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Council: What to do with Google's $30 million?

Original post made on May 4, 2011

Now that Google has agreed to pay for a $30 million land lease up front, laying off city employees to fix the city's budget deficit appeared to have much less appeal in Tuesday's City Council meeting.

Read the full story here Web Link posted Wednesday, May 4, 2011, 3:30 PM

Comments (25)

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Posted by Outraged!
a resident of Old Mountain View
on May 4, 2011 at 7:09 pm

I say, revoke budget cuts, increase salaries by 25% for all city employees, and add 10% to the headcount.


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Posted by Mike Laursen
a resident of Monta Loma
on May 4, 2011 at 9:34 pm

You've got to be kidding me. With the economy in the tank, union concessions said to be likely and inflation said to be likely, staff recommends spending more?!


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Posted by Mike Laursen
a resident of Monta Loma
on May 4, 2011 at 9:34 pm

Union concession unlikely. Sigh.


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Posted by Old Ben
a resident of Shoreline West
on May 4, 2011 at 11:39 pm

RIDICULOUS.

There is no surplus. Inflation has nothing to do with wages, and it is about to explode. When gas passes the $5/gallon mark, this economy will come to a screeching halt.


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Posted by Old Ben
a resident of Shoreline West
on May 4, 2011 at 11:40 pm

HOGS AT THE TROUGH


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Posted by Mr. Big
a resident of The Crossings
on May 5, 2011 at 12:01 am

Take 20 million and put it the city reserve fund, spend the interest.

What to do with the other 10 million, give 1 million to each of the the following;
1. CSA, can't think of a better organization
2. Find the 20 best teachers in MV and give them 50K each
3. Add those fancy LED lit crosswalks all along Castro St, someone is bound to get hit especially on the ones hidden by the street side seating.
4. Replace the 802.11G Google WiFi nodes with 802.11N nodes
5. Shoreline park (excluding the golf course), there appears to be many deferred maintenance projects and is looking a bit run down.
6. LED street lighting
7. Earthquake preparedness
8. Street maintenance
9. Rotacare clinic
10. Smithsonian Air & Space Museum West initiative


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Posted by Observer
a resident of Old Mountain View
on May 5, 2011 at 6:06 am

The city council is crazy. The ship could sink at any moment, and they are asking to where their next cruise should be.


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Posted by Observer
a resident of Old Mountain View
on May 5, 2011 at 6:09 am

BTW, Mr. DeBolt, thanks for leading the story off with a critical statement worthy of a journalist. I'd like to see more stories like this that question some of the insanity that comes out of City Hall and the schools.


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Posted by localmom
a resident of Cuesta Park
on May 5, 2011 at 7:29 am

If if it needs to be spent, upgrade the Rengstorff Community Center! There is NO AIR CONDITIONING and yet recreation classes for small children are held there, scouting events, as well as exercise classes. The main auditorium has DIRT that is PERMANENTLY scraped into the floor. Meanwhile the City employees go to work each day in palatial surroundings!
I agree w/other commentators, NO more employees, no raises! This is a ONE TIME things. We should improve life for the citizen tax-payers of MV who pay for the everyday operation of this town. More safe crossings, some for the schools, how about something for the kids like a concert and ice cream party downtown to show the families how much the city Council appreciates us putting up with them?


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Posted by Hardin
a resident of Cuesta Park
on May 5, 2011 at 9:49 am

Why is there any talk or consideration of spending this one time money as a solution to the City's financial problems?

There is a structural problem with the City's budget, that is caused primarily by the imbalance of growing expenditures for employee salaries and health benefits vs. projected income for the foreseeable future.

Spending this largess from Google is no different than a teenager receiving a trust fund, going on a spending spree, and then wondering why the pantry is empty.

Over the last 20 years, the City has succeeded in balancing costs/income while developing Mountain View to be a premier town in one of the most desirable places on Earth to live and work. Ignoring this looming problem threatens that success.

I'm concerned with the Council's seeming deference to the unions. We shouldn't be asking their permission to make changes...its a contract, we should be negotiating with them when their contracts come due.

