Op-Ed: Google Bought Land in Downtown San Jose—Now What?

Six days before the San Jose City Council was set to vote on a sale of downtown land to Google, a cheerful headline tops the local section of the Mercury News: “Tech leaders donate $20M for housing.” The subhead names our heroes: “Cisco, LinkedIn and Pure Storage are the latest companies to help ease the crisis.”

Hailing this donation as “a step forward for activists who have long been urging Silicon Valley, and its money, to take a more active role in solving the region’s drastic housing shortage,” the Mercury News does not mention that with over 7,000 homeless residents in Santa Clara County, and growing, and a cost of over $600,000 to build a single unit of affordable housing in the Bay Area, the cost to eradicate local homelessness is several billion dollars.

Seldom does the Mercury News provide context for corporate donations. The cost of solving the housing crisis dwarfs the relative pittance the tech behemoths are willing to give, and the behemoths’ profits dwarf the cost of housing every homeless person many, many times over. Until last year’s corporate tax cuts, Silicon Valley’s tech behemoths stashed immense piles of idle profits in offshore accounts, waiting for a tax holiday. Now, they dribble out tiny donations as exercises in public relations.

Consider Cisco’s PR strategy. After stashing $67 billion (with a B) in offshore profits from last year’s corporate tax cuts, Cisco pledged to donate $50 million (with an M) towards local homelessness over five years—less than 0.1 percent of its offshore profit repatriation—spinning it as “ending homelessness.”

Cisco is perhaps our most generous tech behemoth. The most miserly is the largest—Apple, which stashed a quarter of a trillion dollars (yes, reader, with a T) offshore before the tax cuts. In July, Apple pushed back against a very modest employee tax before the Cupertino City Council, supported by over 70 percent of Cupertino residents, that would have cost Apple only $10 million annually, or 0.004 percent of its overseas pre-repatriation offshore profit stash, or about 0.2 percent of its annual profits. A unanimous city council voted against it. Apple is notoriously aggressive in fighting any and all forms of taxation, with nearly 500 property tax appeals pending in Santa Clara County challenging $5.4 billion in value.

After the vote, Cupertino Mayor Darcy Paul played pretend with his constituents, claiming that instead of the tax, Apple had “promised” to maybe possibly thinking about paying for a “hyper-loop” for Cupertino at some unspecified later date. Raise your hand if you’ve ever ridden a hyperloop!

Apple’s heavy-handed approach to Cupertino’s diminutive tax proposal—the size of an unnoticeable rounding error on Apple’s balance sheets—only makes sense if Apple foresees a slippery slope to an egalitarian future where corporate taxes finance housing and transportation infrastructure.

The Prop. C Revolution

Last month, over 60 percent of San Franciscan voters approved Prop. C, a local measure to tax tech behemoths—it only applies to businesses with over $50 million in gross receipts—that will raise over $300 million annually to fight homelessness. Voters ignored the fretting from Mayor London Breed, most San Franciscan politicians, most of the business community and the San Francisco Chronicle about the impact a tiny tax might have on enormous corporations.

Let’s do the math: given that Cisco’s $50 million  donation to “end homelessness” is a $10 million donation per year for five years, Prop. C is the size of about 30 Cisco donations annually.

Traditionally, politicians in the mold of Mayor Breed, or Mayor Liccardo, and their power brokers, have united to support sales tax increases, the cost of which is spread out among corporations, the wealthy, the underpaid and overworked, the rent-burdened and the homeless. Prop. C, in stark contrast, only touches money from businesses with $50 million or more in revenue. You can imagine which one our corporate leviathans prefer.

In Santa Clara County, Carl Guardino, CEO of the Silicon Valley Leadership Group (SVLG), spearheads these sales tax initiatives, enjoying much success on these challenging campaigns that require a two-thirds vote. He has managed or co-managed at least six campaigns, resulting in roughly $20 billion for local infrastructure projects.

In recent years, the contradiction of Silicon Valley has become obscene: very large tech profits juxtaposed with the homeless people and an underpaid working class. As a corporate functionary, the purpose of Guardino and the SVLG is to muddy the waters as to who should be taxed and for what so that corporate leviathans can continue taking advantage of a broken system while the homeless languish in the streets in one of the richest cities in the history of the world.

Earlier this year, the Mercury News presented Guardino’s bad metaphors about the public’s reaction to Google’s desire to purchase land in downtown San Jose: “Some see private enterprise as a tiger to be shot. Some see it as a cow to be milked. Some see private enterprise for what it is, a strong horse pulling a steady wagon.”

