As rumors swirled about social networking giant Facebook buying the former Sun Microsystems campus in Menlo Park, the company quietly bought 22 acres of business property near the campus.
Facebook purchased 312 and 314 Constitution Drive –- neighbors to the former Sun campus -– on Dec. 27, 2010, via an intermediary, Giant Properties LLC, listed at an address Facebook uses in Palo Alto, according to San Mateo County databases.
Meanwhile, "finalizing land use entitlements for a new tenant at Sun campus" appeared on the Menlo Park community development staff's 'to do' list during a city budget presentation to the council on Thursday (Jan. 28). That's as much information as anyone working for the city would reveal about Facebook's plans.
The move could be a boon to San Mateo County. Larry Stone, assessor for Santa Clara County where Facebook currently pays taxes, said the value of the company is its exponential growth. "Facebook from a property tax standpoint -- their public profile is much more valuable. But their growth is phenomenal," he said, and provided the following figures, good through Jan. 1, 2010:
In 2007: Facebook had an assessed business property value of $8.0 million, which includes computers and other equipment.
In 2008: Value doubled to $16.7 million
In 2009: Doubled again, to $30.2 million
In 2010: More than doubled, to $63.4 million
"They're not considered to be one of the major contributors to Santa Clara County business property tax right now," Mr. Stone said. "But if they keep growing the way they have been, they'll be a major player. Not unlike Google was, not unlike eBay was."
Facebook declined to discuss the purchases. The company has about 2,000 employees worldwide, and more than 500 million active users, according to spokesman Larry Yu.
Note: The original story stated Facebook had paid taxes of $8 to $63.4 million. Those figures were the assessed values of Facebook, not the taxes paid.
Comments
Menlo Park: Sharon Heights
on Jan 29, 2011 at 9:22 am
on Jan 29, 2011 at 9:22 am
It would be great if Facebook purchases the SUN site so that the land could be reassessed at a much higher value than currently. This could be very beneficial to Menlo Park's budget in the short term.
Before everyone gets giddy, however, it should be noted that because of Prop 13, over time the property tax revenue will grow much more slowly than city expenses. Unless state or federal laws change so services are taxed, Facebook would not generate sales tax revenue for the city unlike some other potential corporate tenant of the site. With the offices on the two largest parcels in town (SUN and Menlo Gateway) occupied by organizations that don't produce sales tax revenue, Menlo Park must take a hard and realistic look at where its future revenue will come. Surely not tax increases for residents and existing businesses!
Woodside: other
on Jan 29, 2011 at 10:00 am
on Jan 29, 2011 at 10:00 am
It may be shortsighted to assume that Facebook will only derive revenues from services and not product sales.
Menlo Park: Central Menlo Park
on Jan 29, 2011 at 11:10 am
on Jan 29, 2011 at 11:10 am
Bean Counter
A transaction would almost certainly be between Sun/Oracle and an REIT at a LOWER valuation than it currently has. then a high value lease to facebook. That would net Menlo Park less tax revenue than it currently derives from the property.
Roy
Atherton: Lindenwood
on Jan 29, 2011 at 11:25 am
on Jan 29, 2011 at 11:25 am
Roy - why would financial savy Oracle sell this property to a REIT for less than top dollar? The property was already valued when Oracle purchased Sun.
Menlo Park: Sharon Heights
on Jan 29, 2011 at 2:43 pm
on Jan 29, 2011 at 2:43 pm
good points, all. POGO, even if Facebook gets involved in product sales remember that internet sales currently aren't taxed.
I just want city leaders to be very conscious of the financial implications of what is happening.
Woodside: other
on Jan 29, 2011 at 3:04 pm
on Jan 29, 2011 at 3:04 pm
It's helpful to do a little research before making such definitive claims. As some people have noted, repeating something that is false doesn't make it true.
Anyone who has ever purchased a book from Amazon knows that you do pay sales tax. Sales tax is determined by the location of the buyer, not the seller. Web Link So if Facebook gets into retail sales as expected, that could mean a windfall to Menlo Park, even if it just applies to local purchases. Beyond that, there is a big movement to eliminate the disparity between internet sales and brick-and-mortar retailers. If that happens, then Menlo Park would benefit even more. Who knows what kind of solutions our politicians will think of?
But let's not discount the breakfasts, lunches and dinners that thousands of employees and guests will be eating or the hotels, gas stations and stores that they will frequent. And how about the increased employment for janitorial, maintenance and landscaping services and clerical help they will be hiring?
