Google Poised to Strike $111 Million Land Deal with San Jose

Google’s move to San Jose would radically alter the landscape of the 10th largest city in the U.S. by redeveloping 50 acres of downtown into taller, denser blend of offices, shops, restaurants and public plazas linked to BART, Amtrak and Caltrain through the aspiring “Grand Central Station of the West.”

It will take years before the tech company realizes its vision for the city’s core. But a key City Council vote this week lays the groundwork.

Come Tuesday, San Jose’s elected leaders will consider Google’s offer to pay $111 million in exchange for 10.5 acres of public land—some owned by the city, some by the successor to the defunct Redevelopment Agency—with the option of buying 11 more acres in the future. That’s $237.50 per square foot, or two-and-a-half times what neighboring properties appraised for in 2017, but well below what Google spent as part of its recent $1 billion office park purchase in Mountain View.

The memorandum of understanding going before San Jose’s 11-member council Tuesday follows a year of contentious debate over Google’s impact and the city’s dealings with the multinational search-and-advertising giant.

Since announcing the company’s interest in downtown, San Jose Mayor Sam Liccardo has tried to distinguish the city’s negotiations with Google from deals Amazon cut with New York City and other host municipalities in exchange for billions of dollars in tax breaks. “Google never asked for a dime,” Liccardo wrote in a lengthy Medium post about the pending land sales. “Their executives made it clear that they would pay full freight—for land, fees and taxes.”

Business boosters such as the San Jose Downtown Association, the Silicon Valley Organization and the Silicon Valley Leadership Group have held up Google as a way to correct the city’s jobs-housing imbalance. Under California’s municipal tax structure, commercial development generates more revenue than residential, which means San Jose’s lack of jobs compared to housing translates to less money for public services. That’s why, in the midst of a history housing shortage and affordability crisis, the city prioritizes new jobs over new homes.

“San Jose has the lowest ratio of jobs-to-housing ratio of any major city in the United States,” Liccardo explained in his Medium post. “This paucity of jobs has two major impacts on the public: city services in San Jose suffer due to our relatively minuscule tax base, and San Jose residents spend too many hours commuting to jobs to the north and west, far from home.”

Though surveys by the Silicon Valley Leadership Group indicate strong public support for Google’s move to San Jose, a number of community groups have criticized the city over past closed-door talks with the company and decision to only broach the subject of public concessions until after finalizing land sales.

Two nonprofits, Working Partnerships USA and the First Amendment Coalition, sued the city last month for signing confidentiality agreements with Google. The MOU on Tuesday’s council agenda includes the sale price and other details of the deal, but, according to the lawsuit, the non-disclosure documents signed by about a dozen city officials last year suggest that some details were kept from public view, according to the complaint filed last month in Santa Clara County Superior Court. The city maintains that the NDAs were legal and justifiable.

Meanwhile, Silicon Valley Rising, another nonprofit associated with Working Partnerships, has joined a chorus of activists in highlighting Google’s potential to exacerbate displacement and housing costs unless it somehow mitigates its impact. The Affordable Housing Network of Silicon Valley, a group that advocates for the city’s renters and 4,300-plus homeless people, set up a tent outside San Jose City Hall on Monday to call attention to Google’s potential to displace San Jose’s poorest residents.

In a press release Monday, Affordable Housing Network organizer Sandy Perry said the city would be wise to convert its public parcels by the Diridon Station into a community land trust instead of selling them to Google. “Public land should remain a public asset and should not be sold off to the highest bidder,” Perry wrote.

The mayor and his allies, however, contend that Google could help solve some of San Jose’s problems. Liccardo said he will push to have 25 percent of new housing by the Diridon Station below market-rate. Discussions about a commercial linkage fee, which would generate additional affordable housing revenue by imposing a new charge on developers, are ongoing as well.

Negotiations about a community benefits package will begin in earnest once the city sells its share of the development footprint. Though the city will give up valuable public assets in the transaction, Liccardo said San Jose will maintain significant leverage. For one, San Jose has the power to decide whether to approve taller buildings in the development zone, which would provide the biggest economic benefit to Google. Not to mention, the city still wields authority over basic zoning changes.

“Unless and until the city approves changes on the land use designations and zoning—after Google applies and obtains approvals in a public process that will likely culminate in 2020 or so—nothing gets built,” he wrote in his Medium essay.

He added: “Google will be negotiating with the city in the months ahead on a development agreement that enables the city and public to clearly know what will get built, and what benefits will accompany the development.”

WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260; Click here to read the agenda

Jennifer Wadsworth is the news editor for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

2 Comments

  1. Just a thought, how many H1b’s will be inhabiting all that affordable house and who going to be the land lord?

  2. Hello! Jennifer!

    Are you interested in a Pulitzer prize?

    There’s a big fat juicy political scandal right on your doorstep:

    “Cambridge Analytica”

    Ballot harvesting

    “whitelisting”

    “The miracle of the Orange County Democratic Congressional seats”

    Google, Facebook, Twitter, Amazon

    campaign contributions “in kind”

    San Jose City council

    https://www.mercurynews.com/2018/12/05/facebook-allegedly-offered-advertisers-special-access-to-users-data-activities/

    Connect the dots . . . .

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