San Jose Almost Arrives

Welcome to California’s capital of “almost.” Jim Vetter, for instance, is almost ready to leave. His underground art gallery was supposed to have become part of a cultural explosion--a tech-moneyed Left Bank, a Silicon Valley Soho. Unfortunately, what mostly caught fire was the 25-year-old artist’s cost of living.

“This almost worked, but I’m outta here,” Vetter shrugged, rubbing his beard in irritation. “I don’t know why anyone would intentionally come to San Jose.”

Mayela Martinez and her husband aren’t so sure either. They were to have risen with the tide of the new economy. They’d almost imagined moving out of his mom’s house when the tide turned. So much for all boats being lifted in the so-called capital of Silicon Valley. “He works construction, and for a while there, he was really busy. Just not busy enough,” said the young mother, washing cars in her mother-in-law’s driveway.

At the Spina Farms fruit stand, though, the customers are almost chipper. Thanks to the downturn, word is that their end of the city won’t be engulfed by tech in the near term after all. Acres of offices were to have gone in on the city’s wide-open south side, courtesy of the computer networking giant, Cisco Systems. The expansion is now said to be, ahem, less urgent.

“Wouldn’t hurt my feelings one bit if it never happened,” offered a cowboy-booted livestock owner who gave only her first name, Becky. “New money has almost ruined this town.”

So it goes now in the post-boom boomtown that, with the advent of the Information Age, almost came to rival the influence of San Francisco and Los Angeles.

“The classic mid-20th century nowheresville,” Sunset magazine had once called the 177-square-mile town Dionne Warwick didn’t know the way to. But by the late 20th century, national newspapers were touting its muscle, presidential candidates were glad-handing its leaders, and its population was bigger than San Francisco’s at almost 1 million. San Jose, it was said, was this close to transcending its long rap as the Rodney Dangerfield of West Coast destinations.

When the 2000 U.S. Census listed the nation’s 10 largest cities, San Jose was almost on it. (It’s No. 11.) Though it is some 50 miles from San Francisco, the digital gold rush pushed its prices to Nob Hill proportions; at this time last year, ordinarily mid-priced hotel rooms were going for $500 a night, midweek.

Now last year is over, and if San Jose has a Topic A this summer, it is that booms only can carry a place so far. Yesterday’s tech craze may have made San Jose big, but didn’t make made billionaire CEOs want to live here. It drew skilled outside labor, but didn’t keep living costs within the means of less-skilled locals. It bought a downtown, but hasn’t turned San Jose into a place where hip hordes come to hang out.

On a recent workday lunch hour outside a block of restaurants, no more than 11 people at any time were on the sidewalk. Natives grouse that they’ve been overtaken by tech workers--”keypads” and “bluefaces,” in the local parlance--but when tourists come looking for the touchstones of Silicon Valley, they still end up less in San Jose than in Woodside, looking for Oracle founder Larry Ellison’s mansion, or in Palo Alto, home of Stanford University and Hewlett-Packard and the region’s one Spago.

Nor has Silicon Valley come to identify with San Jose the way San Jose identifies with the valley. The political voice for the big tech firms, for instance, is not San Jose’s Chamber of Commerce but the Silicon Valley Manufacturing Group, which draws from throughout the area. When the energy crunch amped the call for a new power plant, San Jose’s was the backyard that ended up being stuck with it.

“The tech boom may have improved San Jose’s opinion of itself,” says Ross DeVol, director of regional and demographic studies at the Milken Institute, who recently wrote a Forbes Magazine study naming the San Jose metro area as the nation’s best place for doing business. “But it’s still not regarded [within the tech world] as the ‘center’ of Silicon Valley by any stretch.”

“A lot of San Joseans feel we’re almost-there-but-not-quite,” agrees Terry Christensen, a San Jose State University political science professor. “We’re out of the shadow of San Francisco, and we’re not the farm town we used to be. We can trade on the Silicon Valley image. But we don’t have much otherwise to boast about.”

That concern has intensified as bad news has battered even the most established tech firms.

“That dream of tech as a world-changing force that would elevate San Jose to this sort of nexus of some new revolutionary form of capitalism? That’s over,” says Autumn Bernstein, a native who is field director for the nonprofit Greenbelt Alliance.

“There used to be grand statements, like that there was this new mode of doing business that’s perfectly harmless and perfectly clean. People thought, ‘If that’s all true, what could San Jose be?’ Well, people here don’t talk like that anymore.”

