San Jose, That Upstart in Hinterland, Takes On San Francisco

By JANE GROSS, SPECIAL TO THE NEW YORK TIMES
 
 
From San Francisco, 50 miles northwest of here and separated by cultural and historical light-years, San Jose seems an unlikely challenger.
 
It is sprawling and without maritime vistas, a bland landscape of freeways, shopping malls and two-car garages. Three decades ago a sleepy agricultural town, San Jose just about disappeared in the high-technology revolution of the 1960’s and 1970’s, when prune orchards gave way to semiconductor plants and tract houses, when the city and the towns to the north became one vast suburb and gained the nickname Silicon Valley.
 
But things are changing. San Jose is about to pass San Francisco in population. A new pastel granite skyline rises incongruously from the valley floor. The derelict downtown is getting a facelift. In the daytime, the streets bustle with office workers and some young professionals are moving into town. Local ballet, opera and theater companies are selling tickets.
 
And Mayor Tom McEnery, a native son, is making bold – some would say grandiose – assertions that his city is ready to assume a new role as the urban center of Silicon Valley. New Economic Power Will it work? It is far too early to say. But urban planners and sociologists note that a city needs a soul as well as a skeleton, that it is easier to build a new downtown than it is to change the habits of people who have spent the last 30 years perfecting a relentlessly suburban way of life.
 
San Jose’s leaders insist they are not trying to compete with San Francisco, which has more in common with the major cities of the East Coast and Europe than it does with the population centers of the Sun Belt. But a second-city syndrome lurks just beneath the surface and can emerge quickly, particularly when smug San Franciscans reserve for San Jose their profoundest insult: that it reminds them of Los Angeles.
 
”They remember San Jose as a hinterland,” said Mayor McEnery. ”They find it hard to accept that we are now the major economic power in the Bay area, leading the way into the 21st century.”
 
The experiment here, a $1.4-billion redevelopment that combines public financing and private investment, is the centerpiece of Mr. McEnery’s administration. The Mayor, 43 years old, was born and reared here. His grandfather and father were both local politicians. He mourned for the San Jose of his childhood, before the department stores, newspaper and government bailed out for outlying locations, leaving behind the sad husk of downtown.
 
When the valley’s high-technology industry boomed, no one ever paused to consider a core commercial and cultural district. Some of the new entrepreneurs were too consumed with work to care about building a cohesive community. Others were content to get their fix of city life in San Francisco. Others burrowed into expensive homes, content to have the world flicker by on their videocassette recorders.
 
”I’m not sure how many people in this valley are urban folk,” said Peter Haas, who teaches political science at San Jose State University and recently quit a rented house in suburban Cupertino for a downtown condominium. ”They live like they’re in Orange County.”
 
But a more mature region needs a capital city, some say. ”In the beginning, the valley sucked resources from San Francisco,” said William E. Claggett, San Jose’s director of economic development. ”Now there’s a need for services closer at hand, more specialized and in greater volume.” Pride and Taxes.
 
San Jose has some selfish reasons for carving out for itself this capital city role. ”Downtown means two things,” Mr. McEnery said. ”It’s a source of pride and a tax base.”
 
Pride is difficult to measure, but the tax base has already grown tremendously. Frank M. Taylor, executive director of the Redevelopment Agency, said the city collected $7,000 in sales, utility and hotel taxes in the downtown neighborhood in the fiscal year 1978-79. This year, he said, San Jose will collect $4 million.
 
In the boom years, all of the South Bay communities grew but none as rapidly as San Jose. From 1950 to 1988, the population here mushroomed to 732,800 from 95,280, making it by far the largest city in the valley and one of the fastest growing in the nation. By 1990, if not sooner, San Jose’s population will pass San Francisco’s, which was 741,300 last year, according to the California Department of Finance and the Association of Bay Area Governments.
 
In addition to its size, San Jose boasts an expanding airport just minutes from the downtown area, which was recently designated the West Coast hub for American Airlines. It is also the only community in the valley that qualifies under state law as ”blighted” and is thus entitled to use tax revenue for redevelopment. To pay for its transformed downtown, San Jose merged 10 redevelopment districts scattered through the 172-square-mile city and funneled all tax revenue from new development into the 60-block core area.
 
In Mr. McEnery’s seven year tenure, the projects completed include the Fairmont Hotel, a match in luxury to its dowager sister atop San Francisco’s Nob Hill; a half dozen office towers that are slowly filling with lawyers, accountants and venture capitalists and an open-air shopping pavilion with smart boutiques and cafes. All these projects were attractive to private developers because of significant government subsidies.
 
Several other projects are under way, among them a Convention Center, scheduled to open this spring, which is struggling with bookings because the two hotels that were planned to flank it are still without financing. Also under construction are a new children’s museum, an art museum that is doubling in size and a 20-mile light-rail line.
 
Approval of Arena. Also on the drawing board is a 20,000-seat arena, scheduled to open in 1992, which was approved by the voters in a referendum last spring. Another lynchpin of the project is a technology museum, which has yet to attract enough private investment to break ground. On the Mayor’s wish list are a new theater for the Repertory Company, a department store and a professional sports team.
 
While the Fairmont remains half empty, with the Convention Center yet to open, there was good news here this week regarding the office vacancy rate, among the highest in the country. According to data compiled by the real estate firm of Cushman & Wakefield, the vacancy rate dropped to 22.7 percent from 30.8 percent in the last quarter of 1988, the biggest drop of any major market.
 
But while the downtown bustles during the day, when 9,000 new office workers swell the population, the streets are ghostly on weekday nights.
”That’s the next hurdle,” said Terry Christiensen, a professor of political science at San Jose State.
 
Among the city’s boosters are young professionals who have found suburban life wanting. One is Mr. Haas, who now bikes to work rather than battling the traffic and owns a $120,000 apartment, paid for in small part with a loan from the city. Once ‘a Laughing Stock’.
 
“I wouldn’t have lived here before,” Mr. Haas said, while taking a visitor on a tour of a half dozen trendy restaurants, book shops and jazz clubs that did not exist a year ago. ”This place used to be a laughing stock. There was nothing here. Nothing. Like Berlin after the war.”
 
Largely left out of the benefits of redevelopment are poor members of the city’s Mexican-American community, which accounts for about 20 percent of San Jose’s hybrid population.
 
Also at risk are the small merchants who have been here for years, barely surviving in the chaos of construction and now fearful of the increased rents that come with the arrival of affluent new residents.
 
”We’ve tried to take the sting out of it,” said Dan McFadden, the downtown business coordinator. ”But you can’t artificially hold back this thing. We’re in the business of change.”