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This City Told Amazon And Google: No Incentives For You

Feb 15, 2019
Originally published on February 17, 2019 8:12 am

A mayor from another city that tried to land big tech companies might be starting to look pretty smart after Amazon canceled its plans for a New York City headquarters. Activists and local politicians said New York had given up too much for too little.

But it doesn't have to be that way, says San Jose, Calif., Mayor Sam Liccardo, who refused to offer Amazon and another tech giant, Google, any incentives to locate in his city.

Amazon's decision to back out of the New York City plan followed opposition from activists and local politicians over the hefty tax breaks and incentives the company would have gotten when it moved in.

As big tech companies expand nationwide, cities continue to grapple with how to make sure they are benefiting. One example is San Jose.

Last year, when Amazon was looking for a city to house its second headquarters, Liccardo threw San Jose's hat in the ring. But unlike the various cities that promised generous tax incentives, San Jose offered Amazon no money. "If you're offering incentives, those are dollars you could use to be building out transit ... supporting an ecosystem of talent development," Liccardo says.

When Amazon ultimately picked New York for one of its new campuses, many activists said it made no sense for one of the world's wealthiest companies to get big tax breaks and other incentives. It caused such local outrage, Amazon announced it was pulling out.

"The lesson for cities really ought to be, don't take the bait. And don't even offer the bait," Liccardo says.

Which is not to say he doesn't want Big Tech headquartered in San Jose — Adobe, Cisco and eBay are based there.

"We're the only major city in the United States that actually has a smaller daytime population than nighttime population," Liccardo says. "And, as a result, our residents spend a lot of time commuting. We're right up there with the worst cities in commutes and obviously it drives up the housing costs. And so we get the worst of both worlds."

Liccardo says when he was approached by Google, which was interested in building a campus in San Jose, the company didn't ask for incentives and his government didn't offer any. Rather, the mayor says the city is requiring that 25 percent of the housing built around the campus be rent-restricted and affordable. As in most of the Bay Area, the cost of living in San Jose has skyrocketed, largely driven by the tech boom.

Google, which is headquartered in nearby Mountain View, is projected to bring tens of thousands of jobs to San Jose. And Liccardo says the company agreed to fees on development to help fund affordable housing.

Google is planning to develop as much as 8 million square feet in downtown San Jose. The city lacks the allure of San Francisco or neighboring Palo Alto, so it's not hard to see why some are so excited to develop it.

But plenty of locals and activists are not happy with Google moving in.

Jeff Buchanan, the policy director at Working Partnerships USA, a community labor coalition, says that even if San Jose isn't offering big tax breaks, that doesn't mean Google's move will be good for the city.

"Maybe we're not offering billions in tax rebates," he says. "But we're offering really valuable public land in an area where prices are going through the roof. Google is just on the beneficial side of things going their way, without having to give anything back."

Like many activists in the various cities where tech is expanding, Buchanan has questions about the details: How exactly is housing going to be kept affordable? And, of all those jobs coming to town, how many will go to locals?

"When you look at Google's workforce," Buchanan says, "only about 7 percent are either Latino or African-American. You look at the population of San Jose, and it just looks incredibly different than who it is that Google is actually hiring."

Expensive housing has been a problem for people like Joseph Chavez. A few years ago, it was so bad that his family — like so many others — had to leave San Jose. "The prices are so outrageous, we've got to move to the Central Valley to actually have affordable homes," he explains. "So with Google coming here, it might be a bad idea. Rent's going to go sky high."

But Chavez works in construction, and he hopes to work on the new San Jose Google site. "More jobs means more opportunities. More opportunity means everybody gets to eat. If it pays well, you might be able to make it," he says.

Whether he'll be able to make it in San Jose after the Google campus gets built, that's an open question.

Copyright 2019 NPR. To see more, visit https://www.npr.org.

LULU GARCIA-NAVARRO, HOST:

It was rolled out like a rose ceremony. Who would be chosen to marry Amazon? Every city tried to make themselves the most attractive.

