Nationally-recognized financial expert disappointed that Google capitulated in SJ development deal

David Bahnsen, widely respected economist and Founder/Managing Partner of the Bahnsen Group, decries the way Google was coerced into paying into a giant, $200m slush fund as part of their deal to develop at Diridon Station. HIs comments are in response to Randal O'Toole's groundbreaking story in Opp Now (see nearby) and occurred during the June 23 Radio Free California podcast.

I came away from reading the Opportunity Now article more upset with Google than San Jose. Google had every ability--the balance sheet, the liquidity, the credit-worthiness, and the demand--to develop anywhere they like. Anyone who knows the Bay Area knows there are lots of cities they could've gone to. They could probably have created their own city.

But they took the bribe from the city of San Jose and its non profit activists. Perhaps they decided it was a lighter cost, but it's still a shakedown. And the shakedowns will continue until someone refuses to pay the ransom.

And it sets a terrible precedent. The next player may not have Google's vast financial means. As a result, this approach simply incents cities to only do deals with big companies, and it leaves smaller developers in an impossible situation.

What would be wonderful for the free market is for the Googles of this world--similar to what Tesla did last year--is just say no. To put their foot down and refuse to pay the bribe, to refuse to pay the Danegeld, and to expand outside of cities that make unfair demands. That would've been a better outcome. It is disappointing that Google capitulated here.

Listen to the podcast here.