What Google Means for San Jose’s Future (Full Text)
“A lie can get halfway around the world while the truth is still putting on its shoes.” — Mark Twain
Much has been said in the media and the community about the proposed Google development in San Jose in recent months, yet fast-moving conversations about subjects of wide public interest — whether in social media or around the water cooler — can often outrun the facts. With the Council considering a significant vote on December 4th, it seems an appropriate time to offer a few key facts as a starting point for our conversations ahead, and to answer some common questions. Forgive the length of this blog, but there are many questions to answer, namely:
· What is the Council deciding on December 4th? What will be decided in the future?
· Will the taxpayers be subsidizing an anticipated Google development in any way?
· Why should San Jose strike any deal with Google? What’s in it for San Jose residents?
· How do we know whether the public will get a good deal on the anticipated land sales? Why sell the land? Why not simply lease it, and hold on to it?
· In light of Google’s plans, how will San Jose continue to address high housing costs?
· How transparent has the City been in making these decisions, and in these negotiations?
You can use the links above to read answers to each individual question, read a summary, or continue reading below to read the blog post in its entirety.
City staff has also prepared a longer list of “Frequently Asked Questions” to address questions that have frequently arisen in the community engagement process.
What’s Getting Decided on December 4th — And What’s Not
On November 16th, after many months of negotiations and public stakeholder meetings, and after 13 separate public agencies have weighed in, the City of San Jose released a proposed “Memorandum of Understanding” (MOU) with Google, along with several agreements relating to the sale of several publicly-owned parcels.
We released the reports and documents to the public 17 days before the December 4th Council vote to ensure a full vetting. On that date, the Council will consider approval of land sale agreements, an option agreement on three more parking lots, and an MOU that broadly defines the parties’ intentions, expectations, and responsibilities in the months ahead. The land to be sold consists of parking lots, a few industrial buildings, and the site of the City’s aged and nearly obsolete fire training facility, which will be moved and consolidated with other fire department operations on another site.
This is an early step in a multi-year process, which would result in an architecturally iconic, vibrant, and attractive transit-focused mixed use development that will redefine our Downtown for future generations.
Much remains to be decided in future months, however. Here’s what won’t be decided on December 4th:
What’s Getting Built
Google and the City have discussed the concept of a mixed-use development with offices, housing, retail, restaurants, public plazas, and other urban amenities integrated into a single, transit-oriented village on the west side of Downtown. Google is still far from designing its proposed project at the site and submitting a planning application to the City. In the meantime, Google’s team continues to work with the City, consultants, and stakeholders to nail down key variables, such as how high it can build in the “airport approach” area, how large a footprint will be needed for the central station and related transit, and the extent of environmental cleanup required on several industrial parcels. This project will likely be larger, more complex, and more urban, than any other development in Silicon Valley’s history to date. It will take time.
What Rights Google Has to Build
Currently, most of the parcels comprising the future campus have an “industrial” zoning and land use designations not aligned with mixed-use development. This means that, under the current rules, Google cannot build an office building, an R & D facility, an apartment building, or much of anything — other than, say, an industrial warehouse. Unless and until the City approves changes to 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. That, of course, is the leverage that the City critically needs to ensure that we get a development that comports with our community’s goals, as articulated in the General Plan. 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 that development.
What Google Pays in Fees, Impact Mitigation, and Community Benefits
In addition to the many inherent benefits of a proposed Google development — jobs, an integrated transit-oriented village featuring high-quality urban design, tax revenues, an expanded and more vibrant Downtown — Google will also be contributing in various other ways. Since much of the Diridon area remains undeveloped, Google will be responsible for installing costly infrastructure — such as sewers, roads, and perhaps broadband fiber — in addition to public amenities like trails and parks. Where the development will create adverse impacts on traffic, Google will pay for roadway improvements to improve flow. Google will pay millions in City fees and construction taxes, and I am pushing to create a Downtown-wide financing district funded by Google and other developers to address needs such as affordable housing and transit. Finally, Google has also generously offered to provide a package of “community benefits” above and beyond the fees it is legally obligated to pay, to address issues such as affordable housing and education.
