Apple’s San Jose land promise is more complicated than it seems

When Apple announced its unprecedented $2.5 billion housing investment promise Monday, it came with — no surprise — fanfare and many of the same components other massive tech titans have promised: grants, loans and land.

But Apple’s promise of making $300 million worth of land it owns in San Jose “available” for housing is not exactly like the other tech giants’ land promises; it’s more complicated because of the location of the property in North San Jose, which city officials said was the land Apple was eyeing when it announced its housing contribution this week.

To sum it up simply, new housing isn’t currently allowed to rise in the part of the city where Apple owns approximately 87 acres due to a 2005 legal settlement between San Jose, the county and surrounding cities. But even if San Jose officials get past the temporary moratorium on housing and approve new homes in North San Jose, the iPhone maker’s property has long been viewed as a place for millions of square feet of commercial space that could bring thousands of jobs to the city’s primary employment corridor.

That’s important because San Jose is one of the only cities in the region with more homes than jobs, an imbalance that puts downward pressure on the city’s finances. City elected leaders for years have taken a hard stance against converting any employment or “jobs land” to housing because of the sorely-needed jobs. Thus, changing any commercially zoned land to housing will be a major ask, said Erik Schoennauer, land use consultant at The Schoennauer Co.

“The only way it could remotely be palatable to the city was if it directly linked to a very large scale employment development,” he said.

And as officials this week prepare to make a nature preserve out of more than 900 acres of land in Coyote Valley once slated for 35,000 blue collar jobs, property where commercial space — and jobs — can rise becomes even more precious for the largest Bay Area city.

These are not insurmountable issues, though they will take work, Mayor Sam Liccardo said in an interview Monday.

“I think what you see in that $2.5 billion package are a lot of commitments that are likely to result in housing more quickly than on that particular site because of some challenges,” Liccardo told San José Spotlight.

Indeed, Apple is also promising forgivable loans, grants to nonprofits and first-time homebuyer assistance that won’t need to go through the zoning and legal hoops its land in San Jose will. But even when compared to other tech giants’ land promises, Apple’s is more complex and uncertain.

For instance, much of Google’s promised $750 million in housing land throughout Silicon Valley was already pegged for homes. The Mountain View-based company had submitted development plans or made major announcements for mixed-use developments in several cities when the company’s housing commitment was announced.

Facebook, likewise, submitted plans more than a year ago for its Willow Campus, which will include 1,500 residential units in its hometown of Menlo Park, where its $225 million land contribution sits.

In both cases, the companies had drawn up proposals and received some level of buy-in from city leaders to create mixed-use developments where only office or warehouse space once stood.

Now Apple has promised to make its land available for affordable housing, but has offered few details on how it will overcome the obstacles of unlocking more housing approvals in North San Jose, changing its land use designation and it hasn’t provided any specific plans that city leaders can throw their support behind — or push back on.

“What I understand (Apple) will do is, obviously we have to get through the EIR and the legal issues … but then we expect they will present a master plan,” Liccardo said.

The mayor anticipates the plan will include dense housing, plenty of office space and he’s hopeful it will also come with retail space, but couldn’t estimate when the plan would arrive at City Hall.

It’s unclear how many of the 87 acres that Apple owns in North San Jose the company is aiming to make available for housing. Representatives for Apple did not respond to a request for information and Liccardo said he hadn’t heard that level of detail from the company yet.

Apple’s San Jose land since 2016 has had approvals to build 4.15 million square feet of research and development space, office, industrial and manufacturing buildings, so city leaders would have to agree to add housing to the site’s approvals to move forward with Apple’s vision to make the property available for affordable homes.

But the site, a collection of properties along North First Street at Component Drive, sits within a planned growth zone, envisioned for more than 30 million square feet of new office, R&D and retail space alongside 1,000 hotel rooms and eventually 32,000 residential units.

New homes in North San Jose will be approved in phases, in time with commercial development, to ensure the area has a balance of both, per an agreement with the county and the cities of Santa Clara and Milpitas in an effort to head off environmental and traffic impacts in the area. Liccardo on Monday said leaders from Milpitas and the county seem open to unlocking more housing approvals in the near-term, but the city is currently at an impasse with its neighbor, Santa Clara, on the matter.

The first 8,000 residential units allowed to rise in the area have already been approved and built. Meanwhile, the commercial development is lagging, holding up any new residential approvals for the foreseeable future.

“There’s still another 24,000 homes for them… that could be built out under the plan,” Liccardo said, noting he would be open to converting some of Apple’s land in North San Jose from commercial to housing. “The question is really how and where.”

Contact Janice Bitters at [email protected] or follow @JaniceBitters on Twitter.