SAN FRANCISCO — For years, as they’ve jockeyed for tech jobs and the cachet that comes with them, San Francisco has touted its cosmopolitan allure, while San Jose has countered with its vast supply of land.

Now, in an effort to add a weapon to his city’s arsenal, San Francisco Mayor Ed Lee has proposed reshaping a 30-acre stretch of freeway and rail yards into high-density housing, shops, restaurants and more than 2 million square feet of high-rise office space.

But rather than a new stage in a Bay Area arms race, Lee’s plans are being hailed as a sign of a new, cooperative sentiment sweeping the region. “Mayor Lee wants to see how to promote the Bay Area,” said his spokeswoman, Chrisine Falvey. “There will

be widespread benefits if companies relocate or expand to San Francisco, San Jose, Oakland or nearby areas.”

Added San Jose Mayor Chuck Reed, whose city long has billed itself as Silicon Valley’s capital: “I’m worried about Texas,” not San Francisco. “We’ve got much bigger competition for companies that are expanding to other states and countries instead of keeping their growth in Silicon Valley.”

Enrico Moretti, a professor of economics at UC Berkeley who has studied the region’s history of innovation, said traditional rivalries have yielded to the reality of a fast-shifting business landscape.

“It used to be the case that tech companies were either in the South Bay or San Francisco. Now they are in both locations,” he

said. “And workers are much more mobile.”

At the same time, Moretti said, Lee’s proposal to knock down Interstate 280 north of 16th Street and relocate a Caltrain storage yard near ATT Park is an aggressive move for the business-friendly mayor, who has worked to keep startups in town as they grow.

Lee already has cut tax deals with such startups as Twitter in exchange for help revitalizing rundown areas, and he persuaded city voters in the fall to eliminate a payroll tax the mayor and others insisted punished companies for growth.

“Knocking down the 280 extension makes a lot of sense,” Moretti said. “It will free up a lot of land to attract companies and create jobs.”

Lee, in fact, said razing the overpass and rail yard is the city’s last, best hope to create the kind of corporate campuses that San Jose and other cities long have used to woo companies that have outgrown San Francisco’s South of Market area. The neighborhood is home to companies such as Zynga and Yelp and also includes the Mission Bay area, where city officials have already targeted expansion zones for tech firms.

But

some say the area already is so filled up there’s little room for growth.

“When you go to lunch in SoMa, you have to get out of the office before noon or you’re going to be standing in line,” said Jason Johnson, co-founder of startup accelerator Founders Den, which sits near the Caltrain yard in Lee’s sights and offers startups shared office space and other resources.

“At certain times, companies have to leave because of their size, or because of tax incentives elsewhere,” Johnson said. “San Francisco has lost a lot of companies over the years.”

To be sure, Lee’s plan won’t give San Francisco anywhere near the amount of office space San Jose boasts. The 30 acres the mayor thinks can be freed up is about the size of a single corporate campus on San Jose’s North First Street. And Reed and other San Jose officials are making plans of their own to add millions of square feet to that area, accommodating as many as 20,000 new jobs.

Rather than view Lee’s plan as a possible threat, Reed sees it as another piece of the region’s real estate portfolio.

“It’s important that we have options in the Bay Area,” Reed said. “North San Jose’s got one kind of development potential. We’ve got Coyote Valley with another kind of development potential. We’re trying to provide lots of different kinds of environments for companies to work in. Those that want to be in a San Francisco high-rise will choose that.”

Lee’s proposal isn’t without its sharp critics. Some

commuters worry it will slow traffic in and out of the city.

Caltrain officials, too, say they need the rail yard to house trains, especially with plans afoot to electrify the line as part of the state’s high-speed rail project. The city is paying for Caltrain to conduct an eight-month study weighing the plan’s potential impacts, according to Santa Clara County Supervisor Ken Yeager, who heads the Peninsula Corridor Joint Powers Board that owns and operates the commuter line.

Still, Yeager acknowledged, despite Caltrain’s concerns, Lee’s plan “would be a tremendous boon” for San Francisco and the rest of the region.

Ultimately, economic forces that are far stronger than the ambitions of the mayors of San Jose and San Francisco are likely to carry the day, said UC Berkeley’s Moretti, who wrote the 2012 book “The New Geography of Jobs.”

“The labor markets in the Bay Area are getting increasingly integrated,” Moretti said. “This is very good for the region, very good for high tech and very good for the Bay Area economy.”

Contact George Avalos at 408-373-3556 or 925-977-8477. Follow him at Twitter.com/george_avalos. Contact Peter Delevett at 408-271-3638. Follow him at Twitter.com/mercwiretap.

Article source: http://www.insidebayarea.com/business/ci_22831780/san-francisco-san-jose-team-up-keep-tech-280-development

San Jose’s storied redevelopment agency — the state’s second largest as measured by property tax revenue — will end on Feb. 1 with a whimper, not a bang.

Even before last summer, when the state Legislature signed off on Gov. Jerry Brown’s proposal to shut down all of the state’s agencies and divert their funding to pay for schools and local government services, the city’s redevelopment agency had axed dozens of positions. Its history of issuing too much debt, recent plunging local property tax assessments and continued cash grabs by the state had prompted those cuts, beginning in late 2009.

While that inadvertently helped to dull some of the pain here, other cities are feeling the impact all at once. Oakland, for example, recently announced it may have to lay off up to 400 employees whose pay is subsidized by redevelopment money. As the state’s Feb. 1 deadline looms to dissolve the agencies and establish successor entities to oversee their payments and priorities, the redevelopment fallout from Morgan Hill to San Mateo is reverberating around the South Bay.

“I guess we are fortunate that we had layoffs a few years ago due to the realities of the economy,” said San Jose Mayor Chuck Reed of the latest turmoil. “Many other cities are not, and are having to do it in very short order.”

San Jose’s once robust agency, with 134 employees at its zenith in 2002-03, has only 14 employees left, half of whom are contract workers. Even the agency’s

largesse that had helped pay the salaries of police officers, city workers and elected officials — about $11.2 million in 2010-11 — ended last summer.

“I’m very proud of what the agency has been able to accomplish over the last 20 years,” said agency managing director Richard Keit. “But there’s also sadness, not only for the staff that’s gone, but for the loss of a powerful tool that has created economic development for our city.”

Over the decades in San Jose, the agency financed such downtown marquee projects as the Fairmont Hotel, the HP Pavilion and the convention center. Now, its revenues will just cover the cost of the agency’s remaining staff salaries, a handful of projects already approved, and payments on its massive $3.8 billion of debt. It will take years to pay off those obligations before any money can be sent to local schools or services.

Yet other agencies with less debt will be able to help schools and special districts immediately, as Brown intended.

In Santa Clara County, nine cities maintain some kind of redevelopment agency; in San Mateo County, 12 cities have redevelopment agencies. Santa Cruz County’s agency went dormant last year, but its four cities all have redevelopment agencies.

The state Legislature created redevelopment in 1945 to eradicate blight that hampers economic development in a community. When a blighted area with low property value is developed, its property value increases and the difference, called “tax increment,” is collected by the agencies. That money is used to issue debt to pay for the next redevelopment project, a process that’s helped agencies finance major civic projects, affordable housing, community centers and business and neighborhood improvements.

Critics, however, say agencies have abused the definition of “blight,” and that development has increasingly come at the expense of taxpayers, who have been subsidizing private real estate ventures.

As city officials are crunching numbers to determine how many redevelopment-related jobs and projects will have to be cut, this newspaper found:

Article source: http://www.mercurynews.com/bay-area-news/ci_19793159