The amount of these fees or payments will be determined through negotiations in the months ahead. The City and Google will direct these negotiations toward the creation of a Development Agreement, which: 1) outlines what kind of project the City will support, along with the accompanying fees and mitigations, and 2) will feature a Community Benefits Plan, outlining what additional commitments Google will make with Council approval of the project. The Council’s consideration and vote on those documents will not likely occur prior to 2020.
Google is Receiving No Public Subsidy
When Google executives and I first discussed a concept for a major development in Downtown San Jose, we agreed that San Jose wouldn’t provide any subsidies, tax breaks, fee reductions, or land discounts. More importantly, Google never asked for a dime. Their executives made it clear that they would pay full freight — for land, fees, and taxes. They have merely sought that we negotiate with them in good faith, sell land based on an independently-appraised fair market price, and treat them fairly in the public land entitlement process. Additionally, as noted earlier, Google executives have expressed a willingness to pay for additional “community benefits” — such as for affordable housing and educational programs for low-income youth — in excess of standard fees and taxes.
San Jose’s situation stands in stark contrast to the experience of New York City and Crystal City, Virginia, where Amazon will receive more than $2 billion in incentives in cash subsidies, tax rebates, and fee breaks for landing its new “HQ2” campuses there. News of large subsidies for big corporations hardly seems unusual these days, as we’ve seen in announcements of General Electric’s move to Boston, or Foxconn’s expansion in Wisconsin, or Tesla’s in Nevada. And in San Jose’s own history, ample examples exist of less sizable subsidies — such as the $32 million that the San Jose Redevelopment Agency provided Adobe for its Downtown headquarters move in the 1990’s.
Google’s project charts a very different approach to economic development: one that pits neither party as savior nor supplicant, but rather as partners in a mutually beneficial relationship.
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:
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.
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.
The Land Sales: The Public Will Get Its Money’s Worth
On December 4th, the Council will decide whether to sell several parcels of publicly-owned industrial land to Google, generating roughly $110 million in revenue to 14 public agencies, including the City, County, and various school districts. Five of those six parcels are required to be sold now for economic development purposes as part of State dissolution of Redevelopment.
In addition, option agreements on other sites could deliver another $110 million in approximate sales revenue, with some offsets for such things as soil remediation.
A look at the numbers: how we know the $220 million is a good deal
The parcels all sold at a uniform price per square foot: $237.50. We can compare this price to a couple of different benchmarks for comparison.
First, Google also bought dozens of other parcels from private owners in the year before the deal that they struck with the City and County in early 2018. We compared the City’s price with the price obtained by those private owners of land from Google, and with the exception of a single parcel (which involved an expensive relocation of a business’ facility), this $237.50/sq. ft. price exceeded the prices garnered by all of the other private parcel owners.
Second, several neighboring parcels were appraised by an independent consultant the year before the price was struck, and the $237.50/sq. ft. price garnered by the City exceeds that appraised value by 2.5 times — a dramatic increase.
Finally, the sale of most of the parcels did not merely need to be approved by the City, but by 13 other public agencies — the County, various school districts, and the like, according to state redevelopment law — in separate, public hearings. These agencies scrutinized the deal carefully, and presumably approved the sale after a public hearing. The City-owned parcels that were not sold through that extensive public process — such as the Fire Training Center site — fetched the same land price ($237.50/sq. ft.) as the other parcels.
Selling vs. Leasing the Land
Some have asked me whether it would have been better for the City to lease the sites to Google rather than to sell them. For various reasons, a lease wouldn’t have worked as well for either the public, or for Google.
First, the parcels that were once owned by the former San Jose Redevelopment Agency — that is, until redevelopment agencies were eliminated by the State of California in 2011 — have to be sold, under state law, by December of 2018. So, holding on to them wasn’t an option. The State would have forced their sale either way.
Second, with a lease, the City or another public agency would need to retain public ownership of land. The mere act of selling the parcels to a private party will generate millions annually for schools, the City, and the County, by bringing the property on to the assessor’s tax rolls. The sale transaction also forces a re-assessment of the land at the top of the market — property that had assessed values of less than $70 per square foot a year before Google started its shopping spree is now being taxed at $237.50 per square foot. For several years, those property tax dollars will be used to pay off public redevelopment debt from past decades, but future generations will benefit from a broader tax base for years to come.
