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'Who belongs?' Development and displacement change the face of Bay Area communities

In elementary and middle school, Simren Gupta (12) often visited a Chinese restaurant down the street from where she lives in Sunnyvale. The restaurant had been around since before she was born.

When Simren started learning Mandarin in middle school, she would practice speaking with the owners there.

Three years ago, the restaurant got a notice from the landowners that they would be shut down to make room for a new apartment complex.

The restaurant is just one example of how Bay Area neighborhoods are changing. As rising real estate costs are displacing people and businesses, upper school teachers and students have noticed differences in their communities.

Even around my house, the local businesses have been shutting down and [are] replaced with big corporations,” Simren said.

Bay Area cities find themselves juggling having more big businesses to grow the regional economy, more housing for the people moving in and more protection for current residents in danger of being displaced.

The COVID-19 pandemic may worsen the situation. As small businesses and lower-income households are likely to be the most impacted by the pandemic’s economic toll, more of them may be displaced in the near future.

At the same time, less money may be available to build affordable housing.

“In a lot of ways, the Bay Area is very resilient. However, at the same time, there's a lot of ways in which we have not fully recovered from the financial crash of 2008. One of the ways that we haven't been quite as resilient is in home construction, home permitting and home entitlements,” Wortham said. “It's going to take a lot of work to make sure that we're building up our workforce and political will to get housing built.”

With little open space left to build, and complications like the coronavirus, development in the Bay Area walks a fine line between helping and hurting the communities around it.

The push to build

In 2017, California Governor Gavin Newsom said 3.5 million new homes needed to be built by 2025 in order to meet the state’s housing needs.

According to California’s housing department, new housing units have been built at the rate of 80,000 per year over the last decade, and each unit of subsidized affordable housing in California costs about $450,000 to build, making Newsom’s goal ambitious if not impossible.

The shelter-in-place order has also slowed development. In a joint statement on March 31, six Bay Area counties prohibited most types of construction. Even as restrictions eased and construction continued on May 4, the pandemic may have lasting effects on development and affordable housing construction.

“The housing and real estate market can change so quickly that sometimes a month delay can cause company developers to lose money,” Kendall said.

According to Wortham, some processes like inspections and permitting may need some time to move online to comply with social distancing guidelines, contributing to a slowdown in construction.

Other obstacles that predate the pandemic stand in the way. San Jose faces particular development challenges as the “bedroom” for the Silicon Valley. More people spend the night in San Jose than work there.

“We’re the biggest city in this area by far, but 85 percent of our usable land is zoned for residential. That means that the city has to figure out how to pay for all the infrastructure, all the services, the parks, everything else that residents need to make a city livable just from residential property taxes, and it doesn't work,” Elisabeth Handler, public information manager of San Jose’s Office of Economic Development, said.

California Proposition 13, which went into effect in 1978, limited property taxes to one percent of a property’s purchase value. In effect, Prop. 13 caps tax increases for homeowners, but makes it difficult for cities like San Jose to keep up with the cost of maintaining residential communities, according to Handler.

No city can break even anymore if all it has is residences,” Handler said.

In addition to cost considerations, politics often slows development of housing or blocks it entirely.

Plans to convert Vallco Mall in Cupertino into 2,402 housing units and 1.8 million square feet of office space stalled from June 2018 to early May 2020 because a community group called Better Cupertino opposed the increased traffic that development would bring.

A Santa Clara County judge ultimately approved the building project to proceed under SB35, a bill in the Housing Package of 2017, which provides increased legislation and funding to support affordable home development.

“A lot of what happens with the Housing Package of 2017 is that the state has been posing a lot of legislation that overrides some of the local legislation, and so things are changing,” City of Cupertino Housing Manager Kerri Heusler said.

Construction takes place at the site of Vallco Mall in Cupertino, CA. Plans to convert Vallco into 2,402 housing units and 1.8 million square feet of office space stalled from June 2018 to early May 2020. (Photos: Eric Fang)

Construction takes place at the site of Vallco Mall in Cupertino, CA. Plans to convert Vallco into 2,402 housing units and 1.8 million square feet of office space stalled from June 2018 to early May 2020. (Photos: Eric Fang)

Construction takes place at the site of Vallco Mall in Cupertino, CA. Plans to convert Vallco into 2,402 housing units and 1.8 million square feet of office space stalled from June 2018 to early May 2020. (Photos: Eric Fang)

Construction takes place at the site of Vallco Mall in Cupertino, CA. Plans to convert Vallco into 2,402 housing units and 1.8 million square feet of office space stalled from June 2018 to early May 2020. (Photos: Eric Fang)

In light of the scarcity of affordable housing, cities are cautious about what development projects they approve. In November, Stanford University suddenly withdrew an expansion plan it had been working on with Santa Clara County for years, after the two parties reached an impasse on the terms of the university’s growth.

