Growing Pains

The stunting of Silicon Valley's growth


At a crowded meeting of the Santa Clara City Council last summer, residents spoke in quavering voices, their arms trembling as they tried to suppress their anger over a plan by Sun Microsystems, one of the area's largest employers, to build a new R&D facility. One woman read a speech in which she castigated the council members for destroying "open space" to make room for "yet another corporate parking lot." Several critics noted that council members who backed Sun's plan had bragged in campaign material of their support for environmental preservation. "Your integrity is at stake," declared an indignant young man.

Silicon Valley, well-known for both its environmentalist sympathies and its high-tech entrepreneurialism, is discovering what happens when those two tendencies collide. The Valley, which includes parts of Alameda and Santa Cruz counties along with most of San Mateo and Santa Clara, exports more goods than any other metropolitan area in the country. Santa Clara alone is home to such computer industry leaders as 3Com, Applied Materials, Hewlett-Packard, Intel, and National Semiconductor. These and other local businesses created 125,000 new jobs between 1992 and 1996.

The growth hasn't come without costs. Freeway congestion throughout the Bay Area begins earlier and lasts longer than ever before. Schools are being taxed to their limits by burgeoning enrollments. Residential and commercial real estate prices are soaring. Santa Clara County's median home price of $308,500 is the highest in the nation. Apartment occupancy levels hover between 99 percent and 100 percent, and it's often difficult to find a hotel room.

Such problems have helped build support for anti-growth–or, more accurately, anti-building–policies. A large majority of Valley residents favor open space preservation and urban growth boundaries, according to a December 1993 phone survey of likely voters by Gene Bregman and Associates, a national polling firm based
in San Francisco. Seventy-four percent of respondents wanted to preserve baylands and wetlands, 69 percent wanted more land set aside for wildlife preservation, and 68 percent wanted to prohibit development on hillsides.

In an October 1995 poll of San Jose residents, 74 percent said the city should adopt a "greenline," defined as a "fixed border between urban development and open space" that "would keep new growth in areas with pre-existing services." The San Jose City Council has since adopted that policy.

Terry Feinberg, executive director of the Tri-County Apartment Association, a developers group, notes that supposedly environment-friendly greenlines push housing to the other side of the boundary, requiring the new development of rural land and keeping cars on the road longer by increasing commuting distances. Restrictions on growth also raise housing costs, exacerbate the housing-to-jobs ratio, and increase traffic congestion by preventing road construction. Not incidentally, these effects make life harder for people who work in the Valley.

Oakland computer programmer Jay Shaw's 10-mile commute to his job in Berkeley already takes more than half an hour. "I'm as much of an environmentalist as the next guy," says Shaw. "I love the outdoors–but not if that means I have to travel at a rate of 20 miles per hour."

Palo Alto financial analyst Todd Parmacek also loves the outdoors, especially the nearby hills and valleys, but he is fed up with the rising cost of living in Silicon Valley. He was forced to give up his search for a house in 1997 because the prices kept rising, and he even had difficulty finding the one-bedroom apartment where he now lives. "Sometimes environmental policies aren't reasonable," he says. "Development can't stop."

I can identify with Parmacek. When my wife accepted a job in Palo Alto a few months ago, we looked forward to saving money on rent, thinking we would have no problem finding a comparable two-bedroom apartment for less than the $1,000 we were paying in New York City. We were wrong. After a few disheartening days, we were relieved to find a one-bedroom apartment for $1,150.

Organizations such as the Greenbelt Alliance and the Sierra Club want to discourage newcomers like my wife and me. They are committed to creating more urban growth boundaries and getting people out of their cars, even if that means restricting jobs and housing. The Sierra Club opposes building new highways or adding new lanes to existing roads if that would facilitate more traffic. "We don't feel we can crowd everyone into this area," says Sierra Club member Aurelia Winsemius. "If we do keep expanding, we'll ruin our air, water, and infrastructure."

Craig Breon, an environmental advocate at the Santa Clara Valley Audubon Society, is a member of an informal environmental network seeking to halt development in the Valley. He drives all over the area speaking at city council, water district board, planning commission, and parks commission meetings. "I get embittered and despondent," says Breon, "and at times get too strident and emotional." He says an Audubon board member is about to resign, and friends and fellow environmentalists are leaving the Valley in disgust. "You can't be around here and not feel the pain," he explains.

Like Breon, the Sierra Club's Bill Michels doesn't like the increasing development and traffic congestion. A native of Palo Alto, he feels betrayed by his city, which he says "created me as an environmentalist." Michels opposes the chemical processes involved in building computers, the environmental laws in the countries where many of them are manufactured, and the use of computers by multinational corporations and the military. He works for Sun Microsystems.