Picking a City Manager that is going to be hawkish on budgetary discipline, and provide the leadership that the Council seems to be squeamish to embrace, is more important than ever.


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Posted by USA
a resident of Old Mountain View
on May 5, 2011 at 12:56 pm

USA is a registered user.

"I'd rather see the money used more quickly to get us more buying power"

Good God. I hope the new manager can teach basic financial analysis to the council members. That's embarrassing.


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Posted by james
a resident of Shoreline West
on May 5, 2011 at 2:30 pm

So that works out to about $5400.00 per acre per month. Why not limit the spending of this "windfall" to $50,000.00 per month and invest the rest in US Treasury Bonds...nothing safer, not even gold.


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Posted by look_around
a resident of Rex Manor
on May 5, 2011 at 3:42 pm

Mountain View has a balanced budget... Look around at the State(short how many Billion?) and other cites in the area.
All would love to be in the position Mountain View is in...
Worrying about pocket change compared to the mess they are in.


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Posted by Observer
a resident of Old Mountain View
on May 5, 2011 at 5:40 pm

look_around:

Maybe they could dump some of that money in the Mountain View Whisman Elementary School District which pales in comparison and performance to Los Altos and Palo Alto schools.

Mountain View schools would love to be in the position they are in...


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Posted by Mike Laursen
a resident of Monta Loma
on May 5, 2011 at 9:18 pm

look_around, true that the State is in a lot of financial trouble. Maybe Mtn. View should spend all the cash before the State swipes it. They've done it before.


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Posted by KD
a resident of Waverly Park
on May 5, 2011 at 9:48 pm

"City officials predict that interest alone will create $1.1 million in new general fund revenue" Comment: $1.1m / $30m = 3.66% per year (approx mid-way between the yield on the 10 and 30 year bond)

"In 52 years the $30 million would be worth what $3 million is worth today, Siegel said." Comment: In order for $30 million to be worth $3 million over 52 years, inflation would have to be 4.5% per year.

Q: Who in their right mind would accept an investment return of 3.66% per year when they are expecting inflation to be 4.5% during the same period?

A: No one except members of our city counsel!

The money should be returned to Mountain View property owners, and used to offset special assessments on their properties for the next 3-4 years.


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Posted by Steve
a resident of Sylvan Park
on May 6, 2011 at 8:12 am

What a beautifully clear illustration. When there is 'extra' money, governement is compelled to spend it. Then when the inevitable shortage occurs, they cry for more. No doubt there are city positions that should be cut, and never been created in the first place. Was our outgoing city manager really so wonderful?


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Posted by Good Deal?
a resident of Blossom Valley
on May 6, 2011 at 9:42 am

The willingness of Google to pay the full $30M upfront substantiates my belief that this wasn't that great a deal for MV. A 50+ year lease is always risky...who knows what new and possibly better opportunities would come up during that time. To give up control for 50+ years should've commanded a HUGE price. $30M may feel big, but it's chump change for Google, and I don't know that it's a market rate rent, particularly when one's trying to assess what market will be in 2040-2060. Heck with technology changes, Google probably doesn't even know if they'll be in business in 50 years, so they either see this as still a bargain in the short term, and/or they have subleasing rights and figure they'll be able to rent out at a profit (if the lease allows that...hopefully MV shares in profits from a sublease).


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Posted by Steve
a resident of Sylvan Park
on May 6, 2011 at 10:25 am

There is a secondary issue here, beyond how the city is planning to blow it's new windfall. By acting as a landowner and landlord, the city is competing against the private sector in business. However lucrative it might be, this practice is pure conflict of interest. What is in the financial best interest of city staff is not neccessarily that of its citizens, and having a monetary stake in municipal regulation is called 'corruption'.


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Posted by Observer
a resident of Old Mountain View
on May 6, 2011 at 10:26 am

Well said. These are the type of deals you get with a much smarter and competitive private sector, better equipped with lawyers and accountants, go up against the public sector administration types that are just sniffing around for more quick-fix revenue streams. They are like junkies at this point. In the meantime, we the citizenry are expected to believe that Google does it out of a genuine concern and compassion for us the taxpayers. lol.