Third, we received a great price for the land. Most experts would say that a lease would only compare favorably if the present value of the future stream of revenue were to exceed the roughly $220 million sale price, and it’s far from obvious that the City could have elicited such revenue annually from a lease.
Finally, Google is considering whether it should invest billions of dollars to develop a new development, with integrated public spaces, plazas, restaurants, housing, and other features. Their concept requires the assembly of dozens of privately-owned parcels, and only a few parcels currently under public ownership. Embarking on a campus development straddling both their property and leased property would be very complex — imagine owning a home that requires you to pay a lease on the portion of the land on which your kitchen is located. Obviously, a dispute with the landlord, or a desire for a better lease deal, doesn’t give you the ability to feasibly disassemble the kitchen.
If we want investment of this magnitude, we have to understand the constraints of the investors, and work within them. If we want to continue to have empty parking lots and half-vacant industrial buildings, we can keep ownership of some of the land, but the public will miss out on hundreds of millions of dollars of public services and a vastly improved Downtown neighborhood.
Google and Our Housing Crisis
Amid all of the enthusiasm for this Google development — 68% of San Jose residents supported a Google-built transit village in the most recent poll — the largest community concern relates to housing affordability. We’ve heard this during our extensive community engagement process, which reinforces everything I hear anecdotally each day as I talk with residents.
Before we launch into what the City and Google should do about the impacts of Google coming to our city on housing affordability, it’s critically important that we ensure that we’re all dealing with the same set of facts. Amid the very active discussion of this issue, too often some facts are either overlooked, or not well understood.
We Are Already in a Housing Crisis Today — Without Google
Our current housing crisis is the result of decades of under-investment in housing and imbalanced development throughout the Bay Area, but particularly in Silicon Valley. It was not caused by Google moving into San Jose, nor will it be suddenly solved when they get here. The forces at work are simple, but much larger than any one actor’s ability to control: supply and demand. The South Bay has produced 6 times as many jobs as housing units over the past decade, exacerbating an already-expensive housing market.
The problem is that those jobs were being disproportionately created in suburban towns outside of San Jose, which were less willing to add housing than tech campuses. For example, in the five years that Apple built its spaceship campus in Cupertino, the city didn’t add a single unit of housing, driving up housing costs in West San Jose. Santa Clara has master-planned a 10 million square foot development on our border, but it would house less than 10% of the 17,900 workers expected to occupy its offices; San Jose already houses four times as many Santa Clara workers as Santa Clara does — and that ratio will now worsen. In short, San Jose has long suffered all the downsides of job growth outside our borders — less affordable housing — with none of the tax revenue or upsides. Google’s campus presents us with a rare opportunity to actually benefit from tech growth.
Google’s Campus Will Require a Decade to Build
Anyone who fears the specter of tens-of-thousands of Googlers suddenly descending from the sky can rest easily: the campus will take at least a decade to build, in part because of all of the challenges with construction in the immediate area: BART, High Speed Rail, and Diridon Station are each multi-billion-dollar construction projects, and all must be built compatibly with a new tech office, residential projects, retail, sewers, streets, and other elements of the urban village. Very preliminary estimates might have the very first Googlers landing at their desks in 2026 or 2027, optimistically. Even if we assume that the future campus ultimately brings tens-of-thousands of employees into Downtown, then the question is whether San Jose can weather absorbing that many employees over the next decade.
The answer is “yes.” How do I know? San Jose is a big city — of nearly 1.1 million people — and we’d need to add several thousand employees annually just to keep pace with our very modest (less than 1%) annual population growth of roughly 10,000 residents. Even in the boom times, San Jose has had a hard time attracting jobs at anywhere near our population growth rates, as our jobs-employed resident ratio has declined over the past decade. In recessions, we lose jobs, and any new infusion of corporate growth will soften the blow. In the long run, of course, we know that San Jose will grow, with or without Google. With Google, we have an opportunity to achieve more balanced growth.
