Menlo Park Reaping Windfall From Facebook? Not Quite

By David Cohen Comment

If you think the city of Menlo Park, California, welcomed Facebook with open arms, anticipating a financial windfall from the social network establishing its headquarters there, think again.

Time reported that while Menlo Park certainly gained some advantages from Facebook’s relocation, its streets are not quite paved with gold yet.

The city government asked the social network about potential compensation for expanded civic services, impact on sales and property taxes, even though a city study found that Facebook’s plans to add more space at the former Sun Microsystems campus it now occupies would bring $8 billion in construction spending and related jobs, property taxes of $182,000, and sales taxes of up to $55,000 per year.

One difference between current tenant Facebook and former tenant Sun, as pointed out by Time: Sales taxes are not collected on online ad revenue from Facebook, whereas Sun’s sales of computer hardware and other products resulted in $827,000 per year in sales tax.

All is not gloom and doom in Menlo Park, as Facebook has told the city it will consider payments to compensate for the sales-tax shortfall, as well as investing in infrastructure such as affordable housing, bike trails, and shuttle services.

Readers: Do you think Facebook should feel obligated to contribute above and beyond its tax obligations, or are the concerns of the Menlo Park government justified?