A fall edition of Content magazine featured a profile of Guardino, whose salary is just shy of $800,000, in smarmy splendor, touting his “nonprofit advocacy group” where “people are mission driven rather than monetarily driven.” For Guardino, it isn’t the money that matters, it’s the fact that he’s saved billions for large corporations from the rapacious fingers of a public hungry for things like shelter.

Mission accomplished, Carl! But not for long. San Francisco’s Prop C has provided a template for San Jose or any city beset by leviathan corporations: ignore the power brokers and the big money boys, ignore the local paper gutted by its private equity owners, ignore the bought and paid for politicians crying that the big bad public wolf might kill the goose that lays the golden egg. Tax the corporate behemoths.

The Google Campus in Downtown San Jose

What will happen to San Jose now that it sold downtown land for Google to build a campus for 25,000 employees? Santa Clara County already has a housing shortage due to anemic housing construction and tech’s prolific job creation. Between 2010 and 2015, Silicon Valley created ten new jobs for every new unit of housing. Predictably, well-compensated corporate employees are driving out lower-income residents.

Google’s campus proposal illustrates the disconnect between San Jose’s political establishment and its residents, best demonstrated last night when the City Council unanimously voted to sell the land to Google after evicting the public from council chambers, the first of many evictions to come from this land sale. The establishment’s vision, inscribed in the City’s “Envision 2040” General Plan, prioritizes job growth. With its goal for 382,000 new jobs but just 125,000 new housing units over the next two decades, San Jose’s nonsensical General Plan is deaf to the plight of San Jose’s current tenant population, nearly half of whom are rent-burdened. Google’s downtown campus, and Envision 2040 generally, will further squeeze renters and further enrich landlords.

Liccardo’s main priority as mayor has been to spur job growth in San Jose. Improving the city’s fiscal health means adding more jobs than homes, but since we’re in a housing crisis, he must at least pretend to care about housing costs. In October 2017, Mayor Liccardo stood on a dais in Japantown and announced a goal to build 5,000 residential units per year, including at least 10,000 affordable units over the next five years.

A year later, Liccardo has just 64 new affordable units to show for it.

The charitable view of Liccardo’s housing record as mayor is that he’s ineffective, constrained by the city’s fiscal health that necessitates bringing in more jobs. The more perceptive view is that Liccardo, Guardino’s cyling pal, simply does not care about the plight of San Jose’s renters and homeless. He has opposed stronger rent control and rezoning land from commercial to residential, except when requested by his donors.

The simple fact of the matter is that the land is too expensive for private developers to build a sufficient amount of affordable housing. By now it’s obvious: there is no way to build 10,000 affordable units absent a significant amount of new public revenue dedicated for housing. Since Liccardo does not support taxing businesses, he will never offer a credible affordable housing plan. When a San Jose State University professor proposed a ballot initiative to raise $40 million (just an M) by updating the city business tax in 2016, Liccardo kept it off the ballot by agreeing to a smaller tax increase instead.

And now, Liccardo has ushered in a sale of prime downtown land to Google for $110 million (M)—for context, Google’s offshore stash last year was $100 billion (B)without any requirement for the company to pay for affordable housing.

The people of Santa Clara County have arrived at a fork in the road: we can either tax tech to build desperately needed housing and transportation infrastructure, or we can recommit to a broken status quo, a two-tiered society affordable for corporate employees and Prop. 13 beneficiaries that consigns blue-collar employees to commute hours each day to and from their homes in the Central Valley, wasting away days of their lives.

In a more egalitarian Silicon Valley, corporate taxation replaces sales tax initiatives and corporate philanthropy, and the SVLG would cease to exist, a relic of a bygone era when we financed infrastructure according to preferences of our corporate leviathans.

Until then, which city council member will be the first to propose a gross receipts tax on San Jose businesses with over $50 million in annual revenue?

Tom Skinner is a nonprofit housing attorney, yoga instructor and a renter who lives in downtown San Jose. Opinions are the author’s own and do not necessarily reflect those of San Jose Inside. Send op-ed pitches to [email protected]

35 Comments

    • > kill google project with CEQA

      President Trump is going to smash Google (and Facebook and Twitter and Amazon) with the anti-trust hammer.

      Those San Jose politicians who are drooling about Google and its deep pockets being their BFF are going to be disappointed.

