Google Offers $30M Upfront Payment on 53-year Ground Lease on Charleston Road

More than 10 years after arrived in Mountain View, the global company will finally build a home. Literally.

The agreed last week to lease a 9.4-acre plot of land for 53 years to Google for which the company will pre-pay rent worth $30 million and the second-half of a $500,000 exclusive right to negotiate agreement. According to city staff, the lease payments should generate $2.5-$3 million in annual interest tax revenue for the .

"This is exciting, because these ground leases have been noted through the budget process and have helped support the city in the last several years," said Ellis Berns, assistant director of community development, who also noted that this was  Kevin Duggan's fourth such major agreement.

This ground lease gives Google access to the entire 18.6-acre plot—about 595,000 square feet with a floor-area-ratio of .72—on the southern corner of Shoreline Boulevard between Charleston Road and Amphitheatre Parkway. Google has leased the northern 9.2 acres since 2006. The property can now be developed as a single parcel, noted staff, which both the city and Google prefer.

In his report, Berns explained that the rent "is an excellent offer for the land" at $74.48 a square foot, and "at the end of the lease term, the land improvements and fixtures revert to the city," though Google has the option at the time to renew the lease. Staff will offer recommendations about how to best invest the $30 million.

Google has no obligation to build, but if it does, it must break ground within the next 51 months.

But the search giant does have plans.

"The combination of the two parcels represents the ability to design and build an integral project," said Dan Hoffman, Google's director of Real Estate and Workplace Services. "This will be Google first green building project, and we look forward to being a model for sustainability and a community partner."

As part of the agreement, Mountain View will provide sewer, water and storm drainage to the site, and Google is responsible for the onsite utilities and connections.

While Google has placed some conditions on its payment of rent, such as that the city has to ensure that no burrowing owls live on the site, Berns assured the City Council that these conditions were reasonable. Another clause in the agreement included that the city must keep the rent in a separate account and deduct the rent from there.

"I certainly love our burrowing owls," said Councilwoman Laura Macias. "But I'd hate to see them stand between the city and $30 million dollars. Can we move them if we find them on the land?"

Berns explained that the city had already begun mitigating measures and trusted "that there are no burrowing owls on the site."

Google's history in Mountain View goes back to 1999 when the then-40-employee company moved to 2400 E. Bayshore Pkwy. In March 2004, the 800 employees moved to the "Googleplex" at 1600 Amphitheatre Pkwy.

More recently, Google announced 1,500 units of housing for its employees in the North Bayshore neighborhood and has plans to add more in Moffett Field. Some estimates put the current employee count in Mountain View at about 8,000.

"This agreement is a win-win for both Google and the city," Hoffman said. "This will allow Google to further expand in Mountain View and remain in Mountain View. The additional square footage FAR [floor area ratio] allows us to keep more jobs in Mountain View."