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Posted by Allan
a resident of another community
on May 7, 2011 at 10:14 pm

Don't spend all the money.

the nut that said spend the money because it will only be worth 2 million in 52 years, must be looking for a way to put some of that money in his pocket.
I guess he does not know about INTREST that would be compounding during that 52 years.

The first thing that must be done is make sure current (no long term) problems are taken care of. That amount would have to be debated, and every cent spent should be accounted for in their newspaper
After that, only the interest could be spent. No pet projects or last minute additions to bills, ect be added. No vauge or or empty spaces be allowed. Straight foreward and easy understood language.
No kickbacks or bonus pd to anyone.
make it legally solid so no one can dip their greedy fingers in it.

This is your little goldmine that will keep your city growing and prosperous over eternity!

Good luck...Allan

The city citizens should be able to see where every cent is being spent, every year, including the initial amount spent the ist year.


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Posted by Allan Halldorson
a resident of another community
on May 7, 2011 at 10:16 pm

I'm from North Dakota.


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Posted by Doug Pearson
a resident of Blossom Valley
on May 7, 2011 at 10:30 pm

This is money that we could have spread out annually for the next 52 years. I share the concern that the city may not have got the best deal on this lease, but it is the deal we have to live with for the next 52 years so we need to make the best of it. The $30 million should certainly be invested and the low interest/high safety rate suggested sounds like the right thing to me.

I'm concerned by another element of the article, "City staff members say that if nothing is done to lower costs, the city would continue to run a deficit until 2015 while quickly burning through reserves. But if a 'structurally balanced' budget is achieved, revenues will cover expenses until 2015 when revenues may begin to exceed expenses until the next recession."

This city has cut staff and services continually since before the Great Recession, just trying to keep from losing money and we still haven't reached our shrinking income. (This is what they mean by a structural imbalance, isn't it?) If we don't have the next recession before 2015, I will be surprised. So, it seems to me that the city is doomed to continue cutting staff and services forever.

We need to find a way to increase the city's income, i.e., we need a new tax or a tax increase. In my opinion, the best choice is an increased property tax. Unfortunately, Prop 13 has insured that the city (or for that matter, the school district) doesn't get enough property tax income to make a difference. I propose to change Prop 13 to allow an annual increase of up to the cost of living index increase (currently capped at 2%) when the property does not change hands.

This would have little or no effect today because Prop 13 does not allow the increase to exceed inflation, which recently has not even been 2% (no doubt a surprise to those complaining about gas price increases). But, when inflation inevitably raises its ugly head again, property taxes will not sink into nothingness--except for those who buy new houses. (Businesses don't have that problem. Instead of buying property, they can buy the property owner, thus keeping the property ownership the same.)


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Posted by Observer
a resident of Old Mountain View
on May 8, 2011 at 6:30 am

"This city has cut staff and services continually since before the Great Recession"

But we have some of the highest paid public employees around and they haven't stopped handing out pay raises or overly-generous retirement benefits, so how can you be for tax increase? Seriously. The more taxes you give government the more they will over spend beyond it's limits without any regard for the risk involved.


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Posted by Hardin
a resident of Cuesta Park
on May 9, 2011 at 2:43 pm

@Doug Pearson

While I would agree with you that Prop 13 in its current form is counterproductive, I don't agree it should be the first solution to the City's budget problems. There are 2 ways to balance a budget: reduces expenses and/or increase income. In order to determine which options will be most effective, you need to look at what the drivers are that have created the imbalance in the budget, which in previous years, had been balanced.

A quick analysis of the City's budget, as publicly reported and available on the City's website, reveals that the main driver for the budget's structural imbalance is rising employee costs, due to retirement and health care benefits. Furthermore, projections suggest that these drivers will play a growing role in the cost imbalance of the City's budget for the foreseeable future.

Decreasing City services doesn't address the root cause of the problem.

Increasing property taxes doesn't address the root cause of the problem.

Negotiating with the unions over the union contracts that define the benefit packages employees receive, and the City's responsibility to fund them to the extent that they currently do, is the answer to permanently fixing the structural imbalance that exists in the current budget.



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