tech campus downtown and that's what we looked at from the very beginning," Hieftje said. "They were being offered very good deals out in the townships and they had a lot of options."
A local real estate professional predicted at a recent DDA meeting there will be 1,400 young tech employees working in the Liberty/Maynard/Washington area within a few years.
"When I look now at the State and Liberty corridor, I think Google came and brought with them vibrancy and credibility," Pollay said. "We are seeing a tech campus taking shape at the point where town and gown come together. That area has struggled for years."
Pollay believes Google has improved the downtown economy, with retail shops and restaurants seeing an increase in business because of Google employees downtown.
Susan Pollay
Hieftje said the fact that Ann Arbor provided more than $1 million worth of free parking to Google was a rare move for a city that's usually stringent about using incentives to lure companies.
He said the amount of tax-abated property in Ann Arbor is less than two-tenths of a percent of the total valuation of property in the city.
"So it's very small," he said. "They don't add up to much."
Pollay suggested Google's presence in Ann Arbor has added to the culture of downtown in smaller ways that many don't notice — like the fact that Google incentivizes employees to give up their cars and commute to work by bicycling, walking or taking the bus.
Nancy Shore, director of the getDowntown Program that encourages alternative commuting in Ann Arbor, said Google is the largest purchaser of go!pass bus passes in the downtown.
For the 2011-12 go!pass season, Google employees had the highest bus ridership of any employer downtown, Shore said, citing a figure that 57 percent of Google employees used their go!passes to commute to work by bus at least once during the year.
"They always provide sponsorship to our Commuter Challenge," Shore added. "They have a real strong focus on alternative transportation and green commuting."
Shore said Google has done, in some ways, what the university also does: Bring a lot of young, creative energy to Ann Arbor.
"It's coming to the point where, at least in my circles, I know several people whose husbands or wives work at Google," she said. "Those individuals are engaged in the community. They're also shopping at downtown business and participating in all the things we love about Ann Arbor."
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's email newsletters.
Comments
kenneth
Wed, Mar 27, 2013 : 5:06 a.m.
Continuing.... 5. Google offers a special program for non-profits called "Google Grants" that offers free advertising grants to non-profits. The advertising can drive awareness for their cause, attract new members, and generate donations. Google Ann Arbor has been proactive in helping Michigan non-profits access this program. The amount is non-trivial - some non-profits get tens of thousands of dollars in free advertising through this program every year. 6. The presence of Google in Ann Arbor increases the relationship between the University of Michigan and one of the most important technology companies in the world. Google hires many U of M grads, offers its Gmail service to students for free, has sponsored a variety of research, events, and talks, and gives Larry Page a very good reason to come back to visit. One day Larry Page will give a significant donation to the university and the presence of the office will only help make that happen. 7. In regards to the story about Google putting together a plan to add more workers through an outsourcing firm, I fail to see how this is anything but a good thing. This is more jobs for this area and while they may not be as highly paid as the coveted Google jobs - they will still be decent paying jobs for people! We want Google thinking about all the different ways it can expand its business in Ann Arbor and if they have an opportunity to add certain types of jobs here than I would much rather it be in Ann Arbor than some other state. Who cares if they are below the tax credit limit or not - if they are then they don't get any tax credits! 8. Google is at the very early stages of its growth - it is less than 15 years old. It is likely its presence in Ann Arbor will be here for a very long time. During that time, it is also possible it will grow and add more people to its office. The $1M investment when considered over many years seems smart.
kenneth
Wed, Mar 27, 2013 : 5:05 a.m.
Here are additional reasons why a $1M investment to attract a major technology brand like Google has brought benefits to the city. Note - this post assumes we want to see Ann Arbor grow economically (I am not always sure people see this as a good thing when I read some posts). 1. We now have 300 talented college educated technology professionals working in DOWNTOWN in Ann Arbor. DTE is the only other example of a major private employer over 200 employees. All thriving cities have major downtown employers as anchors. Detroit lost their anchors and has yet to fully recover. 2. Ann Arbor Spark played a major role in bringing Google to Ann Arbor. It is a success story for them that they can share with any prospective company considering Ann Arbor. It is a fantastic proof point for what is possible in Ann Arbor. 3. These are high-paying jobs for young professionals mostly live close to Google and spend money at local restaurants, bars, dentists, car dealers, YMCA, etc. In fact, I know many people who work at Google and I can't go out at night in Ann Arbor without bumping into somebody who works there. These are people who live, work, and play in the downtown area and have money to spend. 4. Google Ann Arbor has a notable commitment to training the local community on the tools that can make business and non-profits successful online. In addition to offering classes at their offices, workshops for non-profits through the NEW center, speaking at dozens of events per year, they also have setup a class at Eastern Michigan and Community High that pairs students with a non-profits and then trains the students on how to help that non-profit advertise online.
Stuart Brown
Tue, Mar 26, 2013 : 1:36 a.m.
This whole incident simply reinforces in my mind the fact our elected leaders simply don't have a clue. There is probably no connection between the $1 Million in parking and Google's decision to locate in Ann Arbor (other than giving valuable public assets away for nothing.) If Google is in Ann Arbor, it is because they chose to be here based on their business case for being here. If the addition or non-addition of free parking mattered, that would be a clear indication that Google did not have a strong business case for being here, so why would Ann Arbor want to throw good money after bad? This deal stinks and letting Heiftje and Pollay get away with the narrative that their willingness to force taxpayers to bend over and take it in the rear is a good thing is outrageous. People should be mad and they should let Heiftje and Pollay know this deal stinks.
