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Bay Area Backlash On High-Tech Boom
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Source: San Francisco Chronicle
Bay Area Backlash On High-Tech Boom Dot-coms viewed as threat to lifestyle
Angelica Pence, Chronicle Staff Writer
Monday, October 23, 2000
A growing number of Bay Area cities are closing
ranks in a simmering battle against dot-coms that
have swarmed into once-sleepy downtowns.
``Our downtown is being eaten up by startups. Silicon
Valley is here, in a big, big way,'' said Redwood City
planner Charles Jany.
Never mind the seemingly endless stream of tax
revenue and new jobs pumped out by dot-coms,
chipmakers and computer firms throughout Silicon
Valley. These days, city planners say, the daily
congestion, skyrocketing housing costs and dwindling
parking spaces that have become synonymous with
the high-tech boom are too big a price to pay.
Palo Alto is the latest to take action, enacting an
emergency ordinance banning companies from
setting up shop in street-level retail spaces. San
Francisco, Redwood City, San Mateo and Menlo
Park likewise are closing the door to high-tech
startups and their corporate counterparts taking over
vacant spaces once occupied by largely blue-collar
shops and restaurants forced out by rent increases.
Redwood City -- home to software giant Oracle,
Internet service provider [email protected] and the
music swapper Napster -- recently imposed a 45-day
moratorium on most new office development so it
can diagnose its growing pains.
Tonight City Council members will decide whether to
extend the controversial ordinance, which places
strict limits on industrial development for as long as
six months. The council first passed the ruling on
Sept. 11 prohibiting office developments on parcels
of 10,000 square feet or larger in most areas. Parking
requirements were also tightened and new
ground-floor offices completely suspended. Since
then, at least one would-be tenant opted to move
But the dot-com backlash is far from limited to the
Peninsula. The industry, which has been a major
contributor to the booming economy for a decade,
has pushed a construction boom and has also ushered
in gentrification. Rising rent and mounting
``e-victions'' are driving out not just mom-and-pop
corner stores, but lower- and middle-income families,
artists, nonprofit groups and small businesses.
In San Francisco, two propositions on the Nov. 7
ballot to varying degrees would curb tech growth in
the Mission District, Potrero Hill, Bayview-Hunters
Point and South of Market. According to the San
Francisco Rent Board, citywide housing evictions
have doubled since the Internet boom began in 1996.
Last year, 2,761 tenants lost their homes, compared
with 1,354 in 1996. Over the past two years, rent has
jumped fivefold and residential vacancies are less
than 1 percent.
Dot-com overload is also rampant throughout Silicon
In San Jose, protesters are preparing to a battle
against networking giant Cisco Systems, which plans
to build a $1.3 billion, 20,000-worker complex. Menlo
Park, San Carlos and San Mateo have all recently
enacted or are considering moratoriums to limit
high-tech development. In San Mateo, City Council
members voted last week to extend a recently
enacted moratorium to April 17. Between now and
then, planners hope to come up with ways to lure
more retail to the downtown.
``As office space becomes more scarce, we're
seeing more and more dot-commers moving in,'' the
city's senior planner Ronald Nunekawa said of San
Mateo County's 2 percent office vacancy rate. ``We
need to come up with some sort of long- term
policies that maintain the character of our
The e-commerce firm @TheMoment slipped through
before the city's moratorium. Today, it is busy
moving into what used to be a women's clothing store
on Fourth Avenue. Judd Green, a longtime apparel
merchant, was forced from the site after 16 years
when the landlord increased the rent from $100,000
to $260,000 a year.
San Mateo's annual rental space has jumped from
$12 a square foot to $84, a record for the city of
94,000. Palo Alto leads the Peninsula in rental prices,
charging $144 per square foot. Redwood City
charges as much as $93 per square foot.
They may be taking over parking spaces and
outbidding other businesses, tech advocates say, but
computer-related business are revamping
neighborhoods, like East Palo Alto and downtown
San Mateo, long in need of face-lifts. ``The people
we bring into downtown and the presence that we
have is far superior than having an empty retail
space,'' @TheMoment's President Dave Frye said of
its 60 employees. ``Our employees start early and
work late. We're definitely patronizing the local
Much like law firms or insurance companies,
dot-coms make for clean industry, said longtime
community designer Bruce Liedstrand, who is
credited with much of downtown Mountain View's
``If you do it right, those dot-commers need to go to
lunch, shop on their break or after work,'' Liedstrand
said. ``They need office supply places, coffee shops
and other nontechnology-related business to
Still, even beyond the Bay Area's downtowns, some
residents have had their fill of the high-tech
On the southern edge of Palo Alto, residents last
week scored a victory over an Internet company
after protesting about noise and fumes they feared
would disrupt their suburban calm. Paix.net had
hoped to open an Internet exchange facility off
Highway 101, equipped with at least one 20,000-
gallon diesel storage fuel tank for an on-site
emergency generator. The city granted Paix.net
permission to locate on the site, but the company
withdrew its application last Wednesday.
City Planning Commissioner Pat Burt said it was his
understanding that the shift took place because
residents filed an appeal and because the company's
needs changed. Paix.net officials were not available
``We didn't want the diesel fumes in the air or the
noise,'' said one resident, Margaret Hager, who had
joined in the petition protest and attended a hearing
on the matter. ``It would have been in my neighbor's
back kitchen window.''
The question remains, however, whether other, less
bustling downtowns can afford to be so choosy about
their tenants. Indeed, it can be difficult for cities to
turn down easy tax revenue.
In nearby Santa Clara, home to Yahoo and Intel,
office workers outnumber employed residents about
2 to 1. Still, about 95 percent of the city's real estate
tax revenue comes from its commercial base. In
downtown Redwood City, meantime, numerous
storefronts have sat vacant for months, sometimes
``We're not shutting the door on Internet companies,''
said Deborah Nelson, Redwood City's community
development coordinator. ``We just want to direct
where it goes.''
Increasingly, that direction is across the bay, to cities
like Tracy, where commerce leaders are conducting
aggressive recruiting campaigns directed at the
high-tech industry. Indeed, moratoriums on the
Peninsula are welcome news for cities in the East
Bay and South Bay, where office parks are
multiplying and vacant office space is plentiful.
``It's absolutely mind-blowing to us that some cities
don't want dot-coms and other computer companies,''
said Tracy City Manager Fred Diaz. ``Our door is
wide open. Come on over.''
E-mail Angelica Pence at
©2000 San Francisco Chronicle, Page A17
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