It's not just Amazon and Apple that expect massive taxpayer subsidies in exchange for locating physical plant in your town: when Google builds a new data-center, it does so on condition of multimillion-dollar "incentives" from local governments -- but Google also demands extraordinary secrecy from local officials regarding these deals, secrecy so complete that city attorneys have instructed town councillors to refuse to answer questions about it during public meetings.
Data-centers consume massive amounts of electricity and water, and so companies are always on the hunt for low costs for these necessities. Sometimes, those savings come from geography -- siting a data-center by a river or lake, or in a cooler climate -- but they can also come from sweetheart deals from local power and water companies.
The Partnership for Working Families has been fighting for transparency on these deals since Google's first wave of data-center buildouts in San Jose in 2006. They recently filed public records requests in eight cities where Google has built or is building data-center and seven cities with Google offices.
The records reveal a pattern of extreme secrecy: Google uses special-purpose, anonymous LLCs to do its deals, sometimes using multiple LLCs for different parts of the deal (for example, one LLC might acquire the land, and another might develop it).
Google binds the cities it deals with to vows of silence, through extensive nondisclosure agreements. The agreements prohibit cities from revealing Google's power and water usage, payroll data, and investment level. Google argues that these are trade secrets that might reveal sensitive competitive data, but this is also the information that voters need in order to assess whether they are getting value for money when they hand over millions to one of the world's largest, most profitable companies.
What's more, the NDAs also prohibit disclosure of the existence of the NDAs themselves -- a kafkaesque American version of the UK's notorious "super-injunctions" -- further shielding these deals from democratic scrutiny and debate.
For example, if it wasn't for the Partnership for Working Families' records requests, the people of Council Bluffs, Iowa would not know that the city government sold Google 850 acres of land for one dollar; the people of Midlothian, Texas would not know that Google got a ten-year tax-holiday from the city in exchange for creating a mere 40 jobs; and so on.
The secrecy doesn't end after Google opens its data-centers, either. In Berkeley County, South Carolina, Google formed a new LLC to apply for additional water usage permits, years after it had opened its data-center. The people of Berkeley County are not allowed to know how much water Google is already drawing from their local aquifers, but the new LLC was applying for permission to be the county's third-largest water user, and its link with Google was only discovered because the company made the mistake of listing it as sharing an address with the other anonymous LLC it had formed to build and operate its data-center.
Long-serving local officials defended the secrecy and the subsidies, saying that corporate America expects democratically elected governments to negotiate in secret to pay companies to operate in their jurisdictions.
When Google’s representatives first approached Midlothian in 2016, they used a code name that was not the same as either of the subsidiaries, Barnett said. (He declined to say what it was.) Google also asked Midlothian officials to sign a confidentiality agreement before they knew the developer’s identity, Barnett said. He said Google revealed its identity a year later, as the deal approached.
Barnett said that some confidentiality is always necessary when negotiating competitive development deals. “When I’m trying to win a project, as all economic developers do, we abide by what the company wants. It would be detrimental to us to not to follow the company’s lead,” he said. “I’ve been doing this for 20 years and my job is to make sure that my city gets the best deal. When a company asks for secrecy, I say yes. You have to build up trust.”
Google reaped millions in tax breaks as it secretly expanded its real estate footprint across the U.S. [Elizabeth Dwoskin/Washington Post]