Judy
Mon, Mar 25, 2013 : 3:04 p.m.
If tax breaks are going to be given to Corporations and Companies it is time for them to be in the form of "pay first" and receive back "after" the terms are met. Like government makes us do with "income tax!" But just like having a flat income tax this will never happen because the "Fat Cats" will never go for it!
Stuart Brown
Mon, Mar 25, 2013 : 6:14 a.m.
To realize just how egregious this case is, ask how ordinary citizens are treated when they break the rules in this city. Exceed the speed limit, busted, now pay $130.00 dollars and take 2 points on your record. Park your car in the wrong spot, busted, now pay for a tow. Google lies and gets paid for lying. Google is what it is and we have no control over it but this is not true with people like John Hieftje or Susan Pollay; what a bunch of knuckleheads, they are behind us, way behind. What a pathetic display of after-the-fact justification. The worst thing about this deal is that it opens the flood gates to every big robber baron corporation to shake-down the city for more cash. If the city had done nothing, Google would have located somewhere where they would have contributed more to whatever local tax base they landed in, probably in Ann Arbor. This deal was horrible for Ann Arbor!
Kai Petainen
Mon, Mar 25, 2013 : 5:19 a.m.
Ryan.... others have said it too... let me reiterate it... Fantastic job. *claps* Great article.
Attempted Voice of Reason
Mon, Mar 25, 2013 : 3:51 a.m.
To clarify my previous post: Yes, I consider parking and housing crunches to be a good thing, because it means that people want to come to live here and entertain themselves downtown. As a comparison--Jackson has no housing or parking crunches, but isn't really most peoples' idea of a perfect city for entertaining themselves or buying a house.
Steve Bean
Mon, Mar 25, 2013 : 5:08 p.m.
False dichotomy.
mtlaurel
Mon, Mar 25, 2013 : 12:21 p.m.
population Ann Arbor[ 2000]-114,100..in [2012]-113,934
Attempted Voice of Reason
Mon, Mar 25, 2013 : 3:48 a.m.
I'm going to break the tide of commenters on here and say that getting the "Google" sign on a high(ish) profile building downtown is worth the $1,000,000. I am certainly no Hieftje lover, but getting the Google office here helps to make Ann Arbor a little more prominent and a little more attractive to the rest of the world. Certainly right now with the apartment and house market tight (despite all the new towers just built), and the difficulty in finding parking downtown on weekend nights because of all the people coming here, some things are going well, and I'll bet the Google office played some at least small part in that.
JRW
Mon, Mar 25, 2013 : 12:09 a.m.
So, in 2013 Google has 300 employees between AA and Birmingham and won't provide exact # at each office. Let's divide the # in half and assume GOOG has 150 employees in the AA office. This is after a promise in 2007 to hire 1,000 by 2011. Promises promises. Now they are a tax dodge in addition to getting all kinds of freebies from the city and are bringing in contract employees at lower wages and probably no benefits, which is the point of contract workers. Cheaper. And this is good for AA? Then one person, Nancy Shore, knows a handful of Google spouses: "It's coming to the point where, at least in my circles, I know several people whose husbands or wives work at Google," she said. "Those individuals are engaged in the community. They're also shopping at downtown business and participating in all the things we love about Ann Arbor." So a few people are engaged in the community with spouses at Google and this justifies the millions in tax breaks? Get real! One more debacle by the city.
Mad Max
Mon, Mar 25, 2013 : 3:18 a.m.
Some people just have it good ... if it bothers you so much, go work there
mtlaurel
Mon, Mar 25, 2013 : 2:48 a.m.
really now..a few people that get their hair cuts for $ 42./can park and eat lunch and buy a candle for their sister's birthday at a downtown shop...somehow I don't think the narrative is quite on the mark...for each of these individuals there are scores more that don't come and participate because of high costs and recent inconveniences and degradation of real services.
Mad Max
Mon, Mar 25, 2013 : 2:24 a.m.
A lot of talented people making a lot of money that would not be in Ann Arbor if not for the company. Go start your own successful company and get the same benefits from the city - no point in crying over something that isn't going to change anytime soon.
Brad
Mon, Mar 25, 2013 : 1:16 a.m.
This is the same person who thinks the GoPass is a success because 57% of Google people (who get the pass for free) used it at least once in a year. Woo hoo.
Greggy_D
Mon, Mar 25, 2013 : 12:07 a.m.
Where is the Annarbor.com Mega Guide to all the "Jenny from the Block" economic disasters?
JBK
Sun, Mar 24, 2013 : 10:49 p.m.
Not to rain on anyone's parade, but all this BS talk about Google is a joke. You have Truven Health Analytics and ProQuest just up the street on State & Eisenhower. BOTH companies develop their own software for data analytics. They BOTH pay their taxes and together employ around 1600 people! Just sayin. :)
Brad
Mon, Mar 25, 2013 : 11:38 a.m.
The real "tech campus" is by the airport, not downtown. Always has been. Since long before Google moved to town.
JBK
Mon, Mar 25, 2013 : 1:45 a.m.