  1. Mr. Skinner starts his argument with a mistake and then proceeds to tell a bunch of fibs along the way, making his analysis of housing economics total blarney. Housing is expensive in the valley because there’s limited supply. There’s limited supply because restrictive zoning sorely limits the amount of high-density development that would make affordable housing economically feasible: almost all of residential sj is zoned R1–single family homes. Single family homes are expensive on a per resident basis, 20-story high rises aren’t. Skinner claims that the only way to get more affordable housing is to get more subsidies–that is a dead-end argument, as it supports the current uneconomic land use bias for single family homes which is creating the problem in the first place. The way to get more affordable housing is to make it cheaper to build on a per unit basis, which means greatly loosen zoning to provide for more density. It seems that Skinner is more interested in shaking down high tech companies and preserving tony white neighborhoods than actually solving the problem.

    • What’s more, by using “Rent Controls” and complicated “Eviction Laws” you limit the interest in investment.
      No investment, no new units, it’s really pretty simple.

  2. Oh wow!

    Tom Skinner is really an uncompromising, old-line, share-the-wealth socialist. Or worse.

    He should be marching arm in arm with Bernie and Alexandria Ocasio-Cortez leading a caravan of migrants from Silicon Valley to Venezuela.

    I’m sure that Dictator Maduro will welcome them with open arms and be more than happy to lay on all the taxes that Skinner is eager for.

  3. Tomás is well read. He also writes well. His heart is in the right place and he is young. However, he fights an uphill battle. So good wishes to him. I tend to agree even though I am a beneficiary of Prop 13. Young and old alike should be beneficiaries of government policy. We should listen more to the generation which will come next as they will inherit what the powers to be have bestowed upon them.

    • > We should listen more to the generation which will come next as they will inherit what the powers to be have bestowed upon them.

      If you want to get some place, ask directions from people who have been there.

      If you DON’T care where you end up, ask someone who doesn’t know anything.

  4. In his deliberate vilification of local high tech firms the author conveniently ignores the enormous contribution they make to the tax base by providing generous salaries to thousands of employees who pass on a sizable percentage of that income to our local and state governments.
    It’s not Apple or Cisco’s fault that our government squander most of what’s given to them.

    • I believe that the author comes from a the point of social justice. The same corporate entities you have mentioned come from the point of profits for satisfying their stockholders from around the world. However, we live here. It is our home. We need to make our home a great place for us all that Actually live and work here. We elect our officials by vote. We can also unelect them theM the same way. There will always be tremendous opportunities here in the Santa Clara Valley, it is just the names on the outside of the buildings that will change.

    • America Love it leave it …. right? Instead, let’s figure a way how we can have all of the people who work here earn enough from working a normal work week to afford the rent and or mortgage payments. We need affordable living or you will choke off access to formidable workers from every walk of life. Who is taking care of the elderly? Who is bagging your groceries? Who is policing our streets. Who is repairing our roadways? Not everyone is a tech genius. We need everyone to pitch in to make this place work.

      • Maybe Not.

        Wages go UP.

        Problem solved.

        OK

        The tech industry got a free ride with all these guest worker visas that kept wages down. Get rid of h1bs then one or both of the following happen: (1) Tech wages go UP and I mean way UP and/or (2) Tech companies start to move OUT of the area.

        You have to use some common sense. When $100K in the Bay Area is like $30K somewhere else then take some of these $100K Silicon Valley jobs somewhere else.

        If you are a high school teacher and not willing to sleep in a homeless shelter because $60K is chump change in the Bay Area then move to Las Vegas making $55K a year and BUY a house.

        Sooner or later, the teacher wages will go UP.

        • So, I go to my boss and say “Hey I can’t work at these lousy $100,000.00 a year wages because I have to pay on a million dollar mortgage”. He says “I can’t afford you then, and you must leave here”. How many times can my boss keep saying that to all of his employees? Sooner or LATER he has to raise wages or do with fewer employees to do the same work load or LEAVE. Not a win win situation is it?

          • BINGO

            If you can’t afford to live here then don’t.

            That sounds cruel and it is. If you are young and starting out then you want to be buying property as fast as you can. Otherwise you are going to get to 65 years of age faster than you think not having a paid off house.

            Your other option which I am seeing more and more often is to live homeless for a couple of years having a decent job with saving all the money punting out of the Bay Area. You have more homeless software engineers than you might think.

