San Jose mayor pushes for 25 percent affordable housing mandate around Google development

The San Jose City Council will push Google to offer a range of community benefits.

By Emily Deruy
Bay Area News Group

With Google and San Jose agreeing on a price for city-owned land and planning for a massive downtown campus near Diridon Station about to begin in earnest, the city now can lay out what it hopes to reap from the tech giant’s foray — benefits that could affect the trajectory of the region for years to come.

In that vein, Mayor Sam Liccardo and several of his City Council colleagues — Vice Mayor Magdalena Carrasco, Sylvia Arenas and Dev Davis — said they plan to push for a new affordable housing requirement, as well as a fee on commercial development to pay for some of that housing, along with improvements to public transportation and other things.

“We cannot deny that our community is rapidly changing, and the investment of Google will have a real and direct impact,” Carrasco said in a statement. “We will continue the work on the preservation of the unique character of San Jose neighborhoods, including East San Jose, by mitigating displacement and gentrification while guaranteeing career opportunities for our youth and opportunities for upward mobility.”

The City Council is expected to approve the sale of city-owned land to Google on Dec. 4. The four council members say they will push to require that 25 percent of the overall housing built in neighborhoods around Diridon Station be affordable, and they want to see long-term rent restrictions put into place. Ultimately, Google wants to build 6 million to 8 million square feet of office and retail space — and bring in some 20,000 jobs — on about 50 acres just west of Highway 87 and the core of downtown.

“We’re glad the mayor and City Council are now finally realizing the need to address the massive impacts Google will have on the city’s housing crisis and its effect on residents through community benefits, but with so few details it’s hard to tell whether this will be enough,” said Maria Noel Fernandez, the campaign director for Silicon Valley Rising, an organization that has raised concerns about the project. “For 18 months, we’ve said the issue of displacement was the biggest  community concern in the Google deal and proposed community benefits, increased inclusionary housing requirements, impact fees and a number of other measures to fix this. We need to know whether Google is really committed to addressing their full impacts on the community through affordable housing, protections from displacement and commitments to family supporting jobs for local residents.”

Many of the specifics still need to be worked out, and the proposals will have to work their way through the whole council. It’s not clear yet, for example, exactly how affordable the housing would be, but, the mayor said during a phone interview the idea would be to have some housing developments be entirely affordable, which would allow other projects to be flexible.

If Liccardo and his allies can drum up enough support, the 25 percent requirement would mark a significant increase from the 15 percent of homes developers typically are asked to set aside as affordable.

The council members are also pushing for the formation of a district downtown, including the area around Diridon, where the city could impose what’s known as a commercial impact fee or something similar so commercial developers would help pay for affordable housing and other community benefits such as better bikeways and sidewalks.

Though other cities in the region have such fees, San Jose has resisted, concerned that they could slow the flow of development and exacerbate an already bad jobs-housing imbalance in the region.

“Anything to discourage business from coming here will worsen the economic situation for our city and force us to ask for more new taxes,” said Councilman Johnny Khamis, one of the council’s more conservative members.

Liccardo said he thinks the area still would be be too much of a draw to deter businesses, however.

“I certainly retain those concerns in several parts of the city where we have difficulty seeing much job growth,” the mayor said, “but in the downtown, with all the investment we’ve made…there’s a very different story.”

The consideration of such a fee signals an attempt to please critics of the project, particularly labor groups that have argued the new development will send already sky-high housing costs soaring.

And some groups have responded to the outreach.

Enrique Arguello, the business manager for Laborers’ International Local 270, said in a statement the group supports the public-private partnership between Google and the city provided both agree to an “open dialogue with the community.”

For Scott Knies, head of the San Jose Downtown Association, the negotiations with Google are an opportunity for San Jose to think broadly and creatively about how the area around Diridon should look. And while some developers aren’t going to like the idea of paying a fee to do business in the area, “there’s got to be a value capture,” Knies said.

If, for instance, the city eases height restrictions in the area and allows builders to put up taller buildings, that will create more space for businesses and could free up ground level area for parks or walkways or public art for both workers and local residents. But those will need to be funded.

As with many major developments, there’s a “bit of quid pro quo” going on, Knies said.

But, he and others say, where Apple built an enclosed office — the spaceship — in suburban Cupertino that sucks in cars and workers each morning and spits them out each evening, Google is interested in helping create an open, mixed-use neighborhood that is an integral part of the city.

Google and the city have agreed to negotiate so-called community benefits before the City Council makes decisions on a range of issues, from land use designations to zoning, that will affect the project. Right now, for instance, the area around Diridon that Google wants to develop is zoned for industrial uses such as warehouses. The development review process is expected to start in 2019 and last at least a couple of years.

“This is the first company that’s ever honestly worked with us” on issues like transportation and housing, Khamis said. “I’m excited about it.”

Liccardo said he hopes that as the Google development moves forward, residents will view tech companies not as saviors or supplicants, but as partners with San Jose.

Often, such as with the news that Amazon will locate its new headquarters in New York and northern Virginia, “large tech companies are viewed as beneficiaries of public largesse,” Liccardo said. “Google presents a very different narrative and San Jose is establishing a different relationship with tech.”