Jamie - You raise a number of good points, BUT my point is that A2 has always had high tech, yet they do not always admit to it. Companies on the "outskirts of downtown" are looked at as the ugle stepchild. Truven (formerly Thomson Reuter Healtchare) and ProQuest are HUGE contributers to the local economy, yet get NOTHING back as far as a "thanks, glad you guys are here". Most people have NO clue as to what is involded in analytic software. Go back to school and take a "quantitative stats" course and you will get a clue. This Mayor and his rubber stamp Council are clueless. And it is shameful.
Jamie Pitts
Sun, Mar 24, 2013 : 11:10 p.m.
It can't be said enough! I wonder how often towns are bamboozled by large tech corporations seeking a free ride (or at least an easier ride). The leaders involved in attracting some sexy company then get to say that they did a great job, elect me again, just don't pay attention to how much the town actually benefitted from these public resources spent. Still, I do see the utility of incentivizing employers to move downtown! I would like to see the incentive be fairly offered to firms of all sizes, not as some sweet deal with some faraway company done behind the scenes.
DJBudSonic
Sun, Mar 24, 2013 : 8:11 p.m.
My kids and I were doing some math on the way to the film festival this morning. If the city gave Google $1,000,000 in breaks, and there are 100,000 taxpayers in the city, how many dollars is each taxpayer responsible for? $10 each. Have I gotten my $10 out of this deal? Probably not. Now, if the city spends $50,000,000 on an underground parking structure, how much is my share? $500. Have I gotten $500 worth of value out of that parking structure? Definately not. Now, if the city wants to spend $50,000,000 on a train station, and $65,000,000 on a new library, and $4,700,000 on a new recycling drop off station, and lord knows how much for county-wide transit, etc. etc. pretty soon we are talking about real money. I am not seeing the value in these deals. What ever happened to saving for a rainy day?
Dog Guy
Sun, Mar 24, 2013 : 9:57 p.m.
DJBudSonic, there better not be any rainy days. In a dozen years, the boss has taken Ann Arbor from a hill of cash to a pothole nearly half a billion dollars deep from which it cannot emerge in my lifetime. Yet he is frenetic to spend even more and faster.
gerald Grzesik
Sun, Mar 24, 2013 : 8:10 p.m.
When your senior tax payer in Mich that all this governor worries about not his business tax buddies they have save for hid campaign , he can not find fm for Detroit in Michigan he has to go out of state to one of his buddies.
Mad Max
Sun, Mar 24, 2013 : 7:29 p.m.
Man, what a bunch of little complainers. You have the best company in the world in your town, with highly educated/talent people living in your city, and all you do is complain about it. Maybe we should import some additional homeless people to beg for money on Main Street or open up another Bongs and Thongs in its place. If you're so upset about all the perks they are getting, just go apply for a job there instead of complaining about, or start your own successful company that will grow into a company that gets courted, and offered great perks. It always the unsuccessful/unhappy people who complain about successful people and companies. Go out there and make your own success instead of complaining about others
gofigure
Mon, Mar 25, 2013 : 1:04 p.m.
re @Mad Max. You must be one of the FEW that work there.
Mad Max
Sun, Mar 24, 2013 : 10:02 p.m.
You have no idea who works in there - it's a lot more than a call center - Google Adwords accounts for almost all of of Google's revenue .... that's who works out of Ann Arbor .... do some research before you make unintelligent comments
RUKiddingMe
Sun, Mar 24, 2013 : 8:42 p.m.
I think people ar complaining about the city spending a bunch of money on things that work out not being like they said they would. There's some complaining aout the successful business not paying ther taxes or following through on promises. I don't see anyone complaning about the success of the company. By the way, having a call center for a specific part of the business is not really like having the company in our town.
CynicA2
Sun, Mar 24, 2013 : 7:13 p.m.
It wouldn't surprise me to see Google close this advertising sales and service office, and move it elsewhere long before it ever generates 1000 new jobs - mighty expensive real estate for a call center - no wonder they are utilizing an outsourcing firm. The economics of their business have likely changed considerably since this office was created. Tech is so ephemeral - the ground is always shifting beneath their feet. King John and company just love to build sand castles, and when the tide sweeps them away, they go out and build some more, and tell us what a great job they're doing.
DJBudSonic
Sun, Mar 24, 2013 : 6:56 p.m.
New spin on old joke: Q. How do you know when economic development officials are lying? A. There lips are moving. Google ad words could not possibly hire 1000 people to work in that space unless they were to lease additional floors of the building. I know people who have applied for jobs there repeatedly and have been told either that they are not hiring, or that they are overqualified for the work, as it consists mostly of low paying jobs related to ad sales, call center operations and low level data analysis. The high paying tech jobs are filled, by transfers from other Google campuses and a few local hires. I wish it would be the success they claim it to be, but right now it's not. Also, I would like to mention that the Mayor and his MEDC/Spark/Development crew know quite well that people are starting to wise up to their numbers games, expect more articles like this touting their "success"; the city is hiring communications specialists aka PR Flacks to keep feeding stories that favor their programs. (on our dime of course)
DJBudSonic
Sun, Mar 24, 2013 : 6:58 p.m.
I know the difference between "there" and "their" but since there is no editing avaiable on here you will have to pretend it said: A. Their lips are moving.
Stephen Lange Ranzini
Sun, Mar 24, 2013 : 5:38 p.m.
