Google Deal Is a Key Moment for San Jose to Finally Get It Right

Has San Jose’s moment arrived?

Two years ago, Mountain View rebuffed Google’s bid to massively expand its headquarters. A few months later, the U.S. Supreme Court declined to take up San Jose’s long-shot bid to scuttle Major League Baseball’s federal antitrust exemption and allow the Oakland A’s to relocate to land across from SAP Center.

The 2015 rejections created a match made in commercial real estate heaven for both spurned suitors, which are now negotiating a deal to bring Google to downtown San Jose.

Instead of bringing in a money-sucking professional sports franchise, San Jose redeployed the assembled parcels and offered them to a corporate citizen that could transform the city. Google can afford to buy the land, finance its own building, contribute badly needed tax revenue and create high-wage employment. Northern California’s largest city provides Google a way to escape traffic nightmares and a housing crisis as it rockets to a trillion dollar valuation.

The company’s parent, Alphabet Inc., is dabbling in a host of futuristic “moonshot” ventures that include robotics, driverless cars and flying vehicles. With facilities all over the world and no shortage of hubris or cash, Google has seen its universe-changing ambitions stymied by the parochial hand-wringing of a municipality wary of putting too many alien eggs in one basket. San Jose, on the other hand, has spent 35 years and a couple of billion dollars of its taxpayers’ money to become Silicon Valley’s capital, yet it still plays fifth fiddle to Palo Alto, San Francisco, Mountain View and Cupertino. San Jose has seen many dashed hopes and false starts.

A downtown mixed use development initiative collapsed after the dot-com implosion. Subsidized retailers exited. Plans for Apple, Cisco and Tandem (remember them?) to locate their campuses in Coyote Valley disappeared in economic cycles and acquisitions. Meanwhile, Santa Clara won the pro sports lottery, Santana Row flourished, Campbell became an entertainment destination and Sunnyvale turned into a residential hot spot of million dollar-plus homes.

Optimists knew the wave would head south and San Jose would be caught up in the swell. The peninsula became too expensive, crowded and wary of hypergrowth, and San Francisco’s boom has become an angry mess of gentrification-sparked class warfare and culture shifts.

San Jose’s downtown, at the same time, is coming into its own, with an expanding roster of millennial-friendly yoga studios, coffee shops, craft cocktail bars and microbreweries. The ugly tan ’80s-era buildings that dominate the flat-topped skyline have been dressed up with LED mood lighting and murals. Even pedestrian crosswalks are being turned into painted art pieces in a bid to add more color.

In downtown’s shadow, across the meek Guadalupe River, lies a district dominated by auto body shops and other light industrial uses, agricultural era galvanized roofs, neighborhood markets, working class bars, the vestige of a sausage factory and weed-choked, tent encampment circled parking lots with circular skid marks.

That all can change.

Mountain View used to be a dump, literally. The Google campus and Shoreline Amphitheatre are built on landfill. Its now-trendy downtown used to be filled with low-budget restaurants and dated retail.

Google’s arrival will help San Jose’s jobs-housing imbalance, a phenomenon that has left San Jose with some of the valley’s worst parks, schools and roads, and a hollowed-out police force.

For years, San Jose has provided housing for the lucrative job growth in other cities, which captured tax revenues and upgraded amenities for their residents while San Jose lagged.

Neighboring Santa Clara last year brushed off a nearly unanimous chorus of critics and plowed ahead with plans to build the 9 million-square-foot CityPlace Santa Clara adjacent to Levi’s stadium, which will create 24,760 jobs while only adding 1,360 residential units.

San Jose grew by nearly 10,000 residents in the past year—the biggest jump in Northern California. It can easily accommodate a campus of 20,000, which will represent less than 5 percent of the city’s jobs. Other cities are looking to go the other way and cool down job growth to preserve their communities. We’re looking to increase the rate of housing growth, but decrease the rate of job growth,” Palo Alto Mayor Patrick Burt said last year.

With a robust transit infrastructure, Googlers can commute in from San Francisco, the South Valley or the Peninsula on an electrified Caltrain, and Fresno may soon be a 50-minute high-speed rail ride away.

Google made a smart decision—maybe the only decision it could make. San Jose is a behemoth, with land, housing, urban culture, rail lines and an international airport. It has a major city’s infrastructure and can support the ambitions of an expanding global technology leader. Apple and Facebook now hold major conferences here instead of in San Francisco, and the cool factor seems to be taking hold.

Hopefully, Google will see fit to plan a true urban campus that embraces the downtown and the community around it rather than one that seals its employees in a hermetic bubble with free food and ridiculous perks. Companies historically perform better in urban environments, and Google may benefit from a socially connected workforce as it tackles a transforming world.

We can debate the essential unfairness about displacing family-owned small businesses to make way for one of the world’s richest corporations. However, if the city can see fit to incentivize development, it can sprinkle a little love the other way—and it should, in the form of relocation assistance.

A smart agreement will avoid giving away the store with tax breaks, but it shouldn’t load the deal with labor carve-outs and red tape, things that drive up building costs and delay realization. San Jose should move fast to make this happen. Conditions can change quickly, and decades from now we don’t want to be talking about the one that got away.

9 Comments

  1. About time. So tired of the rich South Bay cities getting all the jobs and revenue while SJ remains the poorer bedroom community. Go Google!

  2. Will Google advertise in the Metro?

    Don’t hold your breath.

    The parcels assembled for the failed baseball stadium scam were purchased by defrauding the taxpayers and have been on the “Fire-sale” list for at least three years now.

    It will be interesting to see how much Google can squeeze out of San Jose City Council to consumate the deal.

    David S. Wall

    • > It will be interesting to see how much Google can squeeze out of San Jose City Council to consumate the deal.

      David:

      We won’t find this out until we require ALL city officials, bureaucrats, and council members to wear body cams 24 hours a day.

  3. Certainly makes more sense to do such large development in downtown SJ, where there is existing and planned mass transit infrastructure that can be leveraged (or justified for the future), versus other areas of San Jose… Sure Santana Row is doing well, but it is being choked by traffic which will only get much worse with all the proposed and approved development. Stevens Creek Blvd also will get much worse if it is allowed to get too dense. Moderate development outside downtown, and encourage more of this in the core.

    • I think Stevens creek is a logical corridor for more dense development, but we definitely beed better transit. Why is there still no serious talks for light rail on stevens creek?

  4. San Jose government has been significantly outnegotiated by wealthy individuals and companies regarding land use and development since at least the McEnery/Frank Taylor days. The public employee unions have also kicked CSJ butt as well. I expect more of the same regarding the Google proposal. The Niners did it to Santa Clara. Bend over and grab your ankles taxpayers.