Tale of Two Tech Titans and Their Response to Silicon Valley Housing Crisis - NBC Bay Area
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Tale of Two Tech Titans and Their Response to Silicon Valley Housing Crisis

With the proposed development of downtown San Jose, one giant tech company takes a different approach compared to the recent development of the “Spaceship” campus down the road.

2 Tech Titans' Takes on Silicon Valley's Housing Crisis

With the proposed development of downtown San Jose, one giant tech company takes a different approach compared to the recent development of the “Spaceship” campus down the road. Even so, thousands of current residents will be affected, and some forced to move out of homes they’ve lived in for years. Senior investigative reporter Stephen Stock reports. (Published Tuesday, Nov. 5, 2019)

This story is part of a multi-newsroom investigative project involving Reveal from The Center for Investigative Reporting, The Mercury News, KQED and Telemundo 48 Área de la Bahía.

Transformative. Revolutionary. Disruptive. Long-needed. Damaging.

All words used to describe Google’s proposed 80-acre “Downtown West” project which, if current plans are realized, would bring up to 20,000 jobs and some 5,000 new housing units to the area around Diridon Station in San Jose.

Both enthusiastic supporters and critical opponents agree the 6.5 million square foot project will transform the city in ways both anticipated and unimagined.

If approved by city leaders, the development will be the largest such project in one of America’s largest cities.

“We just want to create a great space for everyone,” Google Community Development Manager Ricardo Benavidez told NBC Bay Area.

“I think it's a great thing,” said downtown resident and entrepreneur Jonathan Martinez. “The demand (for business) in this area is going to go up significantly because of what's coming, because of Google. And there's a lot of things that are happening besides Google. So, it just happens to be bringing more good pieces to this area.”

Homeowner Jonathan Martinez believes Google's new campus will revitalize downtown San Jose.

“You know, I see San Jose growing up because of this Google project,” said Martinez.

Other downtown residents aren’t so sure that’s a good thing.

Residents protest Google's Diridon Station Area Plan outside city hall.

“The rich get richer and we get thrown outside,” said Christine Romey.

“I knew that I had to look for another place, you know,” said Jesus Jimenez who has lived and worked as maintenance man in the same downtown apartment building for the last 30 years. Jimenez fears he may be forced to move when the Google project begins in earnest. “I don't think it's fair.”

Downtown San Jose resident Jesus Jimenez making the rounds outside his apartment where he works as a maintenance man.

“There are huge amounts of money flowing right now,” said Jimenez’s nephew Robert Fletcher. “But it just feels as though it's flowing up to the people who already have money.”

In fact, Google has already spent more than $380 Million buying sites for the project since 2016. That has also pushed up property values and rents all around the proposed development.

The apartment building where Jimenez calls home recently sold to new owners who’ve announced they plan to develop the property in different, more financially lucrative ways with Google locating next door.

“I don't want to live like a homeless (person) on the street,” said Jimenez.

“I'm definitely worried about that and having to leave my job and my home and my friends and my family,” said Ashley Preston, another resident in the same apartment where Jimenez lives, who has been told she will eventually have to leave. When told she was being evicted “I was I was sad and like, scared and worried.”

Downtown San Jose resident Ashley Preston fears she will be evicted when the new Google campus begins construction.

Although renter protections will allow Preston and Jimenez to stay, for now, both know that the Google project will eventually force them to seek a new rental home somewhere else, maybe as far away as the Central Valley.

“I have lived here for 10 years and it's my home and I don't know where I'm going to go,” Preston said.

“I know it's changing Silicon Valley. There was a point where I was proud of that,” said Jimenez’s nephew, Nick Raygoza. But “I'm no longer as proud of it because I see that it (Silicon Valley’s economic expansion) is just gobbling people up and spitting them out. And the change of my city that I grew up in, it's not a pretty sight.”

Who Owns Silicon Valley

It’s transformative changes in communities like this that prompted NBC Bay Area to team up with Telemundo 48/Area de la Bahia, The Mercury News, KQED, and REVEAL from The Center for Investigative Reporting to uncover “Who Owns Silicon Valley.”

The team spent a year reviewing and investigating 500,593 secured parcels and 149,863 unsecured parcels from the Santa Clara County Property Assessor’s office for the year 2018.

The team’s analysis found all that property carried a taxable value of $519,180,026,350.

And Property Assessor Larry Stone estimates that the total market value, should those properties all sell today, would exceed $1.5 Trillion.

 

 

 

Among the top ten property owners, according to the team’s analysis, is relatively newcomer to Silicon Valley, Google Inc., founded in 1998 and its new corporate owner Alphabet Inc., founded in 2015.

The team’s analysis of the property records show that the total value of property owned by Google/Alphabet ($7,504,656,526) follows only Stanford University ($19,749,955,770) and Apple, Inc. ($8,969,175,980) in Santa Clara County.

While property owners such as these helps make Silicon Valley one of the wealthiest areas in the world, the team’s investigation found many instances where current middle and lower income wage earners are being left out of the financial boom.

And the focus of the economic expansion, according to elected leaders, corporate officials and economists we talked with, has been on creating jobs and new economies often to the exclusion of basic, affordable housing and infrastructure that can handle the expansion.