"The council followed through in June 2007 by establishing an Economic Development Fund and transferring $2.18 million from the city's general fund to the new fund." The real question here is why did $2.18 million need to be diverted from the General Fund, which pays for fire, emergency medical and police services, to the Downtown Development Authority to "pay" for free parking spaces, when the parking spaces cost the DDA nothing and the project benefitted the DDA area?
a2citizen
Sun, Mar 24, 2013 : 5:03 p.m.
Google is not a cutting edge technology company. It's a virtual Dollar Store.
Stephen Lange Ranzini
Sun, Mar 24, 2013 : 5:02 p.m.
Did the city actually "spend" any money for free parking spaces for Google? All I see is money was paid from the General Fund to the DDA. Then over $100k went to train station studies. That was real cash.
Steve Bean
Mon, Mar 25, 2013 : 5:03 p.m.
Stephen, yes, we spent tens of millions on a new parking structure that some of them now use.
Jamie Pitts
Sun, Mar 24, 2013 : 4:31 p.m.
The presence of Google downtown is symbolic. Do any engineers / creatives work there? I will concede the importance of that Google sign, though, people point to it all of the time when they talk about the advantages of Ann Arbor. But ultimately what downtown needs are real amenities for tech workers, not just a bunch of tax incentives and parking lots for our employers. This whole mythology of the young people saving the city also disturbs me. Tech workers are not always "young"! Structuring downtown for a group that will perpetually not exist in 10 years is short-sighted and disingenuous. Tech workers are a convenient statistic to point to for city hucksters and developers but we are real people who will form families and make a life. Please plan on making downtown a place that we will want to remain in. And wow, Google sure dies have a pleasant open space on the top of that roof. Wouldn't it be nice if Ann Arbor built something of that size for the rest of downtown?
GoNavy
Sun, Mar 24, 2013 : 3:53 p.m.
I'm not going to judge the city council and the mayor in hindsight. I will, however, judge their decisions regarding Google and these credits going forward. The proof is in the pudding, and the pudding doesn't appear to be all that great. Google hasn't delivered; they City should stop promising. Time to treat Google like any other business out there.
Vivienne Armentrout
Sun, Mar 24, 2013 : 3:39 p.m.
Ryan and AnnArbor.com, thank you for your investigative reporting on this, complete with links, data and interview followups. This is good work.
Ryan J. Stanton
Sun, Mar 24, 2013 : 3:51 p.m.
You're welcome! Strangely, it was fun reading through old city records to dig up some of this info.
Patricia Lesko
Sun, Mar 24, 2013 : 3:06 p.m.
A monthly parking pass in a structure sells for $125-$140/mo. Multiply by 300 parking spaces over the years Google was gifted those spaces, and the amounts claimed to have been spent by the DDA for this program don't add up. We don't calculate costs based on discounted rates. We calculate costs based on the going rate. At $125-$140/mo those spaces cost taxpayers $450K-$500K per YEAR, two police officers and two firefighters, the restoration of leaf pick-up (cut to "save" $400K). Take your pick, or maybe redo the bottom of Fuller Pool? Every goPass! is a taxpayer subsidy. In Ann Arbor, we have to pay certain people to ride the bus. That Google uses the goPass! program aggressively means that high school students whose parents pay an annual millage to AATA get to purchase monthly passes that cost 5 times more than a goPass! Meanwhile, my kids couldn't take a bus on a Saturday evening at 7 p.m. to see a school play at Community High. AATA service ends at 6 p.m. on SATURDAYS. Let's ask Hieftje-appointed AATA Board members about that. They've answered: No one wants to go downtown then. AA taxpayers have to give incentives, TIFs, etc... to developers to build. We pay consultants and temps to do the jobs of the city staffers. The DDA Board pays Republic Parking to oversee city-owned lots. You just reported Hieftje was accused of trying to misappropriate state/federal grant funds to help out Avalon Housing on North Main. Asking Hieftje and Pollay about the parking deal that skimmed millions form the General Fund when we could least afford it whether they think it was a great idea isn't news.
Craig Lounsbury
Mon, Mar 25, 2013 : 3:19 p.m.
were others standing in line to buy those monthly parking passes at market value? i have no idea. If I wanted to buy a pass today could I? Or would be on a waiting list?
Ryan J. Stanton
Sun, Mar 24, 2013 : 5:45 p.m.
I don't think Google ever has had 300 parking spaces. I'm still trying to get data on the number of spaces they actually had year to year, and hoping that comes back in my FOIA response, but it's only been in the last year or so (after the parking deal ended) that Google has built up to more than 300 employees between its offices in A2 and Birmingham (note: not all of them are in A2, and not all of them drive to work). As for the buses ceasing to operate after 6 p.m. on Saturdays, I found myself in that situation yesterday. I took the bus downtown to go to the race exhibit at the natural history museum, grabbed a smoothie at Za's afterward, and found myself having to walk home because the buses stopped running. I know I could have paid $5 for a cab ride through AATA's after-hours Night Ride program, but I chose to walk home instead. Still, later bus service would be great.
Larry Baird
Sun, Mar 24, 2013 : 3:04 p.m.
Ryan, your previous article link above (Google quietly contracting with global outsourcing firm) states: "Google's MEGA tax credit was based on an average salary of $913 a week, or $47,476 a year, according to a document provided to AnnArbor.com in 2009." The article also stated the outsourcing firm was advertising jobs at $12 -12.50 per hour. With all the secrecy around the employment numbers, the tax dispute may revolve around how the contract work, HB-1 temporary workers, etc. are being factored into this average salary threshold.
