The Cisco Kids
Will Monterey County become a bedroom community to Silicon Valley?
In some ways it already has.
Thursday, April 27, 2000
"We are the closest city outside Santa Clara County and have been feeling the impacts [from Silicon Valley] for a number of years," says Lewis. "The big issue is we''re growing faster than residents want, and that is changing the character of the community. The worse thing, besides the traffic problems, is housing demand and costs are being driven up, making housing unavailable for locals."
Housing costs in Hollister have jumped by 25 percent in the past year alone, and Lewis fears the pressures on Hollister are only going to get worse. With the announcement last spring by Cisco Systems Inc. that it plans to build a new $1.3 billion research and development park in south San Jose, a project that will add 20,000 new jobs to the area''s workforce in the next 10 years, Lewis is bracing for the next shockwave from the north.
But he admits there is little his community can do to slow the onslaught of Silicon Valley workers, who are drawn to Hollister''s more affordable housing market and what--for now, anyway--is a quieter way of life.
"At this point in time our position is not real strong in a community and business environment where money is no object," says Lewis. "They can pretty well do what they want, but from a public pressure point of view, maybe we can get them to do something."
| Industry analysts expect Silicon Valley enterprises to generate some 200,000 new jobs in the next 10 years, a staggering increase that begs the question of where the new worker bees will live. |
In 1993, Cisco, the leading manufacturer of networking equipment for the Internet, moved its headquarters to San Jose. At that time, the company had fewer than 1,000 employees. Today, Cisco stands as the world''s most valuable company, with annual revenues of $6 billion, a valuation that reached $555 billion to topple Microsoft last month, and about 27,000 employees worldwide.
With its proposal to build a massive new 6.6 million square-foot facility on a 385-acre campus in North Coyote Valley, 14 miles south of downtown San Jose, Cisco is poised to expand its existing local workforce of approximately 13,000 employees to 33,000 over the next 10 years. It is estimated that up to 40,000 more ancillary jobs, such as vending and contracting positions, could be created by the time the project is complete.
To further complicate the scenario, Cisco isn''t the only incredible expanding company: Industry analysts expect Silicon Valley enterprises to generate some 200,000 new jobs in the next 10 years, a staggering increase that begs the question of where the new worker bees will live.
According to Cisco''s Draft Environmental Impact Report (DEIR), the Coyote Valley project will create the need for 11,765 new homes, about 950 of which will come from Monterey County.
But local officials dispute those projected housing figures, as well as Cisco''s estimate that only 20 percent of the new workers will look for housing in Santa Cruz, San Benito and Monterey counties. They think Cisco''s estimates are low.
At the very least, they only tell part of the story. If the new Coyote Valley campus represents just one tenth of the total job growth expected to visit Silicon Valley in the next decade, then it stands to reason that Monterey County could be expected to supply as many as 9,500 homes for workers in Silicon Valley between now and 2010. For comparison, that would be like roughly creating a city the size of Pacific Grove, which now has 8,073 single family houses in its stock.
These startling figures have provoked a range of responses from city planners and county officials throughout the Monterey Bay region, from anxiety and hopelessness to shock and anger. The question on their minds is the $64,000 one, or rather the 64-New-Millionaires-a-Day one: Where are all these Silicon Valley workers going to live, and how are they going to get to work each day when area roads can barely keep up with existing traffic?
Pay No Attention to That Man Behind the Curtain
Despite these dire forecasts, San Jose officials say there is nothing to worry about. San Jose has plenty of housing for workers, they claim, and with light rail and Caltrain service proposed for Coyote Valley, along with already funded traffic improvements to Highway 101, Cisco will have minimal, if any, negative impact on its neighbors to the south."We unequivocally have adequate housing stock," insists San Jose''s budget and policy director Joe Guerra, who notes that for years the city of San Jose has had more housing than jobs. "We''ve been averaging construction of over 4,000 new housing units a year and our general plan has 42,000 housing units even before Coyote Valley is developed. Another 25,000 would be added after Coyote Valley. While we respect the opinions of jurisdictions to the south, what we''ve attempted to explain is we''re cranking out housing as quickly as jobs."
Such glib assurances have done little to assuage the concerns of environmentalists and area officials. They''ve studied enough environmental impact reports and seen the fallout from enough developments to know that San Jose''s sanguine attitude toward the Cisco project should be taken with a large grain of salt. Kaitilin Gaffney, a South Bay field representative for the environmental group Greenbelt Alliance, is one such skeptic.
"One of the concerns our organization has is if Coyote Valley is developed, it will shift housing pressure to San Benito and Monterey counties," she says. "San Jose has more housing than jobs, and over the last several decades the city has served largely as a bedroom community to Silicon Valley to the north. As job creation continues to expand quite quickly, housing in Santa Clara County is growing at a much slower pace so you will see more export housing. San Jose is trying to improve its jobs/housing balance, but it''s pushing the same syndrome to other communities to the south."