Tax Revenue, Building Permits Increase

Still, as an economy, San Jose--even in this miserable moment--remains the envy of most big cities. Unemployment in Santa Clara County, which generally reflects San Jose’s job market, has more than tripled since December, but by July it was still lower than the state average, at 4.7%. The county, about half of which is within the city limits, has lost about 18,000 employees from its workforce due to migration and layoffs, but almost 1 million people still work there.

In the city proper, officials say, home prices are falling, but the median is still among the nation’s highest, at a stiff $489,000. The convention business is off by some 10%, but the convention center is still amply booked. Hotel occupancy rates downtown have fallen, but they’re still high, in the mid-70% range. The local newspaper, the Mercury News, is cutting 126 jobs, but the decision is partly due to pressure for higher profit margins from shareholders in Knight Ridder, its parent company.

Sales tax revenues reflecting local commerce in the first quarter of this year were up by an adjusted 5% or so over the same period last year. (The surrounding county, by comparison, posted only a 1.7% revenue increase.) Building permits are up 27% over last fiscal year, and planning permits for future projects are up for everything but big industrial projects. Fifteen years ago, the only international flights from San Jose’s airport were to Vancouver. Last month, American Airlines added daily nonstop flights from San Jose to Paris and Taipei.

But commerce isn’t culture, and money alone can’t turn a bedroom community into the next Florence. “When you’re really a big city and a capital, you don’t need to keep telling people,” observes Brian Grayson, a former chairman of the city’s planning commission.

“The people of San Jose don’t quite have a sense of themselves yet as a place with importance,” says Bill Fulton, who has written extensively on urban planning in California. “They want to believe they’re the center of the world, but they don’t quite trust that feeling because saying that in California is like being a New Yorker and saying the center of the world is in Jersey City. It feels uppity.”

Mayor Ron Gonzales takes issue with the implication that San Jose’s self-image is lagging, particularly in the wake of Silicon Valley’s downturn. But he acknowledges that “as the city has grown, I’m not sure we’ve done as good a job as we’ve needed to of making sure people here are sufficiently proud.”

It has been ever thus in San Jose, founded in 1777 as a farming station between presidios in Monterey and San Francisco. It was California’s first state capital--but who remembers? It had the state’s first symphony--but who knows that now?

“Sannazay is probably bigger than S.F. already, but who cares?” the San Francisco Chronicle’s late Herb Caen wrote, before San Francisco did get bumped--caring not a whit--as California’s third-largest city. “Nobody goes there.” He wrote that a generation ago, when San Jose was a sprawl of middle-class aerospace suburbs surrounded by orchards. But even now, the city gets dissed.

“Darling, nobody lives in San Jose unless they have to,” a real estate agent who specializes in Silicon Valley luxury homes recently confided. When the San Jose Convention and Visitors Bureau advertised for a public affairs person who could “identify and promote product development opportunities,” such as “renaming Highway 101 ‘the Information Superhighway,’ ” the San Francisco-based Salon.com couldn’t stop hooting.

“What a tin-eared attempt at civic boosterism,” guffawed the Web site’s technology column.

The situation, not surprisingly, makes some San Joseans defensive.

“Ooh, here it comes,” mocked Phil Trounstine, a onetime local newspaperman who is now a political consultant. “The Los Angeles Times: ‘Ooh, San Jose must be reeling. Ooh, the crash of the dot-coms.’ But the people of San Jose are not walking around stunned.” Confidence in San Jose’s future, he said, hinges “on just one question: Do you believe in the new economy or not?”

San Jose believes--most of the time, almost. But then, belief in tech is an important part of the city’s history. Before World War II, San Jose was a cannery town that was known mainly for being the county seat. After the war, it became a suburb for the defense industries that grew up around Stanford. Farm culture gave way to the linear aesthetic of engineers and aerospace workers. Cherry orchards, their blossoms like clouds, were plowed under to make way for long, hopeful rows of tract homes. San Jose went suburban both in its look and in its mind-set, annexing and spreading until even its City Hall had left downtown.

By the 1980s, as the region’s defense sector was morphing into Silicon Valley, San Jose was a typical Sun Belt urban nightmare--a sprawling, octopus-shaped bedroom community with more people than could be served by its tax base. Downtown, such as it was, was a jumble of dirty-movie joints and run-down buildings. “Little L.A.,” the rest of the Bay Area contemptuously called it. “Our parks were low, not only in acreage but in maintenance,” recalled former mayor Tom McEnery. “We didn’t have enough books in the libraries. Our sewage system was malfunctioning and toilets were backing up into people’s homes.”