Ryan J. Stanton
Sun, Mar 24, 2013 : 3:26 p.m.
Both Google and the MEDC say the tax dispute is not related to tax credits received by Google. Some have guessed the dispute might have been caused by a modification in the state's tax code in 2008. State treasury spokesman Terry Stanton pointed out Michigan switched from the Single Business Tax to the Michigan Business Tax Jan. 1, 2008.
actionjackson
Sun, Mar 24, 2013 : 3 p.m.
I can not for the life of me understand how people can believe that this Mi. tax is owed. Is it because the state said so? If you were to do your taxes and received a letter saying that you were incorrect in the amount owed do you just pay it? Maybe they do owe something. Just because you read it on the internet doesn't mean that it is fact. 300 employees is nothing to scoff about. No it isn't 1,000 as was hoped for however it is a significant boost for those 300. With all of the lost manufacturing jobs in Ypsilanti and all over S.E. Mi. I for one am glad to see any jobs created.
J-smith
Sun, Mar 24, 2013 : 3:23 p.m.
ACTION, follow along... If the government says something outside of A2 then 2nd amendment solutions apply. If it involves A2, then we must take the IRS's word for it, as they never make mistakes. If GE pays ZERO income tax in the US, then that shows how crazy our tax system is, if GOOGLE gets a lien for unpaid taxes, they are a bad corporate citizen and Hejftje must be to blame. Got it?
Ryan J. Stanton
Sun, Mar 24, 2013 : 2:41 p.m.
I looked at the city's annual audits going back to 2007 to see how the Economic Development Fund's remaining balance changed year to year. Here's a recap: A year after the fund's creation, $310,225 had been spent, and the fund still had a $1,869,775 balance as of June 30, 2008. The city again planned to spend as much as $600,000 in the following year, but expenditures from the fund totaled $403,678 over the next year, leaving a $1,466,097 balance as of June 30, 2009. The City Council later voted in August 2009 to tap into the fund's reserves to pay for $104,742 worth of engineering work on the city's Fuller Road train station project. Minus liabilities, the fund still had a balance of $967,161 at the end of June 2010, and in June 2011 the council closed down the fund and returned unspent monies to the city's general fund.
clownfish
Sun, Mar 24, 2013 : 2:40 p.m.
How dare a government entity grant tax breaks and incentives to businesses! This is unheard of anywhere in the world, let alone the USA! Don't people know that higher taxes on business is what drives the economy? Oh, wait, that is the exact opposite of what so many posters have said before, until it is A2 that does it.
MarcelN
Sun, Mar 24, 2013 : 2:35 p.m.
TECH-Campus .. TECH-Triangle .. require TECH jobs .. Google from the beginning mainly offered low paying ad sales jobs .. and obviously, non of those jobs would keep an U of M engineering graduate in town, or would attract any other tech people .. but to Google's defense, I don't think they ever hid the fact that mainly focus on hiring non-tech jobs in Ann Arbor.
Craig Lounsbury
Sun, Mar 24, 2013 : 2:52 p.m.
this is what I was wondering with respect to those jobs.
Stephen Lange Ranzini
Sun, Mar 24, 2013 : 2:25 p.m.
@Ryan Stanton: You asked "should we cut Google a little bit of slack given that the entire nation slipped into a recession shortly after those numbers were projected and not very many companies were creating jobs?" No. Google has experienced dynamic growth and huge profits as a globalizing company throughout this period. They just chose to do something different including out sourcing and off shoring jobs as they rapidly grew.
Ryan J. Stanton
Sun, Mar 24, 2013 : 2:21 p.m.
Here's a link to a document showing the terms of the 20-year, high-tech employment tax credit Google received from the MEDC. http://www.annarbor.com/Google_memo_July_2006.pdf It says Google would get 100 percent of the credit for the first five years if at least 75 jobs are created, but beginning in 2012 it must create and maintain at least 500 full-time jobs to collect any percentage of the credit (and it would have gotten 85%, for example, if it created 850 jobs, etc.). Since it never hit 500, this tells me Google no longer is receiving the tax credit from the state. I can't get MEDC to confirm that, but we've requested documents under FOIA that we expect to show us the year-to-year worth of these credits.
Ryan J. Stanton
Sun, Mar 24, 2013 : 2:07 p.m.
While it's certainly disappointing that Google hasn't delivered on the 1,000 jobs it projected, should we cut Google a little bit of slack given that the entire nation slipped into a recession shortly after those numbers were projected and not very many companies were creating jobs?
Judy
Mon, Mar 25, 2013 : 2:31 p.m.
Sure we can cut them some slack when they pay the money they owe to the State and show "no" corporate "profit" for the same period! Maybe the few employees they did hire could go with out fruit and juice bars on every floor.
dancinginmysoul
Sun, Mar 24, 2013 : 2:52 p.m.
No, because they aren't being transparent about the number of employees they have, and they've offered no explanation as to why.
PhillyCheeseSteak
Sun, Mar 24, 2013 : 2:17 p.m.
But Google Adwords revenues have increased every year - they weren't affected by the recession.
Craig Lounsbury
Sun, Mar 24, 2013 : 1:38 p.m.