Stanford’s plan would add 3.5 million square feet to the university campus, including 2.275 million square feet of academic space, 2,600 student beds and 550 housing units for faculty and staff.

Jai Bahri (12) spent the past summer working in the office of Santa Clara County Supervisor Joe Simitian, who led the county’s negotiations with Stanford.

“What we were trying to do is make sure that Stanford, if the Planning Commission agreed to allow them to expand their campus, that they would build the necessary housing to make sure that everyone there is able to live sustainably and affordably,” Jai said.

While Stanford was willing to build 2,172 new housing units over the next 20 years, it could not meet the county’s restrictions on the amount of new traffic the expansion would bring.

According to Jean McCown, associate vice president of Stanford’s Office of Government and Community Relations, the county sought to measure and limit the total number of trips taken on or off campus as well as the number of reverse commute trips, trips taken off campus by people living on campus.

“Although we questioned whether you can make an employer build all of the housing for their future employees, we were willing to do it as a part of an agreement with the county,” McCown said. “This is an example of where there’s on the one hand the desire on the county’s side to build housing, but then there are conditions being suggested that essentially says that you won’t be able to do that unless you can keep your trips to virtually no increase at all.”

A run-down part of Vallco mall remains standing amid construction of a new mixed-use complex. Construction had been stalled from June 2018 to early May 2020 because a community group called Friends of Cupertino sued the property developers, opposing the increased traffic that development would bring. (Eric Fang)

The biggest builders

Some of the biggest contributors to the housing problem are also those throwing the most money at solving it.

In the past year, tech companies Apple, Facebook and Google pledged a collective $4.5 billion to addressing the housing crisis.

In June, Google announced a $1 billion housing plan, promising to build 20,000 new homes in the Bay Area over the next decade.

In October, Facebook matched that offer, dedicating $1 billion to building 20,000 homes of its own.

Most recently in November, Apple invested $2.5 billion into funding affordable housing projects, helping first-time homebuyers with mortgage payments and supporting vulnerable populations.

“What these tech companies are doing is they’re filling the gap,” said Vince Rocha, Senior Director of Housing and Community Development at the Silicon Valley Leadership Group. “A lot of projects may have acquired the land, or they just need a little bit of extra resources to get the project done.”

In August, Google unveiled a plan not only to invest money in housing but also to build a whole new community of its own: a mile-long “transit village” near Diridon Station, a Caltrain stop at the western edge of downtown San Jose that also serves as a hub for buses.

Google’s transit village would include 5,000 new homes of mixed income levels and 6.5 million square feet of office, retail and community space.

Google has envisioned their development as very different from a typical corporate campus. In fact, we’re not even using the word campus because it will be more like a downtown neighborhood. Their whole point was to make it permeable, to be part of connecting East and West and North and South San Jose, not creating a little, round fenced-off blob in the middle of the city,” Handler said.

Google’s vision for the Diridon Station area aligns with a model of transit-oriented development that urban planning and environmental groups are increasingly promoting.

“What we’re seeing is that by ensuring that we’re building near transit, we’re not adding more cars to our already congested roads,” Rocha said. “Right now a lot of the concern around sprawl is people are commuting two to three hours to work, and so if you can build homes here in Silicon Valley near jobs, you can not only improve people’s quality of life, you can also reduce greenhouse gas emissions.”

Local residents have protested Google’s plans for a new campus since the company’s announcement. Protesters fear that the campus will lead to increased rent in the area, driving out local residents and businesses.

"While I think we need more housing, we also know from some of our research that transit station areas are more likely to experience gentrification and displacement than areas without a transit stop,” Cash said. "There needs to be a lot of awareness and thoughtfulness around the policy strategies to mitigate that."

According to a Google spokesperson interviewed over the phone, the company has engaged in extensive talks with city officials and community residents to get their feedback on the proposal. Based on local input, Google has added more mixed-income housing units to their initial proposal.

A vote by the city council on whether to approve the new campus is anticipated this fall.

Some say tech companies are still not doing enough to address their role in the housing crisis.

“A lot of these corporations don’t pay their fair share of taxes,” Cash said. “I think taking that step would be a more systemic way to support the communities around them.”

A sign for Interstate 280. San Jose has identified neighborhoods it believes are particularly vulnerable to displacement, such as the Alum Rock area ten miles northeast of the upper school. (Eric Fang)

So, who belongs?

Concerns of displacement and gentrification often accompany proposals for big development projects like Google’s Diridon campus.

According to Victor Farlie, Senior Executive Analyst at San Jose’s Office of Economic Development, displacement can happen directly through rent increases or indirectly through changes to the community or the general state of the economy.

For example, the city could improve road access in and out of the frequently congested Santana Row area near the upper school, but that change might make the area so desirable that current residents can no longer afford to live there.

