Google Spends $86 million on low income housing

[Azure]

http://techcrunch.com/2010/08/30/goo...ncome-housing/

Google is partnering with U.S. Bancorp Community Development Corporation (USBCDC), a division of U.S. Bank; to create an $86 million Low-Income Housing Tax Credit (LIHTC) fund. According to a release issued today, the funding will be used towards the construction and operation of 480 affordable rental housing units for low income families and senior citizens in seven communities throughout the West and Midwest.

It’s unusual for a technology company to get involved with these types of loans; banks and insurance companies usually help fund these credits. While the money doesn’t cover the total cost of these developments, these tax credits help them complete a project.

No I'm not trying to trump up Google. I just find it interesting that a company with millions, or perhaps billions in the bank is doing this.

Techcruch pointed this out.

As an added bonus, the company will be able to offset its federal tax liabilities over several years with these credits.

Which begs the question, if Cowperson is indeed correct, and US corporations are sitting on trillions in cash, why don't they do more stuff like this to offset federal tax liabilities?

[Flash Walken]

Originally Posted by Azure

Which begs the question, if Cowperson is indeed correct, and US corporations are sitting on trillions in cash, why don't they do more stuff like this to offset federal tax liabilities?

Because most of them already pay an absurdly low amount of tax.

[Cowboy89]

Originally Posted by Azure

http://techcrunch.com/2010/08/30/goo...ncome-housing/



No I'm not trying to trump up Google. I just find it interesting that a company with millions, or perhaps billions in the bank is doing this.

Techcruch pointed this out.



Which begs the question, if Cowperson is indeed correct, and US corporations are sitting on trillions in cash, why don't they do more stuff like this to offset federal tax liabilities?

Because spending 100% to save 30% is a negative NPV project. A big reason why companies have record cash piles is because they are unsure of the riskiness of deploying it. They are using cash as a safety blanket. So why would you spend your safety blanket in still uncertain times?

[bizaro86]

Google is spending the massive cash tsunami their search engine ads pull in on all sorts of stuff. Aquisitions of every other internet company that moves, green power, and now low income housing.

It's like they're throwing everything they can think of at the wall to see what sticks.

Michael

[valo403]

Low income housign tax credits aren't simply a way to reduce your tax burden, they are also an incredibly lucrative income source. Unused credits can be spun off to other companies, typically realizing pretty solid profits. Google has the cash reserves and liquidity to make a move that other companies typically can't, and it also gives them a pretty decent PR boost.

[octothorp]

Do these numbers seem a little odd? 86 million for 480 units comes out to a construction cost of $179 thousand per unit. Seems like they should be able to stretch that money further.

[valo403]

Originally Posted by octothorp

Do these numbers seem a little odd? 86 million for 480 units comes out to a construction cost of $179 thousand per unit. Seems like they should be able to stretch that money further.

the funding will be used towards the construction and operation

That might explain it

[yads]

I'm sure they'll use this low income housing to improve their search algorithms in some way. Do all the houses contain CC cameras and by living in one you consent to let google record your life?

Only half joking.