Sun, which has 11,000 employees in the Bay Area, wants to build a 1-million-square-foot, $230 million research and development complex on the site of the former Agnews Developmental Center West Campus in Santa Clara. In November 1996, the company arranged to purchase 82.5 acres of the 331-acre site from the state of California for $51 million. It planned to build nine new buildings for 3,200 workers, incorporate three of the existing structures into the R&D campus, and raze the remaining 54 buildings.

But opponents claimed Agnews is rich in history and should be preserved. Known as the Agnews State Lunatic Asylum in the 1880s, it was destroyed and rebuilt after
the 1906 earthquake. An on-site cemetery contains the remains of 119 people who died in the earthquake. More recently, Agnews became a home for the developmentally disabled. The last of its patients moved out in 1995. A homeless shelter operates out of one of the buildings, and the rest have been abandoned.

Liz Holmes and her 19-piece big band ensemble had been using one of the abandoned Agnews buildings to rehearse when she learned Sun was buying the property. Not wanting to see the buildings razed, she spent hundreds of hours fighting Sun's project as a member of the Agnews Preservation Coalition. In addition to attending city hearings, she documented and photographed each building on the property and succeeded in getting the Agnews complex listed in the National Register of Historic Places, which she hoped might confer some legal protection on the buildings. It didn't.

But before consummating the deal, Sun had to get rezoning approval from the city, a process that took four consecutive weeks of hearings and over 20 hours of public comment before a final vote was taken. While critics such as Holmes decried the plan on preservationist or environmentalist grounds, many residents of the area near Agnews welcomed the Sun project. They hoped it would bring the neighborhood amenities such as a grocery store, a gas station, an elementary school, and a library.

At the city council meeting, Councilwoman Patricia Mahan criticized the Sun deal for almost an hour, proposing several amendments to help "mitigate" the project's cultural, environmental, and historic impact. A few of them passed, including one requiring Sun to pay somebody $20,000 to write a book on the history of Agnews. It was past 2:30 a.m. when the council finally approved the Sun project by a 4-to-3 vote.

The saga still isn't over. The Agnews Preservation Coalition has filed a lawsuit contesting Sun's environmental impact report, and a signature drive is under way for a city-wide referendum to overturn the council's vote.

The Sun expansion is not the only local project that has encountered resistance from opponents of growth. Residents of Oakland have filed a federal lawsuit to halt port expansion. Plans to expand San Jose International Airport provoked hours of angry public testimony at planning commission meetings, as nearby residents complained about a likely increase in noise levels and what they believe will be a deteriorating quality of life. In November, Palo Alto voters approved a ballot measure to widen Sand Hill Road, a major thoroughfare famous for its concentration of venture capitalists. But the neighboring city of Menlo Park has filed suit to challenge the project's environmental impact report, claiming the likely effects of expansion on traffic and the environment were understated.

The increasingly hostile environment seems to be having an impact on expansion decisions by local businesses. Sun, while still a dominant presence, recently decided to open two new campuses far away: one in Broomfield, Colorado, the other in Burlington, Massachusetts. Far from protesting, these cities welcomed Sun with millions of dollars in tax credits. Sun says development costs were a factor in its decision to expand outside the Valley; land near the company's proposed Santa Clara campus can cost as much as $1 million an acre.

Many other Valley heavyweights, including Hewlett-Packard, Intel, 3Com, and National Semiconductor, are scattering plants across the country and around the world, from Malaysia to Ireland. Intel reportedly received $100 million in tax credits to open a plant in Rio Rancho, New Mexico. "Many companies are choosing not to locate here," says Leslee Coleman, vice president of the Santa Clara County Manufacturers Group, which represents 120 of the largest companies in the area. While she says there is still room for development, Coleman concedes the cost of land and the overcrowded roads pose challenges. Acknowledging the political climate, she says her group supports greenlines and affirms the need to "grow smart."

Jim Tucker, director of economic development at the San Jose Metropolitan Chamber of Commerce, says he's not worried: "This is the Silicon Valley–if you want to be in the mainstream, you come here." But Feinberg, head of the builders association, offers a bleak prognosis: "Demand is increasing, the opposition is getting stronger, and cities are getting greedier." He warns that cities "better find a way to house the workers if they want economic progress to continue." And while the Sierra Club tries desperately to keep cars off the road, Santa Clara Chamber of Commerce President Betty Hangs notes, "If there was no traffic, there would be no jobs."

Brian J. Taylor (brian@brianjtaylor.com) is REASON's Webmaster.