SAN JOSE — Google and the city of San Jose have struck a deal for land sales in downtown San Jose — with a potential value of as much as $220 million — that mark a major milestone for a transit-oriented community poised to be a game-changer for the Bay Area’s largest municipality, city officials reported Friday
The deals involve the proposed sales to Google of several government and city-owned properties near the Diridon train station, as well as planned options that the search giant would obtain for the large surface parking lots next to the SAP entertainment and sports complex.
“This is a critical step, but we are still in the early innings of a long ball game,” San Jose Mayor Sam Liccardo said Friday. “Between now and the time that the city gives an approval for re-zoning of these sites, there will be much work to do for the city, Google and the community.”
The San Jose City Council is scheduled to vote Dec. 4 on the deal. The properties are expected to be formally sold, and the options officially recorded in public records, by the end of this year. Some city insiders believe Google might submit proposals sometime in 2019 for specific components of the development of the site.
“Unlike many other South Bay cities, San Jose does not have enough jobs for our very large resident population,” San Jose City Manager David Sykes said Friday. “This makes San Jose the most fiscally challenged city in the South Bay, and this causes lengthy commutes for residents. We appreciate having a major company such as Google willing to invest in downtown and partner to achieve city development goals for the Diridon Station Area.”
Among the notable properties in the 21.2 acres that the city proposes to sell to Google, either directly or through options for possible later sales: several surface parking lots, a cocktail lounge site, the city’s Fire Training complex, and, through an option for a future transaction, the big surface parking lots next to the SAP Center.
The properties that would be bought outright by Google would be transferred for a price of roughly $109.9 million, while the option that Google would obtain for the SAP surface lots would be accompanied with a potential maximum price of up to $111 million, according to Kim Walesh, San Jose’s director of economic development.
The $111 million price is expected to be eventually reduced because Google will likely be given credit in the final cost due to extensive environmental remediation and assurance that the parking requirements for the San Jose Sharks are met at the location of the current surface parking lots, Walesh said.
Some community groups have expressed worries about the development’s impact on traffic, affordable housing, displacement and gentrification.
“It’s great that we’ve gotten here, but the anxiety with the housing crisis is going to cause more people to do more publicity stunts to push their agenda,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land use and planning consultancy. “The city really needs to come to a conclusion on what the broader-brush mitigation items are.”
This week, two non-profit groups, Working Partnerships USA and First Amendment Coalition, filed a lawsuit in Santa Clara County court that targeted non-disclosure agreements that several local officials, including Liccardo, signed in connection with the development.
However, some observers believe the Google transit development is precisely what San Jose needs to help it plan thousands of well-paying jobs near a train station that already has light rail, Amtrak, Caltrain, Capitol Corridor, ACE Train and bus connections and in the future is expected to have a BART stop.
“Instead of growing jobs in another state or nation, Google not only wants to invest in downtown San Jose, but is paying full market value for the land, never sought a single deal or tax break, and has committed to working with the Mayor and Council on additional benefits for our community as well,” said Carl Guardino, president of the Silicon Valley Leadership Group.
Mountain View-based Google and the city, in addition, have launched a process to engage San Jose residents.
“We look forward to the City Council session on Dec. 4 where we’ll continue our open dialogue with the community and city,” said Javier Gonzalez, Google public affairs manager. “Google is committed to paying the city of San Jose fair market value for the public lands and providing community benefits as part of our proposed development.”
That engagement process has included numerous public meetings and town hall gatherings, blog posts, public memos and city meetings, city officials noted.
“Because it’s Google and because we realize as everyone is saying that this will be a game-changer for San Jose, we went out of our way to be inclusive and to have a public process,” City Councilman Lan Diep said. “San Jose is about to turn the corner and Google is kind of the lead anchor company that will make things happen.”