The notion of marketing bland San Jose as a hub of the Silicon Valley, he said, was “a Hail Mary pass” aimed at bringing in business; at the time, not one of the valley’s 15 largest tech firms was headquartered in the town. But San Jose had land, something the other, more tech-heavy cities didn’t. As Silicon Valley burgeoned, San Jose accommodated the demand for industrial parks and corporate headquarters. The strategy yielded tax increment financing for redevelopment.

Today, the city’s north end glitters with mile upon mile of high tech. The Cisco headquarters alone covers millions of square feet. Its low-slung, tan-and-turquoise buildings run for so many blocks that the place is colloquially known as “Cisco City.” Adobe Systems is based in San Jose now. Many more companies have branches in the city’s office parks.

The downtown--almost of all of which was built within the last decade--has an almost-new convention center (named after McEnery) and a professional hockey team and luxury hotels. Some $50 million in subsidies went into the city’s bid for the popular Tech Museum of Innovation. Its art museum is so well-endowed that it can offer free admission. The phrase “Silicon Valley” is everywhere, from the municipal letterhead to the names of the city’s ballet and chamber of commerce. A $1.5-billion airport expansion is planned, along with a joint municipal-San Jose State University library, an extension of the BART line down from San Francisco sometime during the next decade, and a new--downtown--City Hall.

Population Diverse, Housing Expensive

But for all that, the city’s evolution has left too many high-water marks and loose ends, critics contend. The schools have improved, but still aren’t up to the high quality that characterizes most of the rest of Silicon Valley. The populace is a model of diversity--San Jose is a third Latino, 36% white, 26.6% Asian and 3% black--but the poorer parts of town are disproportionately Latino. Rentals and home prices, which shot up in the boom, have failed to return to anything close to affordability.

A drive down North First Street, the high-tech artery that bisects the city, offers a core sample. At its north end--where Mayela Martinez shares her mother-in-law’s scuffed house--a tract of $500,000-plus homes is rising amid a 70% Latino neighborhood surrounded by landfills. Four-story houses with state-of-the-art kitchens stand a stone’s throw from shacks with taco trucks in the driveways. “Escape to Trinity Park,” the brochures urge, despite the fact that the barrio, Alviso, already has a name.

Farther south, the bare bones of a canceled Cisco expansion loom over the landscape, and, still farther, high-tech office space unfurls for miles: Novellus, Cypress Semiconductor, Applied Biosystems, Netro, Samsung, Sun Microsystems, Fujitsu, Canon, Texas Instruments, Xerox, campus upon great, landscaped corporate campus.

And radiating from them, acres of orderly houses ranging from new to newer. They’re look-alike, but in the last several years, exuberant tech workers have bid up the prices to $600,000 and $700,000 and $800,000 for the most ordinary of homes. Kan Yuan Cheng and his wife, Michelle, say their pink stucco Mediterranean has lost 10% of its value since the two young hardware engineers bought last year at the top of the market; nonetheless, the going price of a four-bedroom home on their block is nearly triple what it was in 1992.

The loss hurts, they say, but it’s minor compared with what’s happened to their investments: They’d cashed stock options for a down payment and put almost all they had left back into tech stocks. “Last year we had a lot of dreams,” said Michelle Cheng, cradling her 10-month-old baby. “But this year our savings are almost gone.”

Still farther south, toward downtown--where the high cost of studio and loft space has frustrated artists such as Jim Vetter--non-tech types complain that computer workers have priced native San Joseans out of their own backyards.

“There are all these people here with jobs who have no place to live,” complained Lorin Partridge, a downtown bartender, smoking a Lucky Strike outside the Cactus Club one workday. One recent estimate put the affordable housing need at 35,000 units. Partridge said his home is a basement storage closet because apartments cost more than $1,300 a month.

Still farther south on the same street--the name changes here to Monterey Road--the shiny tech buildings give way to mile after mile of auto repair shops and no-tell-motels and faded billboards offering T-bone steak dinners, all you can eat. At its southernmost segment, the artery opens up into a breathtaking vista of tawny hills and rich farmland of the sort that, a generation ago, was San Jose.

What San Jose will make of this motley landscape, in this pivotal time, is uncertain. Fulton and others say the city should savor its season of being in-between.

The history of Silicon Valley, like that of California, has after all been a pattern of exuberance and adjustment. “In the long run,” he said, “I don’t think there’ll be any ‘almosts’ about San Jose.”