As we know, it didn't quite work out as planned. Activists and local politicians in New York were not happy about offering big tax breaks to Amazon, and Amazon has pulled out of that deal.

As big companies continue to expand, one city in California says it's trying to do things differently. They're asking not what we can do for big tech, but what can tech do for us? NPR's Jasmine Garsd reports from San Jose.

JASMINE GARSD, BYLINE: A few years ago, Joseph Chavez's (ph) parents had to do like so many people in San Jose - leave.

JOSEPH CHAVEZ: The prices are so outrageous, we've got to move to the Central Valley to actually have affordable homes.

GARSD: Joseph stayed behind, but he says that like in most of the Bay Area, the cost of living in San Jose has skyrocketed, although it's still not as bad as San Francisco. People who live in San Jose tend to commute to other cities for work. Here's Mayor Sam Liccardo.

SAM LICCARDO: We're the only major city in the United States that actually has a smaller daytime population than nighttime population. And as a result, our residents spend a lot of time commuting. We're right up there with the worst cities in commutes. And, obviously, it drives up the housing costs. And so we get the worst of both worlds.

GARSD: Mayor Liccardo would like that to change. In 2017, when Amazon started looking for a city to house its second headquarters, San Jose threw its hat in the ring. Around the country, it became a circus. Cities did everything they could to lure Amazon. Many offered juicy incentives. Chicago even got William Shatner to narrate a proposal. But San Jose made a point of offering no subsidies.

LICCARDO: If you're offering incentives, those are dollars you could use to be building out transit, to be helping supporting an ecosystem of talent development.

GARSD: This is exactly what many activists argued when Amazon ultimately picked New York for one of its second headquarters. Why does one of the wealthiest companies in the world get these tax breaks and incentives? It caused such a local outrage, last week, Amazon announced it was pulling out.

LICCARDO: The lesson for cities really ought to be don't take the bait. And don't even offer the bait.

GARSD: Liccardo has also been talking to another tech giant, Google, which is headquartered in a town nearby. It wanted to build a campus in San Jose. Again, Liccardo says he offered no incentives. Rather, he says his government asked that 25 percent of the housing built around the campus be affordable. He says this will bring tens of thousands of jobs to the area.

LICCARDO: And they've also agreed that we can impose a fee on development in that area and throughout the downtown that will generate dollars we need for affordable housing.

GARSD: Google is planning to develop as much as 8 million square feet in downtown San Jose. Walking through the area, it lacks the allure of San Francisco or neighboring Palo Alto. It's not hard to see why some are so excited to develop it.

But, here in the Bay Area, that word, development, touches a raw nerve. Will development actually mean affordable housing? And all those shiny tech jobs that keep getting promised - how many actually will go to the locals? Jeff Buchanan is a policy director at Working Partnerships USA, a community labor coalition.

JEFF BUCHANAN: So when you look at Google's workforce, only about 7 percent are either Latino or African-American. You look at the population of San Jose, and it just looks incredibly different than who it is that Google's actually hiring. Even if you're a student that graduates from San Jose State University, it ranks nowhere in the top 10 of the universities where Google recruits from.

And so I think when we've gone around and talked with people in the community, they don't think their kids are going to be able to work on the Google campus.

GARSD: Buchanan says, don't be fooled. The land that San Jose sold to Google could've been used for public works to serve the community.

BUCHANAN: Maybe we're not offering billions in tax rebates, but we're offering really valuable public land in an area where land prices are going through the roof.

GARSD: Affordable housing is on everyone's mind out here. But Joseph Chavez, the man whose family had to leave San Jose because they just couldn't afford it anymore, says he's hopeful about all those new jobs Google will bring in. Chavez is in construction. He says he's worked on other Google buildings in the past. Maybe he'll get to work on the San Jose site.

CHAVEZ: More jobs means more opportunities. More opportunity means everybody gets to eat. If it pays well, you might be able to make it.

GARSD: Whether or not he'll be able to make it here after Google gets built - that is an open question.

Jasmine Garsd, NPR News, San Jose, Calif. Transcript provided by NPR, Copyright NPR.