Indeed, local critics of the Coyote Valley project argue that the proposal does not accurately assess the project''s impact in several regards. Not only does it fail to fully recognize the project''s effect on its neighbors to the south, but it fails to account for such intangible factors as whether workers will automatically choose to live in San Jose, where housing is notoriously expensive.
On March 27, the Association of Monterey Bay Area Governments (AMBAG)--which includes representatives from Monterey, San Benito and Santa Cruz counties--produced a written response to the Cisco DEIR. In the document, AMBAG contends that the DEIR needs to address the project''s regional impact on transportation, air quality, loss of open space, housing, and public facilities and services. And San Jose and Cisco officials need to fully consider housing quality, costs, location and availability. Only then will the proposal reflect the true shape of things to come.
As of February 2000, the median price for a home in San Jose was $416,000, compared to $239,500 in Salinas and $270,250 in Marina. AMBAG speculates that a Cisco employee earning $80,000 might well choose to live somewhere like Marina, which is only 55 miles from San Jose, in order to take advantage of a greater range of housing types at much lower costs.
"...[M]any employees will not be able to afford the high cost of housing in Santa Clara County and will have no choice but to travel south to the Monterey Bay region, or will choose to drive to this region to obtain more housing choices for the same lower cost," notes the AMBAG response.
More than any other issue, it is the question of housing that has AMBAG and Monterey County officials spooked. Affordable housing is particularly problematic given the fact that Monterey County cannot provide enough affordable housing for its current residents.
| "It has been ratcheting up prices. At Las Palmas in the last two years, prices have gone up 10 percent per year. On the eastern side of Salinas prices are up five to seven percent. I know for a fact we can''t build houses fast enough." --Dale Handley, Salinas real estate broker |
At least one city is not planning on taking the changes lying down. In a 24-page response to Cisco''s DEIR, the Salinas City Council asked San Jose officials to pony up $20 million for low-cost housing in Salinas, $30 million for commuter train service to the city and assistance in developing high tech training programs for Salinas high school students.
Even Common Ground, the new land-use organization that puts a generally positive spin on growth and development, has serious reservations about the Cisco project.
"Our board of directors has discussed the Cisco project and is in agreement that the DEIR needs to be rewritten, primarily to look at secondary employee issues as they relate to Monterey County," says Common Ground Executive Director Carol Kurtz. "The planning model used by the city of San Jose only addressed local impacts within and immediately adjacent to San Jose. We suggest they use a regional model to take into account impacts regionally."
Despite the flurry of letters and the general outcry from the south, Joe Guerra says the proposal could very likely go before the San Jose City Council for final approval in a matter of weeks.
"At this stage in the process, San Jose''s planning department will review, and where necessary respond to all comments to the [DEIR]," says Guerra. "We believe there are no CEQA issues relative to regional impacts, and we expect to hold final public hearings in May. The project could go before the San Jose City Council in June."
The Future is Now
Like it or not, it is pretty much a foregone conclusion that the Coyote Valley project will be approved by the San Jose City Council. When completed, the Cisco campus is expected to generate $242 million in total revenues to the city of San Jose and $2.8 million per year to the Santa Clara County economy overall. Those numbers aren''t to be taken lightly, and Cisco knows it; in an interview in the San Jose Mercury News, Cisco CEO John Chambers leveled a veiled threat against San Jose officials, warning he would locate his golden goose elsewhere if approval was slowed by red tape.But even without the Cisco project, the impacts from Silicon Valley are already being felt here in Monterey County, and will continue to be felt for decades to come.
Dale Handley has worked in Salinas as a real estate broker for the past 25 years and is president-elect of the Monterey County Board of Realtors. In the past six years, he''s watched Salinas swell with residents who spend their shopping dollars elsewhere.
"We have five new home subdivisions in the northeast part of Salinas and 80 percent of buyers are commuters," he says. "I know for a fact they''re living here and doing business and major shopping where they work."
According to Handley, the number of commuters living in Salinas and working outside the county has taken off in the past two years, resulting in a marked increase in price and demand for housing in the Salinas area.
"It has been ratcheting up prices," he confirms. "At Las Palmas in the last two years, prices have gone up 10 percent per year. On the eastern side of Salinas, prices are up 5 to 7 percent. I know for a fact we can''t build houses fast enough."
Of particular concern to Handley, beyond the ability of area cities to build the infrastructure to meet the growing demand, is how the phenomenon will impact locals'' quality of life and ability to compete in the housing market.
"I was born in Salinas, and even though we still have a rural flavor, my concern is seeing a small town of 50,000, which is now a city of 135,000, continue to grow every day," he says. "Things aren''t bad for people who own houses already, but we''re concerned about our children being able to afford houses. Our kids are priced out, and without two incomes, parents won''t be able to afford a house.
"It hasn''t been discussed within our industry, but we''re all aware that it will impact Monterey County and we have to be ready for it," he warns. "Being ready means having infrastructure in place to handle that growth. Personally I don''t think it is in place, and I''m sure there are a lot of people who share my feelings."
