The San Jose City Council approved a $5 million tax-incentive deal Tuesday with Netflix for the video-rental company to relocate and expand its DVD division to the city.
Netflix is headquartered in Los Gatos and currently leases 250,000 square feet of space in three locations. Los Gatos recently approved a 550,000-square-foot Netflix development project. Under the San Jose deal, Netflix will lease 55,000 square feet of office space at 1732 N. First Street that was formerly occupied by the city's airport administration.
Under the 5-year lease agreement, San Jose will provide Netflix payments equaling half of sales tax receipts from the company's operations in the first year, 40 percent in the second and 30 percent in the third. The incentives are to offset $1.6 million in improvements Netflix plans to make for its San Jose operation, which will employ 225. The company plans to move the DVD division Oct. 1.
One resident, Ross Signorino, questioned why cash-strapped San Jose should give any company a tax break.
But Mayor Chuck Reed and other city officials said the company only gets paid if it provides new revenue to the city. They noted that Netflix had many choices for its relocation and that other cities and states are competing for such business.