Pricey Mistakes, Public Demands and Transparency Issues Color San Jose’s Google Negotiations

Wednesday, September 27, 2017

San Jose largely rebuilt its downtown by shelling out lavish, risky subsidies. From the 1980s on, the city lured developers to its hollowed-out center with cash incentives—$38 million to the Fairmont, $19 million to the Hilton and $35 million to Adobe Systems. Though the exact accounting of direct subsidies remains un-tallied, estimates peg the total somewhere in the hundreds of millions of dollars out of the $2 billion invested in downtown by the city’s since-shuttered Redevelopment Agency.

As prophesied by regional business coalitions such as Joint Venture Silicon Valley and the Silicon Valley Leadership Group, wealth proliferated in the aspiring tech capital. Cisco, eBay, PayPal and other corporate powerhouses attracted a burgeoning influx of educated, well-heeled consumers. Per-capita incomes rose alongside property values. Public revenue gutted by California’s tax revolt of the 1970s got a much-needed boost, which allowed local governments to invest in a new light rail system, a sports arena and other public infrastructure.

But prosperity was less equitable than predicted by business boosters. San Jose’s economic ascent came with declining wages, a growing wealth gap and skyrocketing housing costs while tax-funded gifts to private companies came with few strings attached—and no enforceable commitments from them to buffer their own impact. Thus, Google’s tentative plans to root itself in San Jose’s core have understandably inspired polarized reactions and intense debate about how the city should negotiate over future growth.

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