By Nour Malas and Rob Copeland
SAN JOSE, Calif. -- Technology giants helped pump the West Coast
full of choking traffic and expensive homes. Now they are trying to
fix the damage.
The challenge, and all its many complications, is playing out in
real time in this city.
Google wants to build a campus of more than 6 million square
feet here, with twice as much office space as the Empire State
Building. The plans include a revamped downtown area around an old
train station with thousands of apartments, shops and community
spaces. The pitch would essentially remodel San Jose as a
21st-century company town, where a dominant employer lifts the
local economy for decades to come.
Some residents welcome the potential lift. Others fear the
worst, having seen nearby towns struggle to recruit firefighters
and teachers because few can afford to live near their jobs.
Activists protesting gentrification have objected to the secrecy
around initial talks and booed the city mayor at public events. At
one city council meeting in 2018, activists chained themselves to
chairs to protest the project. Police used bolt cutters to remove
them.
The Alphabet Inc. unit is negotiating with San Jose officials
after three years of preliminary discussions. Local community
groups want a quarter of the housing in the development to be sold
at below-market rate. They're also drawing a line at private Google
buses, citing inequality and environmental concerns.
Google has said it would build some below-market housing units
but hasn't determined the exact figure. It won't commit to nixing
the buses.
The back and forth is a microcosm of a battle that has played
out over and over across the region. Technology has brought
extraordinary wealth to Silicon Valley. It has also worsened the
area's housing shortage and a widening economic divide. The
question facing San Jose, the nation's 10th most populous city, is
whether it can bring in a major employer while managing the
downsides.
Elizabeth Valdivia, a 60-year-old security worker, could no
longer afford to live in her hometown of Mountain View after Google
built out its global headquarters there. She rents a room in an old
San Jose apartment building for her disabled brother while she
lives out of a rusted 1997 Mercury Tracer sedan.
"Where will we go?" she says. "You can't have 20,000 Googlers
come here and not have mass displacement."
In private meetings, local officials say, Google representatives
have said the company's primary responsibility is to shareholders,
not to solving the ills of an entire region. Google has offered
smaller concessions, such as curbing perks like free snacks for
employees to encourage them to spend money outside the office and
build up a broader neighborhood.
"We're trying to create the best version of all the voices we
have heard, " says Google real-estate development director Alexa
Arena. She says that from the start, Google decided not to seek tax
breaks or run a competitive bidding process between cities --
strategies that fomented a public outcry during Amazon.com Inc.'s
highly-publicized second-headquarters hunt.
"HQ2 is the opposite of what we are trying to do," says Ricardo
Benividez, a Google director charged with incorporating San Jose
public opinion.
San Jose's mayor, Sam Liccardo, said the city was working hard
to get it right: "It's high stakes, and it's a great opportunity."
Mr. Liccardo called the Google project an opportunity to reinvent
Silicon Valley away from a model where "you create a moat, put
alligators in there, and surround it with a sea of parking."
Tech companies, which largely blame the housing shortage on
local regulations that restrict home building, are starting to
respond. Last year Google pledged $1 billion, mostly in land
donations across the San Francisco Bay Area, to address the issue.
In November, Apple Inc. said it would commit $2.5 billion to go
toward affordable housing in California, including to help the
state develop and build low- to moderate-income housing and to help
first-time home buyers with financing.
Two years ago, the company took heat from neighboring towns for
spending $5 billion on a new headquarters that included roughly
10,000 new parking spaces but no additional housing.
Facebook Inc. was the first big Silicon Valley firm to start its
own fund for affordable housing in 2016 as it negotiated with the
city of Menlo Park over its expansion. In a pilot program for
teachers who want to live in Palo Alto, the company covers any rent
above 30% of their income. Last year the subsidy was an average
$31,582 per teacher.
Facebook has also become a political force in Sacramento,
putting hundreds of millions of dollars behind housing bills and
supporting a grass-roots movement of housing advocates in
California.
"We can fund all the housing we want, but that doesn't actually
get it built," says Facebook's Menka Sethi, who leads the company's
housing efforts. "Government needs to approve more."
Missing out
San Jose has long been the stepchild of Silicon Valley.
Its first city planner in the 1950s envisioned it as a Los
Angeles of the north, a collection of single-family homes scattered
across cherry, apple and plum orchards. The city designated
relatively little land for commercial use, and mostly missed out as
Palo Alto, Cupertino and other towns around Stanford University to
the northwest became startup central.
Over the past eight years, Silicon Valley added jobs at six
times the rate it added housing, according to local transport and
housing agencies. San Jose, however, gained more residents working
in cities to the west and north than it did new jobs, depriving it
of business taxes and the daytime dollars its residents were
spending everywhere else.
The city's streets are all but abandoned during the day. The
population swells past 1 million only after dark, when commuters
trickle home. The soundtrack is the roar of jet engines from the
airport downtown.
San Jose has a reputation as a pocket of affordability in
Silicon Valley, in a state that boasts 91 of the 100 most expensive
ZIP Codes in the country, according to real-estate data firm
PropertyShark.
Google, where the median employee pay is almost $250,000 a year,
almost triple San Jose's median household income, has the potential
to reverse those trends.
