Study: Without Affordability Measures, Google's San Jose Campus Will Jack Up Rents Citywide

Google’s proposed San Jose campus will need to include thousands of new affordable homes to avoid hitting renters with $235 million each year in higher rents, according to an economic analysis commissioned by a local community advocacy group.

Working Partnerships USA, a San Jose-based nonprofit, reported Wednesday that Google would need to build more than 5,000 new affordable homes in San Jose, and more than 12,000 market-rate homes, to avert the rent increase that it says the new development would likely trigger.

The report, which the group hired Los Angeles-based Beacon Economics to conduct, calculates the impact that 20,000 new tech employees and 8,000 service workers would have on housing costs, in what is already one of the most expensive metro areas in the nation.

"As all the higher-income Google workers come into the community, they're going to drive up rents, meaning that lower-income households, who are predominately people of color, are likely to face increased displacement," said Jeffrey Buchanan, director of Working Partnerships USA. "We found that families here in San Jose would really be hit the hardest, paying $816 annually in additional rent only due to Google moving downtown."

Families in the rest of Santa Clara County would, on average, pay an additional $765 in rent each year, he added.

In a controversial vote last December, the San Jose City Council unanimously approved the sale of $110 million of public land to Google. The move, which drew fierce opposition from some community groups fearing increased property values and gentrification, allowed the tech giant to move forward with its plans to develop more than 21 acres of land on several city-owned parcels near Diridon Station, a Caltrain stop, on the outskirts of the city's downtown. It's here that Google wants to create a transit-oriented complex of offices, homes, shops, restaurants and parks.

The massive project would take more than a decade to complete and is expected to bring more than 20,000 jobs by 2035. It would make Google the city's largest private employer.

"We still don't know exactly what Google plans to do in terms of housing," said Buchanan. And although the tech giant has acknowledged that the development will have major impacts on area rents and displacement, he said, "they've yet to make binding commitments to how they're going to address their impact."

The research also found that the amount of additional rent that San Jose residents will pay as a result of the new development will be more than five times what the city expects to collect in new property taxes.

For its part, Google has pledged to build more affordable housing downtown, but has not offered specifics.

“We’re working closely and collaboratively with the city and many community groups on our future development in San Jose," Javier Gonzalez, a Google spokesman, said in a statement. "As we do so, we know that housing is a vital issue and we're committed to invest in new housing in the area, including affordable housing.”

The company also noted the multiple contributions it has made to local housing and homeless organizations.

Buchanan said that Google's investment in the Mountain View community, where the company is headquartered, shows that it has the capacity to offset the negative impacts of development. San Jose is giving Google a green light to rewrite plans for an incredibly lucrative piece of public land, he added, and the company has an obligation to make sure the community is protected.

"A tremendous amount of public resources are going into supporting Google's efforts around this development,"Buchanan said. "Google has an opportunity at this point to be a model for tech development, to develop without displacement and really to set a goal of ensuring that our communities have the freedom to remain and flourish ... and not be displaced by enormous rent increases."

Correction: An earlier version of this story attributed the report to "Community Partnerships USA." The correct name of the organization is "Working Partnerships USA."