Will anyone from these so called spin off company's go on record as saying they came here specifically because of Google? Or they would not have come here without Google's presence? Unless I missed the quotes all I saw was public officials touting something without any actual facts to verify. Pardon me if I hesitate to take a politicians statements at face value. Also while Google is certainly a "high tech" company not all jobs in Google are "tech jobs". Does anyone know what exactly the Google 300 do? I see the following quote..."MEDC officials estimated in 2006 that the establishment of a sales and operations center in Ann Arbor for Google's AdWords online advertising program...." Are these folks doing techy things or are they sales people?
harpua
Sun, Mar 24, 2013 : 2:17 p.m.
well said, exactly what i was thinking.
Kai Petainen
Sun, Mar 24, 2013 : 1:23 p.m.
I can't help but wonder.... The university switched from Microsoft Outlook to Google mail. If Google hadn't moved to Ann Arbor, would that have happened? And if Google was to ever leave Ann Arbor, would it switch back to Microsoft? Sometimes the best way to get business.... is to show up next door to your customer.
MyOpinion
Sun, Mar 24, 2013 : 7:08 p.m.
This is happening all over the US; contracts with vendors come up for renewal and sometimes a new vendor, e.g., Google wins. I doubt that Google moved in to hundreds of university towns to win their vendor contracts.
aarog
Sun, Mar 24, 2013 : 4:58 p.m.
I think Google would have been selected regardless. It is hugely beneficial over the plethera individual systems in terms of money and collaboration abilities, while the learning curve to some, like me, is larger than desired. Gives the university shared calendars that were spotty before, free cloud docs that work with others outside the university, free conference calling with anyone, slick interfaces to calendars and documents when the local IT folks program them into Intranets, and there's more coming. Oh yea, and now students are on the same calendars and easily included in everything noted, that's all students from all schools. The other front runner was more comfortable to many but did not win out on functionality, robustness, or modern global capability. My continued learning curve is worth it.
wisecat
Sun, Mar 24, 2013 : 1:44 p.m.
Google email at the University is nothing but problems in my sad experience. No appreciation here. The U made a big mistake.
rm1
Sun, Mar 24, 2013 : 1:20 p.m.
Let's see. The state says Google owes $3.1 million in taxes, and Google disputes this amount, and is appealing the matter through the prescribed legal procedures. How on earth was this a news item at all? Especially since the details of the dispute are not publicly known, and AA.com in the first article didn't trouble to tell us the amount was under legal dispute -- only that the state had filed a "lien" (apparently part of the dispute resolution process). That gratuitously makes it sound like it hasn't paid a now past due bill, which apparently is in fact under dispute. Those of you who keep complaining that Google "hasn't paid its taxes" -- have you never known the taxing authorities of a cash-strapped state to get it wrong? Not my experience. Or are you arguing -- silently, since it would sound silly if articulated in the open -- that Google is not entitled to the legally prescribed appeal procedures?
Chimay
Sun, Mar 24, 2013 : 1:18 p.m.
I understand the vitriol toward Google as it relates to taxes and such. However, there has been a notable change that is highly visible: the creation of a 'midtown' area. Before Google moved in, that stretch on Liberty between downtown and the U was empty. Now you've got a thriving Mani, a bar, and such. Now if the city would catch up to the growth and deal with Liberty Plaza and the panhandlers, it would be even better.
HB11
Sun, Mar 24, 2013 : 12:49 p.m.
"Since then, Google has been hesitant to reveal the exact number of workers it employs in Ann Arbor, generally giving estimates instead of specifics." Estimates = weasel word. Ask any HR manager or CFO of any other company and they can tell you EXACTLY how many employees they have. An honest answer would be "we currently employ X number of employees and Y number of contract employees." How hard is that?
Stephen Lange Ranzini
Sun, Mar 24, 2013 : 12:35 p.m.
Their advertising solutions do work and are cost effective. One benefit locally has been the local classes they offer which our bank has taken advantage of. Disseminating this knowledge into our community quickly and early certainly has brought more revenue to local firms and therefore more jobs, however this knowledge is getting widely disseminated throughout the economy now, so the advantage is waning. Oh, and FYI, while I love the Google maps web services, I always instead use the search engine at www.dogpile.com, which gives better and more accurate results for the info I am looking for.
Stephen Lange Ranzini
Sun, Mar 24, 2013 : 2:20 p.m.
@PhillyCheeseSteak: SPARK has a free email newsletter anyone can sign up for that lists all area training classes. When Google offers a class, this SPARK newsletter advertises them and has links as to cost and how to sign up.
PhillyCheeseSteak
Sun, Mar 24, 2013 : 2:13 p.m.
What classes does Google Adwords offer locally?
Craig Lounsbury
Sun, Mar 24, 2013 : 1:17 p.m.
dogpile isn't a search engine, its a metasearch engine. There is a difference. Just like you point out a local bank is different from a "too big to fail" international bank.
Rick Stevens
Sun, Mar 24, 2013 : 12:33 p.m.
'AnnArbor.com filed a Freedom of Information Act request with the state last week for a full accounting of the actual worth of state tax credits and incentives received by Google since 2006, as well as records related to the tax lien filed against Google by the state. A spokesman for the MEDC said on Wednesday there's no relationship between the tax lien and the job creation agreement the state reached with the company in 2006.' So how about a FOIA for MEDC and SPARK audits? The amount of lying by both these entities is ridiculous. Thousands and hundreds of 'jobs created' but no real evidence or independent verification of their press releases.