Many are concerned the COVID-19 pandemic could worsen gentrification and displacement in the Bay Area.

Small businesses have been hit really hard. [Many] were telling me they’re making 30 percent of their normal profit and they had to lay off or furlough nearly all of their workers. They’re not sure if they are going to be able to pay their rent,” Bay Area News Group Housing Reporter Marisa Kendall said.

While the government has put evictions moratoria in place that will prevent some displacement for the time being, the moratoria will no longer be effective once shelter-in-place orders are lifted.

“The current protections are one step in the right direction, but policymakers need to start planning for what happens when they expire, mostly this fall,” Dr. Elias said.

Due to legacies of discriminatory housing practices, the danger for displacement is especially high in minority-majority neighborhoods that have historically faced disinvestment.

As people search for cheaper housing closer to the city core, they enter low-income communities, and landlords realize new tenants can pay more in rent than old tenants.

But the problem isn’t as simple as greedy landlords, as Jai learned in his time as an intern in Supervisor Simitian’s office.

At first I was like, why don’t we just stop landlords from charging residents too much money, but a lot of landlords aren’t wealthy as well and are doing what they can. It’s because the foundations of our housing system are flawed,” Jai said.

Upper school visual arts teachers Trish Ludovici and Joshua Martinez noticed displacement creating demographic changes in their neighborhoods.

Ludovici noted that recently, many older Black and Latino families have moved out of North Oakland and younger, white couples working in tech have moved in.

She estimated that at least once a month a house in her neighborhood goes up for sale and every two or three months a house gets completely torn down and rebuilt, then often resold for at least $1 million.

“There’s a lot more wealth in my neighborhood [than before] and you can see it in the houses as well,” Ludovici said.

Ludovici feels that the city’s culture is also suffering from the effects of gentrification. With less diversity of people and an outflow of long-time residents, Oakland is losing much of its variety of businesses and appreciation for its own history, which is deeply rooted in art, music and activism.

"What made the city so beautiful and multicultural and diverse is quickly, quickly, quickly disappearing in the face of this homogenization of economic wealth,” Ludovici said. "Everybody seems to have the same job, and they all seem to have the same interests. It’s just this very middle level, tech takeover of what was otherwise a very interesting and diverse place to live."

Martinez has also observed these community changes happening where he lives in the Mission district of San Francisco.

“We had a huge Central American, mostly Salvadoran, population in my neighborhood. And now it is predominantly upper-middle-class white Americans,” Martinez said.

Since Martinez started living at his current address in 2008, he’s seen 18 houses on his block be renovated and sold and several families evicted under the Ellis Act.

The Ellis Act is a California law that allows landlords to evict tenants if the building is being taken off the rental market. Often, this means the rental units are being converted to condominiums that can be sold at higher prices.

San Jose faces similar displacement pressures. Since 2015, San Jose has become an “advanced gentrification area,” meaning it has undergone so much demographic change that it would now be considered moderate to high-income.

A house is on sale in West San Jose, about three miles from the upper school campus. Tech companies in Silicon Valley have been developing efforts to build and provide affordable housing for their employees. (Eric Fang)

Through her work as the executive director of the community organization Somos Mayfair, Camille Llanes-Fontanilla advocates for the housing needs of the predominantly Latinx Mayfair neighborhood in East San Jose, ten miles from the upper school.

"You have pockets of San Jose that are very affluent, and then you have communities like Mayfair that have for the last hundred years been defined by every negative indicator of health and wellness," Llanes-Fontanilla said. "When you think about that it’s not the people that live here, but the policies of the system that have created the lack of opportunity for the people in this community.”

San Jose has identified neighborhoods it believes are particularly vulnerable to displacement, such as the Alum Rock area ten miles northeast of the upper school. A BART station and a number of affordable housing projects are set to be built in Alum Rock in the next five to ten years, and only six percent of the area’s businesses own their premises.

“It’s an area where people, when they first come to the city and they don’t have much money, they can find a place to live to find a job. And inevitably, what happens particularly in family structures is that the family creates a business for itself. Many of those families have remained on the east side of the city,” Farlie said. “So that’s our motivation: how do we protect them?”

Through talks with community members, the Office of Economic Development identified three answers to that question: supply information in multiple languages, provide free legal services and help businesses get bank loans approved to acquire their premises.

In addition to rent control and tenant protections, Llanes-Fontanilla believes that cities need to have local preference policies, which would guarantee that people displaced by housing projects can move back in, and build affordable housing in higher-income neighborhoods.

“We need South San Jose, Almaden Valley, Willow Glen to open up their communities to being home for extremely low-income families, which is not happening right now. People don’t want low-income people in their communities, which reinforces the question, ‘Who belongs?’” Llanes-Fontanilla said.