What’s in It for the Community

In assessing the merits of a potential Google campus in Downtown, it seems important not to overlook the obvious: how San Jose benefits from a multi-billion-dollar investment of this magnitude. To be sure, there are reasonable concerns about housing affordability and displacement — and I’ll address those issues in a separate section. Let’s start with the benefits:

Jobs

San Jose has the lowest ratio of jobs-to-housing ratio of any major city in the United States. 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. More on those issues shortly, but let’s also acknowledge the most obvious consequences of attracting tens-of-thousands of new jobs: expanding opportunities in our city for San Jose residents — some of whom are already Google employees. When the next recession rolls around, we’ll be glad we’ve got local jobs.

Funding for City Services

As a result of the poor jobs-to-housing ratio-described above, San Jose has the most thinly-staffed City Hall of any major U.S. city. Why? Employers pay far more in City taxes than the services they demand, while residents consume services at much higher levels, and pay taxes overwhelmingly to public agencies other than the City, such as the State, the County, and school districts. San Jose’s relatively anemic tax base undermines every aspect of our service provision, from rehousing our homeless residents, to responding to emergency medical and police calls, to paving our streets.



To offer some perspective: San Francisco is a smaller city than San Jose, with nearly 200,000 fewer residents; yet it has a police force with twice as many officers as San Jose. Although we’re fortunate to be a statistically safer city than San Francisco, our residents must deal with longer responses to 911 calls due to our staffing — and every second can make all the difference.



How can we calculate the purely financial benefits to the public? City staff has determined that the additional City revenues from Google’s development could range between $28 and $40 million through this expansion of our tax base, with a net benefit of roughly $10 million annually. Other agencies — providing hospitals, jails, and schools — would receive tens of millions more. Additionally, the sale of the parcels under consideration on December 4th will yield another $110 million for the City, County, and schools, and future land sales may roughly double that amount.



Yet many other financial benefits accrue to the public from a potential Google project, and those indirect impacts are far greater. For example, there is the “Google effect”: the mere announcement of Google’s intentions has enticed more than $1 billion in investment in Downtown land, driving up valuations and forcing reassessments with each transaction, all of which generate millions for the City, County, and school districts that will benefit our local residents. The additional vibrancy and activity resulting will support higher Downtown hotel tax revenues, busier restaurants paying more in taxes, additional income supporting more retail sales, and more surrounding development — all reinforcing a positive multiplier. Though too speculative to meaningfully quantify, the very positive fiscal impact of these ripple effects is very predictable.

Downtown’s Revitalization

In 2011, after several years of engagement and the input of more than 5,000 of our residents, the City Council unanimously adopted the Envision 2040 General Plan (“Plan”), which set the blueprint for all development in our City. That Plan reflected the longstanding aspirations of our community for a more vibrant Downtown core, with the addition of 48,500 jobs in high-rise office buildings, along with thousands more units of high-rise housing. A Google development isn’t likely to get us there alone, but it would be a historic catalyst. The employees will fill restaurants and entertainment venues, and support housing and retail within walking distance, spurring more development and economic activity in our core.



It’s no secret that for a city of nearly 1.1 million people, San Jose has a relatively diminutive Downtown of only a couple dozen blocks, with far fewer workers or residents than that of many smaller cities’ urban cores. We stand at a critical moment — spurred by historic transit investments and the proposed Google campus — to realize the community’s longstanding ambitions of creating a city center worthy of San Jose and of Silicon Valley.

The Benefits of “Land Assemblage”

Getting neighboring property owners to work together has long impeded Downtown’s redevelopment. We see plenty of examples — such as with Santana Row — of the great advantage that a single landowner can bring: architecture, plazas, public spaces, and amenities can be designed with a coherent, holistic approach, creating an attractive, compelling urban fabric. Our Downtown bears the scars of fragmented property ownership, where some adventurous investor or another has sought to create a “there there,” only to have their goals thwarted by a single “holdout” owner of a small parcel in the middle of the project. Even if the “holdout” owners indicate a willingness to sell, it will often be at such a high price that no investor can feasibly move forward. San Pedro Square stands as one of the few examples of successful urban redevelopment — precisely because different property owners worked together to assemble a critical mass of properties into a quality destination.



The work of consolidating parcels is very expensive, risky, and time consuming. In past years, the City had a Redevelopment Agency (RDA) which aggregated land with public funding, but private land owners famously knew that they could consistently extract above-market prices for RDA purchases. With the State legislature’s elimination of RDAs statewide in 2011, no public entities have the combination of resources and patience to undertake the incredibly costly, time-intensive, and risky endeavor of assembling three dozen parcels as Google has done.

Traffic — And a Smarter Approach to Growth

We all suffer dreadful commutes, the product of decades of poor planning. Yet we know that we won’t suddenly stop growing — as families expand, companies hire, and healthy communities attract new residents. That growth doesn’t need to choke us in worsening traffic, however — and Google’s proposed development shows us how, in three important ways.



First, it moves job growth closer to the region’s residential center — San Jose — rather than up the Peninsula. We encounter the same pattern of gridlock — northbound on 280,101, 85, 880, and 87 in the mornings, and southbound on those routes each evening — for a simple reason: jobs aren’t here. We San Joseans disproportionately commute to smaller suburbs to the north and west for work, and we comprise the bedroom community for the rest of the Valley. By bringing jobs closer to where San Jose residents live, we spend less time on the freeway.



Second, Googlers already live in San Jose — some 70% of all Google employees live south of Mountain View. That means that we, as the region’s biggest city, already house many of Google’s local employees. Our San Jose Googlers will happily welcome a shorter commute to an office closer to home.



Third, and most importantly, Google presents a vision for transit-oriented “smart growth” that must become a model for our Valley’s future. Google selected the one place to build that has among the best current and future transit capacity of any site in the continent: Diridon Station, where we currently have five transit systems converging, with two more — BART and High-Speed Rail — under construction. At full build-out in a decade, this will become the busiest multi-modal transit station in the West. Transit experts can point to many studies showing that maximizing ridership requires putting high-density employment uses adjacent to transit stations, thereby fully leveraging the public investment to reduce congestion. Google does just that.

Fees, Taxes, Infrastructure, and Community Benefits

Independent of the property taxes and other annual revenues that the City will receive from a Google development, there are numerous one-time taxes, fees, and expenditures that will provide widespread public benefit. Google has willingly accepted that it must pay “full freight” for hundreds of millions of dollars of these construction taxes and impact fees. Some of those fees — such as planning charges — will simply pay for the cost of City staff to process Google’s project. Other revenues, such as construction taxes, will help us improve fire stations or streets citywide. Google will bear the cost for installing costly infrastructure serving the Diridon area — such as sewers, road improvements, and perhaps broadband fiber — in addition to public amenities like trails and parks. Where the development will create impacts on surrounding neighborhoods — such as traffic or parking — Google must pay to mitigate them. In recent weeks, I proposed creating a Downtown-wide financing district or commercial linkage fee zone, funded by Google and other Downtown developers, to fund needs such as affordable housing and transit. Google has also generously offered to provide a package of “community benefits” beyond what the law requires, and we expect that the community benefit fund will address issues such as affordable housing and educational opportunity for low-income youth.



The public already has much it can reasonably expect to receive from a successful Google development in Downtown. Through the contemplated Development Agreement and Community Benefits Plan, however, we will continue to advocate at the negotiating table for the best possible deal for San Jose residents.