Google’s Employees Are Already Here — Like All San Joseans, They Want Shorter Commutes
Although Google has massive campuses in Mountain View, Sunnyvale, and elsewhere, far more of their employees already live in San Jose than in any other city. We know that some 70% of Bay Area Googlers live south of Mountain View, and larger number of them already live in San Jose. For many of those South Bay residents, a San Jose campus offers a welcome opportunity for a dramatically shorter commute. Moreover, preliminary indications from Google are that the first tranche of employees — perhaps the first several thousand — to move into the Downtown San Jose campus a decade from now will almost certainly come from the move of an entire business unit from another Google campus elsewhere in the County. In other words, the Google employees moving in will overwhelmingly be people who already have a South Bay home.
Google Will Be Part of the Solution
With Vice Mayor Carrasco and Councilmembers Sylvia Arenas and Dev Davis, I’ve recently proposed several measures that will ensure that the Google campus will be part of a larger housing solution for San Jose. We have proposed to mandate that at least 25% of any of the units built in that area be affordable and rent-restricted. We’ve proposed to begin work on a commercial impact fee program that will have office developers like Google paying to help create affordable housing and for other infrastructure. We’ve urged that discussions commence after the December 4th vote to assess what community benefits Google would pay, and to ensure that affordable housing is prioritized at the top of that list.
Google is fully invested in this partnership. For example, although the plan approved for the Diridon Station Area by the City Council in 2014 calls for 2,588 housing units to be built in the Diridon urban village, Google has expressed a desire to build considerably more. The company has also generously supported organizations focused on housing our homeless, such as PATH and Destination: Home. In these ways and in others, Google will be part of the solution.
What’ We’re Doing Today — Regardless of Google
With or without Google, we must redouble our efforts to tackle this crisis by building more housing. In the next few weeks, here’s what you can expect from us, with Council approval:
o Award nearly $100 million to affordable housing builders of approximately a dozen projects that will get more than one thousand rent-restricted apartments under development in 2019;
o Complete nearly 600 rent-restricted, affordable units already under construction;
o Begin development of two micro housing villages for working homeless individuals, and partnering with the County on the rehabilitation of dozens of transitional units;
o Modify the city’s inclusionary housing policy to facilitate more housing construction;
o Expand rental assistance to families to prevent homelessness, open four City community centers as cold-weather shelters, and expand emergency response to homeless with additional state funding;
o Study and design of a commercial impact fee for affordable housing;
o Implement and expand our recently-launched Transitional Jobs Program that has homeless individuals earning wages to clean City streets and parks;
o Partner with private developers on several projects utilizing more innovative building techniques to reduce costs and drive supply, such as prefabricated construction techniques, co-living designs, and “floating” foundations in flood-prone areas.
All of this work has been part of a much more comprehensive effort since my term began in 2015 to respond to our housing crisis, including:
o Implementing the nation’s largest citywide “inclusionary housing” policy, which requires market-rate developers to help finance the construction of affordable, rent-restricted units by building them on-site, or paying into a fund for off-site construction;
o Assembling a “Housing Crisis Workplan” that calls for the construction of 25,000 housing units, including 10,000 affordable units;
o Streamlining permitting for “granny unit” development that has more than doubled the rate of those units in its first year of implementation;
o Tightening rent control and tenant eviction protections, including the implementation of both “just cause” and Ellis Act protections;
o Modifying fees, and softening zoning restrictions, to make it easier to get more housing built, resulting in 8,000 units in the development pipeline;
o Successfully advocating with my mayoral colleagues for the statewide funding to fight homelessness (known as HEAP funding) that delivered $11 million to San Jose and millions more to Santa Clara County;
o Leading a $450 million housing bond that secured 64% of the vote this November, but fell just short of the required two-thirds needed for passage. We’ll be thinking about how to make another run at securing critical affordable housing funding in the months ahead.
None of this, of course is enough: the housing crisis will persist, at least until a recession substantially cools or reverses the rate of job growth. But in the meantime, we’ll continue to push on these and many other initiatives to get more affordable housing built — regardless of Google’s presence in San Jose.
Transparency and Public Vetting
Whenever a major negotiation between a public agency and a major corporation rises to the front page, understandable questions arise, and conspiracy theorists jump to conclusions about “back room deals.” In light of the historic amount of public engagement over a proposed development in the very early “concept” stage — we’re several years away from construction — such claims seem overwrought, but let’s consider the facts.