City officials say they started talking to Google in 2016. Kim
Walesh, San Jose's economic development director, says her team was
gauging if Google would consider expanding in San Jose, arguing
that a large number of the search giant's employees already lived
there.
"Quite honestly," she says, "there was no interest."
In late 2016, Mark Golan, Google's real-estate head, called the
mayor, Mr. Liccardo, and said Google was in. It would develop a
complex surrounding downtown San Jose's dilapidated Diridon train
station with as many employees as Google's headquarters a few miles
to the north. The development could be ready as soon as 2024.
The city also has plans, yet unfunded and decades away at best,
to transform the station into a hub for light rail, metro and
bullet train systems connecting the city to Silicon Valley's
smaller towns, as well as to San Francisco and Los Angeles.
Google's Mr. Golan told officials his company would buy land
parcels downtown through a real-estate broker, to keep the
company's name out of the press.
Mr. Liccardo agreed to swear to secrecy while negotiations
continued. The mayor, along with two dozen city staffers including
council members and their aides, signed nondisclosure agreements
starting in February 2017.
The agreements became public that June. Two weeks later, the
city council voted to start exclusive negotiations with Google to
sell the land. No other bids were solicited. Google has spent
around $450 million so far buying public and private property for
the expansion.
"It felt like, 'This is happening,' as opposed to, "Do we want
Google in our community, and is that the best thing for us?' " says
Liz Gonzalez, a local activist.
Mr. Liccardo says the NDAs were appropriate to stem real-estate
speculators, and because the city didn't make any decisions related
to public benefits during that time. Google executives now say that
they were a mistake from a public-relations standpoint, and that no
further NDAs are planned.
Already the largest lobbying spender among major technology
companies in Washington, D.C., Google has recently become a major
philanthropic force in San Jose.
In early 2018 San Jose assembled a Station Area Advisory Group
of various community groups. Several groups on the board receive
money from the search giant, and Google has bumped up its donations
in the past two years, according to public disclosures and
interviews.
Google's Ms. Arena says there's no quid pro quo. "It's a little
bit of a double-edged sword," she says of donations to community
groups with a say in the outcome. "We absolutely need to support
the organizations who are helping to think through massive regional
programs."
A walk-through of the site last year revealed actual
tumbleweeds. Parking lots were mostly empty. Google's Mr.
Benividez, playing the role of tour guide, was delighted to find a
full bike-sharing dock, but it wouldn't accept his credit card when
he tried to rent one.
Several homeless residents were sleeping in makeshift camps.
Google gave $1 million to a local nonprofit that runs shelters in
November.
The tour continued past a reedy, unkempt creek. Ms. Arena said
Google is negotiating with environmental groups about what, if
anything, it can to do improve the waterfront, given local
regulations.
San Jose council member Johnny Khamis said the variety of
demands levied on Google risked scaring the company.
"If we keep forcing them to pay for housing and parks, they will
go to Houston or Austin," he said. He balked at the idea that
companies like Google should be involved in building housing: "They
will end up fixing toilets rather than fixing code."
The Station Area Advisory Group meetings have been dominated by
talk of housing.
A recent hearing in a windowless conference room at San Jose
City Hall demonstrated the mix of viewpoints that all involved must
navigate in a city as large and diverse as San Jose. Google's Mr.
Benividez sat quietly to the side as a dozen speakers railed
against his employer.
The first speaker during the public comment period, local
resident Paul Soto, began reading excerpts from Aldous Huxley's
dystopian novel "Brave New World" with dramatic verve.
"Democracy can hardly be expected to flourish," Mr. Soto said,
"in societies where political and economic power is being
progressively concentrated and centralized."
Another resident compared Google to "colonizers who set sail for
San Jose." She broke into tears after her two minutes at the
microphone were up.
City officials have banned the use of the word "campus" in
internal and external communications about the Google project,
fearing it triggers a negative association with the sprawling,
insular workplaces of other tech giants.
Plans for the new development released in October included up to
5,000 units of housing. That would accommodate roughly one-fifth of
Google's employees at the site.
As part of its effort to win over locals, it spent $40,000
restoring a San Jose icon, a neon sign of a plump yellow pig once
used for an old meat factory. It marked the event with a party in a
parking lot in June that was covered closely in the local
media.
On Montgomery Street in downtown, two blocks from where Google's
new village may rise, shopkeepers and homeowners are awaiting a tap
on the shoulder to sell to the company.
A row of stores -- a cement showroom, a welding shop, a food
wholesaler -- and a shingle-roof home have already sold to Google.
Across the street, mechanic George Lopez hoped his turn would come
next: "It will be a beautiful thing. Jobs. Tourists. More people
spending money."
Ms. Valdivia, who has taken on more hours at work to save for an
anticipated rise in her brother's rent, sees it differently. "We're
going to be driven out of town."
Write to Nour Malas at nour.malas@wsj.com and Rob Copeland at
rob.copeland@wsj.com
(END) Dow Jones Newswires
January 28, 2020 13:19 ET (18:19 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Alphabet (NASDAQ:GOOGL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Alphabet (NASDAQ:GOOGL)
Historical Stock Chart
From Sep 2023 to Sep 2024