But why would anyone want to alleviate California's 12.4% unemployment rate? Just let them know they're not welcome and they can go somewhere else.
Menlo Park: Central Menlo Park
on Jan 29, 2011 at 4:08 pm
on Jan 29, 2011 at 4:08 pm
How is moving a campus from Palo Alto to Menlo Park having any change on the unemployment rate?
There are rumors that the Sun campus is being bought for less than half the current prop tax valuation, even bearing in mind that the current valuation was probably frozen around 1985. That would have a huge impact on the entire county.
Maybe Roy T-S or another financial whiz can explain this transaction. It's not like Larry to leave $100+ million on the table.
Woodside: other
on Jan 29, 2011 at 4:19 pm
on Jan 29, 2011 at 4:19 pm
I can't explain the financials, but any real estate transaction is subject to fair market review or everyone would be reporting home sale prices of $1,000 (plus a bunch of cash in a briefcase). I haven't reviewed the terms of the Sun/Oracle transaction, but perhaps they shifted around the value of some assets.
Just wondering asked: "How is moving a campus from Palo Alto to Menlo Park having any change on the unemployment rate?" First, a lot of movers, contractors and workmen are going to be very busy for some time and I presume they will be happy to have the work.
But your question seems to indicate that Facebook's current employment isn't going to grow. It might be nice to have a growing employer in your midst.
Then again, if it doesn't matter, perhaps you should encourage them to move to Nevada. Fortunately for you, our elected officials in Sacramento are already doing that pretty well.
Menlo Park: Sharon Heights
on Jan 30, 2011 at 12:51 pm
on Jan 30, 2011 at 12:51 pm
A lot of internet transactions do not generate sales or use tax. These include software, digital music, movies, and items delivered out of state.
Woodside: other
on Jan 30, 2011 at 2:04 pm
on Jan 30, 2011 at 2:04 pm
But tangible product sales do. And Facebook plans to be in those markets... and in just about everything else.
another community
on Jan 31, 2011 at 8:29 am
on Jan 31, 2011 at 8:29 am
Conjecture is always interesting and speculation makes it fun, but in this instance I think we can look to history to bring some clarity to some of the issues being discussed. Simply go back to the time when the campus was full of Sun employees. Then, for example, check around with local eating/drinking establishments, grocery stores, retailers and ask how much business they actually got from Sun employees. Here is my point; that campus is relatively self contained (on site cafeteria, on site retail, etc.). Like Google, Facebook will very likely want to keep providing those amenities to keep people on campus and productive during the workday It's on the other side of 101 from MP, so people leaving campus can opt to go north or south, rather than just west to do their shopping or whatever, and remember, most don't live in MP.
Atherton: Lindenwood
on Jan 31, 2011 at 8:41 am
on Jan 31, 2011 at 8:41 am
WhoRUpeople makes a great point. But let's turn it around - why not use Facebook as the 'anchor tenant' and develop the East of Bayshore Willow corridor into a shopping magnet and tie it into downtown Menlo Park with a good free shuttle system. Castro Street in Mountain View and California Ave in Palo Alto come to mind.
another community
on Feb 3, 2011 at 9:10 am
on Feb 3, 2011 at 9:10 am
No one seems to be mentioning all of the peripheral businesses that will locate near Facebook just to be part of the halo. Wouldn't you think that some of these enities would create jobs and taxes?
Atherton: Lindenwood
on Feb 25, 2011 at 1:55 am
on Feb 25, 2011 at 1:55 am
IF Menlo Park wants to show some real leadership, and by Menlo Park I mean the business and financial leaders - not the Council, then we/they ought to organize an action group focussed on 1) building the east of 101 Willow corridor as a flourishing business/service center with Facebook as its anchor tenant and 2) consolidating all elementary schools into a single school district.
Left to the politicians on the Council and the School Boards this will never happen.
Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle
on Feb 25, 2011 at 9:24 am
on Feb 25, 2011 at 9:24 am
I, for one, welcome our new computer overlords...
Peter's right about the school districts, too many administrators and overhead costs - combine.
re: Sun Quentin prop tax - too many corporate loopholes to transfer property and retain reduced rates via Prop 13.
As opposed to our neighbors who pay exorbitant taxes on essentially the same home, due to the fact they're younger and bought recently.