Home Is Where the Heart Is
One may question what difference it makes if residents choose to live in Monterey County but work elsewhere. Lord knows good-paying jobs are difficult to come by, especially in MoCo, and if someone is willing to make the personal sacrifice to commute several hours a day to provide for his or her family, who has the right to gainsay that choice?But maybe something greater is at stake. What concerns many critics is not whether Monterey County''s infrastructure can absorb the impacts from Silicon Valley, but whether its social and economic fabric can withstand the stresses of serving as a bedroom community.
What kind of place will Marina or Salinas become if an increasingly larger percentage of workers spends two to three hours a day commuting? How will access to housing and services be affected by the disparity in incomes when Cisco engineers earn an average salary of approximately $80,000, while local workers are lucky if they earn much more than half that amount on average?
While the vision of thousands of new residents earning big dollars with lots of discretionary income might appeal to revenue-starved cities, county officials say they believe that such commuters actually spend more of their shopping money outside their communities.
But that''s not the worst news. From a social perspective, workers spending two to three hours a day in their cars have less time, energy and inclination to devote to family and community. Gary Patton, executive director of LandWatch Monterey County, thinks that''s the greatest and most insidious danger. And he thinks it''s already here.
"I don''t think there is any doubt Monterey County is being influenced already, and to my mind the biggest long-term issue is neither environmental, governmental, financial, nor strictly about housing impacts," he says. "It''s a social impact. When you have people who are living in the community yet are spending between three and four hours a day going back and forth [to work], they are taking time that would otherwise be invested in the community and spending it in transportation."
As a result, says Patton, "Family and education in the home are shortchanged. That to me is one of the costs, the forces at work from social disintegration that leads to less stable social situations. People don''t focus on that indirect impact."
How much of the local concern over Silicon Valley''s southward expansion is an overreaction and how much is legitimate remains to be seen.
"The issue of spillover from Silicon Valley has come up in a lot of different ways, and while there is a lot of anecdotal information, there are no hard facts," says Jim Colangelo, assistant administrative officer for Monterey County. "We don''t know, for example, how much of new housing resale is bought by people with jobs in Silicon Valley. We are working on getting that information, and agree we need to quantify the impacts."
Even without much hard data, Colangelo concedes the issues and potential impacts are real and warrant concern.
"People are not participating in the community if they commute, and if it was me and I worked in San Jose, I''d spend my money there, where there''s more availability, selection, better prices," says Colangelo. "I''d do it after work and miss traffic."
The Best Laid Plans
Can anything be done to halt or minimize the effect of new Silicon Valley workers who might decide to live in Monterey County and commute each day to work?Based on the experiences of cities like Hollister, Gilroy and Morgan Hill, there are steps Monterey County can take that may at least limit the impacts.
According to Hollister''s City Manager Lewis, his City Council imposed a moratorium in July on new housing permits and limited growth to just 3 percent a year until 2010.
"The big thing you have to decide is how you want to grow and set controls in place to allow growth at a pace you want," explains Lewis. "You also have to create a mechanism to make housing available to those who work in the community."
His city''s solution is to help nonprofit, low-income housing projects by giving affordable projects "unit allocation" preference while keeping the total number of units low.
In Gilroy, city officials strive to maintain a 75/25 percent ratio of market-rate to affordable housing. Down the road in Morgan Hill, the city is studying ways to attract jobs so the wealth gets shared.
"The community is looking at a general plan update to attract more jobs in Morgan Hill so there is less commuting," says Curtis Banks, senior planner for the city of Morgan Hill. "Jobs are being created outside the community, so Morgan Hill doesn''t see the benefits of those jobs. There is discussion to create policies to attract jobs that match the population of Morgan Hill, some high-tech and similar type positions."
Closer to home, Marina''s City Council might soon be considering similar measures as it prepares a new general plan. Planning Director Jeff Dack says creating a proper jobs/housing balance will be critical to minimizing the potential of Monterey County, and Marina in particular, of becoming a bedroom community to Silicon valley.
"From the anecdotal evidence, Monterey County is being impacted by jobs in Silicon Valley that are not accompanied by additional housing to meet the needs of the expanded work force," explains Dack. "It is the failure of the area to produce a balance between housing and jobs which is contributing to longer commutes, air pollution, demand for transportation structures, and higher housing costs."
As far as LandWatch''s Gary Patton is concerned, there is nothing preordained about Monterey County becoming a bedroom community to Silicon Valley. It all comes down to a matter of political will, foresight and planning.
"The communities in Monterey County can decide if they want to meet the demand, but it''s not an inevitable requirement," says Patton. "There are all sorts of techniques to be used but the community must decide."
What LandWatch advocates, says Patton, is an intergovernmental, countywide approach to planning in which all the players decide how they want to make things work for the community at large and individual cities.
"Santa Clara County has so much demand potential that if jurisdictions in Monterey County are going to simply absorb or react to that demand, we''ll transform the county into something like Orange County, and nobody wants that to happen. If we don''t do anything then the choice is already made."
In the meantime, he says, what we''re hearing now is a call to action.
"Coyote Valley is a symbol, a single instant of what is a cumulative pervasive process. It should get people''s attention."
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