          • Hoapres, monolithic homes are not middle class housing here in Silicon Valley. Middle class housing is a small condo (2 bedrooms) inside of a building that has many other condos in it.

            People who make $100k — the median salary in Silicon Valley — aren’t buying monolithic houses by themselves. Either both parents make $100k, or one makes upwards of 200k. Which is common if you’re been in a professional occupation — programmer, software engineer, lawyer, surgeon — here in Silicon Valley for five years or more.

            And that’s the way it should be. Density is the future. I would support a ban on new monolithic single family homes. All housing should be required to be dense.

          • You all are asking the wrong question. It’s not “why do i make so little money?” It’s “why does housing cost so much?” Follow that rail and see who is responsible and things begin to make a lot more sense.

      • > America Love it leave it …. right?

        There’s a caravan of migrants heading for Venezuela at this very moment. I hear that they are promising a better life for all . . . . especially for “formidable workers from every walk of life.”

        Don’t be left behind.

    • And who do you think will fix your Starbucks coffee, teach your children, fix your car, fix your plumbing, etc.? We cannot have a society made of only financial types and software engineers.

  5. San Jose Outside the Bubble. Correction. There are tons of Venezuelans leaving their country FOR Columbia. The Venezualan economy has been destroyed by a strong man who became an autocrat and ruined their economy.

    • > Correction. There are tons of Venezuelans leaving their country FOR Columbia.

      SUSAN:

      There is nothing to correct..

      I never said that people WEREN’T leaving Venezuela. I only said there was was a caravan from Silicon Valley to Venezuela.

      They’re different people.

      Based on the things that people complain about on SJI, I have to believe there are many people locally who would LOVE Venezuela. Just think of all the wonderful attributes:

      1. Fairness and equality
      2. No racism
      3. No white privilege
      4. No sexism or homophobia.
      5. No greed.
      6. Free education
      7. Free healthcare
      8. Efficient public transportation
      9. Abundant affordable housing

      Venezuela seems to have everything that Silicon Valley DOESN’T have, and it should be no surprise that a lot of bay area people would find happiness and fulfillment there.

  6. “El BUBLE”
    Okay I am on my way to Venezuela with a caravan that now has all of the workers this city will need to run on. If you are left behind I might suggest before you next use your toilet that you check to see where the contents will go. Who will run the infrastructure? Who will mow your lawn? Who will paint your house? Who will feed you Green Jello when you can no longer able to do it yourself? ( My kids told be that is all I am getting when I become old an feeble).

    • Wayvoz, robots will mow the lawn and paint the house. Robots will paint the house 10,000 times faster than a human and do it perfectly. Robots will clean the toilets and take out the trash. Humans will maintain and supervise the robots and make $100k doing it.

      Venezuela, like most communist states, is a 3rd world country. The most prosperous nations are the ones with individual liberty, and if you have that you have capitalism. :)

  7. lol you guys espousing communism obviously didn’t grow up in Silicon Valley. I’ve lived here since I was five years old. I wrote my first computer program in BASIC on the Apple //e in 1986, when I was eight. We in Silicon Valley are liberal, but we’re moderate liberal, to the right of San Francisco (but still far, far, far to the left of Mike Pence).

    And no, tech is not moving out, not in the forseeable future. We have built a unique ecosystem for tech here in Silicon Valley. We are the WORLD LEADER in technology and innovation.

    EIGHTY PERCENT support Google’s project in downtown San Jose. It’s going to happen, and it’s going to be awesome!! :)

    • Ahhh …. and this happens how? Son you need to perhaps let the helium dissipate and come back to ground level. “Everything is awesome” is a great movie jingle, but it takes hard work and planning to make things happen. I programmed in C+Basic back in 83’ my first computer set up cost $50,000.00 and was only 8 bit with a mother board with a 64k chip, and 12.5 MB Hard Drive. The first micro computer. Had to learn to program to be able to run the business and tweak form printing line ups. Although I am not a techie. Tech has pretty much followed Moore’s law since then. Our cost of computer power is thousands of time cheaper today. But we need to think ahead for the future. We need to bring everyone along to this future, not just the elite.

      • ok, what’s the median home cost in Manhattan, another desirable area? Paris? London? Do you think you could afford a monolithic single family home down the street from the Louvre? You could not.

        Silicon Valley is an expensive place to live because it is desirable, especially for techs.

        A major tech company having an office in the downtown area is exactly what San Jose needs. That’s why 80% support it!