Stephen Lange Ranzini
Sun, Mar 24, 2013 : 12:27 p.m.
Whether or not the incentive for Google worked, I am glad it ended in 2011, and it should *not* ever come back in the future. For a company that asserted it's core beliefs include "Do No Evil", their actions locally pose a stark ethical contrast.
Billy
Sun, Mar 24, 2013 : 5:28 p.m.
My cousin was on their top development team......and he walked because of the ethics the company is holding. Google are actually a big evil corporation and no one's willing to see it...
Ken
Sun, Mar 24, 2013 : 12:27 p.m.
This parking deal is nothing but corporate welfare for a bunch of billionaires.
Homeland Conspiracy
Sun, Mar 24, 2013 : 1:35 p.m.
Corporations are people too. Some times GIANT corporations need a hand out not a hand up.
OLDTIMER3
Sun, Mar 24, 2013 : 12:19 p.m.
The emergency of high tech? Shouldn't that be the EMERGENCE instead of emergency?
Ryan J. Stanton
Sun, Mar 24, 2013 : 2:28 p.m.
Ha. I just noticed that myself. It's fixed now.
Brad
Sun, Mar 24, 2013 : 12:26 p.m.
No, it was a high tech EMERGENCY that they put out by dousing it with taxpayer dollars.
Brad
Sun, Mar 24, 2013 : 12:14 p.m.
"citing a figure that 57 percent of Google employees used their go!passes to commute to work by bus at least once during the year" Slightly over half of them used their pass at least once during a year? Can you possibly come up with a less meaningful and compelling statistic? Judging by the people who are claiming it is a success I can only assume it's an abject failure and waste of money.
drew_blows
Sun, Mar 24, 2013 : 12:13 p.m.
Is Barracuda Network getting any kind of "sweetheart" parking deal?
Lizzy Alfs
Sun, Mar 24, 2013 : 1:30 p.m.
From an old story by Ryan, when the underground structure opened: "Monthly permits in the seven parking structures range from $140 to $155 a month, though the DDA has offered a $95-per-month discount rate for some users of the Library Lane garage." I believe Barracuda got that $95-per-month rate. Ryan, correct me if I'm wrong?
SEC Fan
Sun, Mar 24, 2013 : 1:22 p.m.
They're "leasing" spaces in the new underground structure...i'm sure it's at a very good rate.
Brad
Sun, Mar 24, 2013 : 12:16 p.m.
Oh yes. Just to move eight blocks.
Brad
Sun, Mar 24, 2013 : 12:11 p.m.
"California-based tech firm Barracuda Networks recently moved hundreds of employees to office space on Maynard Street " Hundreds? I thought it was actually fewer than two hundred which doesn't really qualify as "hundreds". But "hundreds" does sound good, doesn't it?
Judy
Mon, Mar 25, 2013 : 2:34 p.m.
Where are those employees parking?
Lizzy Alfs
Mon, Mar 25, 2013 : 2:14 p.m.
The general rule of thumb is 15 square feet per employee. Barracuda's offices are 45,000 square feet. Using that rule, they have plenty of room for their 200+ employees and room to keep growing.
Billy
Sun, Mar 24, 2013 : 5:26 p.m.
Yeah no....where are they putting those 200 people? They don't have that kind of office space....not even close.... Another big lie...
Lizzy Alfs
Sun, Mar 24, 2013 : 1:28 p.m.
When Barracuda moved, they moved 200 employees. They've been hiring several employees per week since then, so I'm not sure what the total is now.
SEC Fan
Sun, Mar 24, 2013 : 1:20 p.m.
you just don't understand the definition of "success". Let me educate you... Barracuda Networks announced last year when they leased the Maynard St. office that they were "expecting at least 300-400" employees at the new location. See, SUCCESS! Just like the 1,100 Google employees we now have in MI..."success" is an announcement, not actuality. Welcome to 1984, Mr. Orwell.
Brad
Sun, Mar 24, 2013 : 12:34 p.m.
Tip: next time you want to inflate something, go with "millithousands".
dancinginmysoul
Sun, Mar 24, 2013 : 12:10 p.m.
This is just absurd. Let me see if I understand: They owe 3.1 million in Michigan Business Tax. They haven't made good on the promises they made when moving here (including the hiring practices). But the 1.2 million they get in free parking was a good idea. Totally makes sense. Increased people on the sidewalks does not equate to increase sale for restaurants and businesses. It just means there's people on the sidewalks. Stop treating us like morons.
Judy
Mon, Mar 25, 2013 : 2:11 p.m.
A few years ago a group I am a member had a tour of Google, I am sure not much increase in sales for restaurants in downtown because Google has a full service cafeteria within Google and gives employees "FREE" food and drinks on every floor.
dancinginmysoul
Sun, Mar 24, 2013 : 1:49 p.m.
If I wanted to buy a parking permit in downtown, it would cost me about $1100 a year (give or take $100). Compare that to the figure you just mentioned... I just threw up a little.
SEC Fan
Sun, Mar 24, 2013 : 1:10 p.m.
oh, come on. you're being way to critical about this. I mean, really, it only cost us taxpayers $5,263 per parking spot for each employee. That's a real bargain!
Bob W
Sun, Mar 24, 2013 : 12:10 p.m.