“The problem is, over the last six to seven years, we've seen job growth exceed housing production by a ratio of six to one,” said San Jose Mayor Sam Liccardo. “And that’s a recipe for disaster.”

Preventable Disaster

It’s disaster years in the making.

“Housing development is not keeping up with employment growth,” said former Mountain View Mayor Lenny Siegel. “What we're trying to do at this point is keep up with employment growth. That employment growth has been so dramatic here. This is a boomtown that we aren't going to get to a balance between jobs and housing. But if we can keep it from getting worse and build transit, then we'll be in good shape.”

Several experts said that to truly meet Silicon Valley’s current housing need, governments and private industry will have to pony up six to seven billion dollars to build enough places to live.

That’s why officials from both Google and Facebook say they recently pledged $1Billion to address the local housing crisis. Microsoft also recently committed $500 million for the same reason.

Representatives from Google say they want to bring a different approach to their proposed San Jose development which they are calling “Downtown West.” It’s a project Google says will include up to 20,000 jobs and around 5,000 new housing units including some for low income residents.

For its part, Google officials say the company does have a responsibility to the wider community as they plan “Downtown West.”

Google employees ask San Jose residents for their feedback on the Diridon Station area project.

“We have concerns around traffic, parking, housing. All things that we’re trying to solve for. Or (to) be part of the solution,” said Google Community Development Manager Ricardo Benavidez.

“We know some of these are more regional issues. But Google has a responsibility to be part of that conversation. And (to) be able to work cross functionally with the public sector to see ‘How do we address some of these issues,’” Benavidez said.

Jeffrey Buchanan of Working Partnerships USA in San Jose says he likes what he’s hearing from Google officials right now but he’s still skeptical and he’ll believe it when he sees it.

“What we've seen so far in their plans that they have made some significant commitments,” Buchanan said. “I think Google has the opportunity to really be a leader when it comes to developing without displacement. But it's going to take significant additional investments in affordable housing.”

A Similar Project’s Impact

To get an idea how much of an impact a big tech campus like this can have on the housing market, NBC Bay Area turned to a project already completed, the Apple “Spaceship” that recently opened in Cupertino. The newly built campus employs more than 12,000 workers. The team mapped out every house and apartment near the campus and found that if every employee chose to live in Cupertino with their families, Apple workers would fill a third of the city’s total housing and nearly 100% of the city’s single-family homes.

 

Source: Analysis of Santa Clara County Assessor's data for FY 2018, Sean Myers/NBC Bay Area
Map: Sean Myers/NBC Bay Area

When asked why Cupertino officials didn’t do more to ensure additional housing was built in the city when the Apple Spaceship was built, Cupertino Mayor Steven Scharf, who wasn’t on the city council at the time, said “I think when it was built, when it was entitled and approved we were not in this housing crisis.”

Mayor Scharf also says to compare 12,000 jobs in the spaceship with little housing built along with the “Spaceship’s” construction would not be totally accurate or fair because the old Hewlett Packard complex was located on the same spot as the “Spaceship” and held 10,000 jobs back then. Therefore, Mayor Scharf says those employees already lived somewhere in the city or surrounding area.

Aerial shot of Apple Park

Mayor Scharf does concede that Cupertino didn’t build enough housing for those additional extra 2,000 employees when the Apple Spaceship opened.

Apple officials did not return several of our requests for comment about these issues. But on Monday, the company pledged to spend $2.5 billion towards affordable housing and mortgage assistance programs for first time home buyers.

“I would say we can do better than we’ve done (in building more affordable housing)," said Mayor Scharf.

Scharf also says developers who promised to build more housing in Cupertino have not come through and haven’t built hundreds of affordable housing units as promised.

“We hear a lot of reasons (why not)," said Scharf. Reasons such as “they’re worried about an economic recession coming. They see a softening in the housing market. In one case there’s currently an apartment complex there that would be removed and replaced. They would remove 342 units and build, I believe, 943 (units). (But) they say, ‘we’ll lose the rent for those two years while it’s under construction.”

Scharf said developers also blame the high cost of construction in the Bay Area.

“The end result is we’re not getting those units,” said Mayor Scharf. “We can’t make them build.”

When asked if Cupertino’s City Council needs to do more and be more aggressive in pushing developers to build affordable housing, Mayor Scharf said “We do, and we are. Since we have a new city manager she’s been engaging with some of these developers that own the property to see what we can do to actually get them to start construction.”

Entrepreneur and downtown San Jose resident Jonathan Martinez, one of the strong downtown Google campus supporters, asks “Why is it their responsibility (to build housing)?”

“They're not a housing company. They're providing jobs, high paying jobs to help people buy that housing that is available,” said Martinez. “It’s supply and demand.”

Martinez said that providing housing and pushing developers to build more affordable housing is the government’s job not high tech’s responsibility.

San Jose Mayor Sam Liccardo says he’ll do his part and vows to hold Google to its promises and not let them off the hook to the wider community like he says happened in Cupertino.

“Google is very intentional that they are really excited about an urban, vibrant village,” said Liccardo. “We need to make sure it happens right. We need to ensure we are protecting our residents’ interests first. And that's the deal I intend to negotiate. I'm absolutely committed to it.”

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