        People with meager salaries can afford Silicon Valley just fine. You do have to adjust your housing expectations. I make about 35k before taxes, and I live in Silicon Valley. I share a one bedroom apartment with someone.

        I can’t wait to move back to downtown, with all the awesome stuff that’s going in there! BART, Google, all the new high rises coming in…it’s a wonderful place with a wonderful future. :)

        What do you mean, how is it going to happen? They buy land and build a building, fairly straightforward. :)

        • > I can’t wait to move back to downtown, with all the awesome stuff that’s going in there! BART, Google, all the new high rises coming in…it’s a wonderful place with a wonderful future. :)

          WHOA ! ! !

          Here’s your hi-tech future in downtown San Jose, MR NEUTRINO78X.

          https://www.sfchronicle.com/business/article/Spotify-gives-up-SF-Mid-Market-office-and-tax-13450875.php

          “The change was motivated in part because some Spotify workers felt unsafe, said two former Spotify workers, who requested anonymity to avoid repercussions from former or current employers. The Mid-Market and Tenderloin neighborhoods have some of the highest violent crime and poverty rates in the city, according to government data.”

          When the poop becomes knee deep in downtown San Francisco, the urban aborigines (aka “the homeless”) will hop onto BART and zoom down to your massive Google transit village in San Jose and poop in your elevator.

          Do keep us informed, Neut.

          We’re all eager to know how long it takes for disappointment to set in.

          • San Jose Outside the Bubble, we don’t have that problem down here because, while we are liberal, we are significantly to the right of San Francisco. The homeless are considered a low priority for police, but when they become a problem, we emphasize solving the problem, not making people feel good about it. San Francisco lets huge homeless encampments develop and does nothing to disperse them. In Silicon Valley, when they get large, the police eventually go through and make people move on, offering vouchers etc.

            You guys have to stop being nice and actually go in there and disperse people.

            In any case, downtown San Jose is a low crime area. Your high crime area is East San Jose (east of downtown, but west of the foothills). Downtown San Jose is a very desirable and expensive neighborhood; in 2014, a two bedroom penthouse condo sold there, at The 88, at 88 San Fernando, for 2.2 million dollars.

  8. Please take a moment to watch Videos of the public being excluded from this City Council meeting on Dec 4th. Very sad to see but well documented to show the world on YouTube how we do things in the Anti Democratic City of San Jose under the leadership of Mayor Sam Liccardo.

    https://www.youtube.com/watch?v=ubQKavk8UvU&t=48s

    https://www.youtube.com/watch?v=7nD4ZASeBjk&t=136s

    https://www.youtube.com/watch?v=Ff74UXnCrAE&t=13s

    https://www.youtube.com/watch?v=Tu89I4N0-3g&t=6s

    https://www.youtube.com/watch?v=ThGt3o3Wu84&t=8s

    • > how we do things in the Anti Democratic City of San Jose under the leadership of Mayor Sam Liccardo.

      Exactly the opposite: San Jose is a VERY DEMOCRATIC city. Properly understood “democracy” is, as one commenter recently put it, “dictatorship of the majority”.

      Those excluded from the meeting were likely not members of the “democratic majority”. Probably, they were just tiny inconsequential little pissants.

        • > Of those surveyed, 79 percent said they support development that combines jobs, housing and mass transit in an urban setting, . . . .

          Democracy is government by the stupidest and most easily manipulated 79 percent.

          Do the stupid 78 percent want Google Corporation to run San Jose for the benefit of Google’s bottom line?

          Do the stupid 79 percent have a plan for what to do when Google gets smashed to pieces by President Trump’s trust busters. and Google requires a bail out by San Jose taxpayers?

  9. ROBERT CORTESE sayeth:

    “Already happening. SF got tired of doing the “Warm Fuzzies” approach, and just started handing out bus tickets.”

    An excellent report, Robert!

    An extra ladle of gruel in you supperdish.

  10. > Google Bought Land in Downtown San Jose—Now What?

    Now What?

    Local government becomes the slut of Snowflake Corporation, and San Jose becomes Snowflake Town.

    https://theconversation.com/why-googles-employees-walked-out-and-what-it-could-mean-for-the-future-of-labor-106305

    “The recent walkout by thousands of Google employees at offices around the world was the first protest of its kind by well-paid and benefit-rich high-tech workers.”

    https://www.nytimes.com/2018/04/04/technology/google-letter-ceo-pentagon-project.html

    “‘The Business of War’: Google Employees Protest Work for the Pentagon”

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