"They" who cut the deal, "believe" it's a success. Let's see real numbers for a change. Studies suggest tax incentive deals rarely pan out.
Brad
Sun, Mar 24, 2013 : 12:38 p.m.
C'mon - he's "comfortable" with how it's working out.
kilroy
Sun, Mar 24, 2013 : 12:08 p.m.
Meanwhile the City and DDA has burdened the rest of us with their impossibly difficult parking kiosk system and shortage of downtown parking spaces.
AAW
Sun, Mar 24, 2013 : 12:07 p.m.
Maybe they should pay their tax bill with the savings.......
Brad
Sun, Mar 24, 2013 : noon
"They were the brand name that has really allowed us to build a tech campus around them." Really? Which "tech campus" would that be? Menlo and Barracuda? Someone is smoking crack.
actionjackson
Sun, Mar 24, 2013 : 11:51 a.m.
First of all I would like to state that I wholeheartedly support the Google move to AA. I am not a lawyer in business taxes and will not comment on something that I know nothing about. I also agree that it labeled AA as a tech friendly and intelligently rich community that brought many other jobs to the area. I do like the comparison of how money is saved by not spending it however. The city initially was planning to spend as much as $600,000 a year for Google parking, ..... .............. the city saved hundreds of thousands of dollars. I saved over a quarter million by not buying the Maserati I saw for sale in a luxury car magazine also.
Ken
Sun, Mar 24, 2013 : 5:27 p.m.
Lol... thanks for saying what I was thinking. Reminds me of an Encyclopedia Brittanica salesman explaining to me how, by taking advantage of a today-only special deal and signing up for a monthly payment plan, they'd throw in a set of bonus books for "free" that would "normally" cost $1000, so "already you've got an extra $1000 in your wallet".
RUKiddingMe
Sun, Mar 24, 2013 : 11:50 a.m.
"For the 2011-12 go!pass season, Google employees had the highest bus ridership of any employer downtown, Shore said, citing a figure that 57 percent of Google employees used their go!passes to commute to work by bus at least once during the year." Uh, is this how success is measured by the GetDowntown program? A little more than half of them use the bus at least ONCE in a YEAR? Seriously? Is this also how AATA estimates ridership? Ms. Shore, a while ago you offered to answer questions about the funds GetDowntown receives, its relationship with the AATA (I believe you indicated it's a department of AATA, paid only with AATA money?), etc. Do you believe that its existence and expenditures brings in more money than it spends? It's two staff members, right?
SEC Fan
Sun, Mar 24, 2013 : 1:05 p.m.
hmm...there are roughly 300 employees between AA and Birmingham. When the B'ham office opened, Google stated it would hold 75 employees. that leaves roughly 225 working in AA. So 57% used the bus once in the past year...oooohhh... that makes a whopping 128 bus rides! or one person riding the bus every 3 days or so.
RUKiddingMe
Sun, Mar 24, 2013 : 11:45 a.m.
Here's some stuff to remember next time the city bases return on investment, or justification for spending, on "estimates:" "MEDC officials estimated in 2006 that the establishment of a sales and operations center in Ann Arbor for Google's AdWords online advertising program would not only create the 1,000 direct jobs Google projected in its first five years, but also more than 1,200 spin-off jobs."
RUKiddingMe
Sun, Mar 24, 2013 : 11:40 a.m.
"We have no indication that locally Google has been anything but a good citizen, and no indication that there is anything that has changed that," Hieftje said" Uh...what about these things: "Google promised to hire 1,000 employees by 2011 in exchange for tax credits from the Michigan Economic Development Corp." "Since then, Google has been hesitant to reveal the exact number of workers it employs in Ann Arbor, generally giving estimates instead of specifics." "The latest estimate is that Google has more than 300 employees in Michigan between its offices in Ann Arbor and Birmingham, but the company doesn't break it down beyond that." That's a lot less than 1000. It's less than a third of 1000. "AnnArbor.com learned in 2011 that Google was quietly contracting with a global outsourcing firm to bring contract employees into the Ann Arbor office at wages lower than required under the state's tax credit program." This should also anger some people, although it's just a small sampling of the wasteful spending on the whole new train station thing: "Most of it went toward Google parking, though $104,742 was shown budgeted for work on the city's Fuller Road train station project."
Alan Goldsmith
Sun, Mar 24, 2013 : 10:30 a.m.
"AnnArbor.com learned in 2011 that Google was quietly contracting with a global outsourcing firm to bring contract employees into the Ann Arbor office at wages lower than required under the state's tax credit program. Google has declined to comment on the details of that." Of course Mayor John Hieftje and DDA's Susan Pollay aren't going to tell you, wow we screwed up and gave funds to a tax dodge and company the lied about jobs being created and moved forward with global outsourcing. Yet another reason we need a new Mayor and to abolish the DDA. They seem to always forget it's out money, not theirs. And I'm disappointed the Council Member Stephen Kunselman needs to understand it's a win for Ann Arbor, regardless of where Google might have located, whether it was downtown or a research park. Again, it's shouldn't always be about downtown at the expense of the rest of this City. Not one person in this article expresses outrage at the failure to pay taxes either. Because they buy lots of bus passes? Spare me.
nowayjose
Sun, Mar 24, 2013 : 10:03 a.m.
Hasn't helped them pay their business taxes
Arieswoman
Sun, Mar 24, 2013 : 10:34 a.m.
Amen to that!