The Council will consider two sets of decisions on December 4th: the sales (and options) of particular parcels of land, and an MOU outlining the process going forward. Each had a different path to the Council:
Land Sale Agreements
With regard to the land sales of the six parcels comprising what is commonly known as the ballpark site, there has never been a set of public land transactions which have been more fully vetted with the public in San Jose history. No fewer than 13 public agencies have held public hearings prior to their public votes in support of these transactions. With regard to the parcels that were once owned by the San Jose Redevelopment Agency, The State of California has mandated an extensive and transparent process for the sale of this land, and we made the details of those transactions public nearly a year ago.
The remaining parcels, solely under City ownership — namely, the Fire Training Center parcel — were sold at the same price per square foot ($237.50) as the other, publicly-vetted former Redevelopment parcels. There are no surprises, and the details of those transactions — as well as the option agreements on the parking lots adjacent to the SAP Arena — can be found in reports publicly released 17 days in advance of the Council’s December 4th vote.
It is both lawful and routine that local governments engage in discussions regarding real estate transactions, their negotiation strategy, and price behind closed doors, until such time as the final decision must be made to buy or sell. When the ultimate decision to purchase or sell the site is before the Council, it must be discussed in a public hearing, with opportunity for public comment. Council discussed its negotiation strategy, its desired price, and other terms of sale in closed session, all for an obvious reason: doing so publicly would show the City’s cards to the party on the other side of the negotiating table, Google. For that reason, California law has protected cities’ routine practice of discussing real estate transactions in closed session.
Memorandum of Understanding (MOU)
Many of the other issues tied up in this potential project — such as the size and components of any development, how many units of housing get built, and how to allocate community benefits — have been part of a very public community engagement process launched in February 2018, ten months ago. In that time, we’ve convened a 38-member Station Area Advisory Group — consisting of representatives from surrounding neighborhoods, non-profit organizations, labor, business, and other stakeholders — that has had 10 public meetings. City staff and professional facilitators moderated each of those meetings, providing substantive information about the issues. Portions of that group have had another 11 public meetings to focus on particular issues and elements, and city staff has has conducted 7 community forums, 2 walking tours, 5 feedback sessions with stakeholders groups, and provided information publicly through www.diridonsj.org, eliciting over 600 public responses through online feedback.
Keep in mind: we’ve engaged the community over these dozens of meetings before the applicant (Google) has even formulated a proposed project, and while the company is still trying to assess what it can build, and how. We’ll continue to proactively engage with the community regarding these issues in the months ahead, and in parallel with our negotiation with Google over a community benefits agreement and a development agreement.
Lawyers representing an opposition group filed a lawsuit recently regarding a “Nondisclosure Agreement” (NDA) that several City officials signed in Spring of 2017 during the initial time when a potential Exclusive Negotiations Agreement was being considered and a draft recommendation was being developed for City Council consideration.
The suit largely misses an important fact: those NDA’s all expired more than a year and a half ago. That is, on June 6, 2017, when I publicly announced our intentions to negotiate with Google and the Administration publicly released its Council memo recommending the Exclusive Negotiations Agreement, the City was officially “public” with the project and the NDAs became null and void. We released the text of the expired NDA’s to the media, and the expired NDA’s have had absolutely no effect. Exhibit A: we have had very public conversations about the potential development since June of 2017.
Ok, so why did I sign an NDA that was in effect for a few months in early 2017? NDAs are commonly signed between two parties in a real estate negotiation — including public agencies — to protect their ability to negotiate a deal without disruption from third-parties, particularly land speculators. Here’s why: prior to June of 2017, Google had been working quietly to acquire some three dozen parcels of land from different private owners. Any disclosure about the identity of Google and their buying spree would have undermined their efforts, because it would embolden property speculators to scoop up parcels before Google could get them. Such speculators could then attempt to extract far higher-than-market-prices in return, threatening the financial feasibility of the entire project. It would also encourage property owners to “hold out” for prices far higher than any objective appraisal would offer. So, the parties agreed to keep Google’s land-buying quest under wraps, to enable Google to do what the City could no longer do since the demise of RDA: acquire and assemble land for future redevelopment.