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Technology—Bay Area execs warn: Don’t make Silicon Valley’s mistakes

Imagine the average new home in San Diego costing $562,200, requiring $56,000 down and monthly payments of $4,850.

Imagine commutes far into the next county to escape such housing prices.

It could be the price of success for San Diego’s technology industries.

In following Silicon Valley’s road to economic success, San Diegans could sacrifice quality of life on the way, according to both local business leaders and Bay Area observers.

Representatives of three Bay Area business associations in town last week warned members of the San Diego Regional Chamber of Commerce what to avoid if this region’s technology sector continues to grow like Silicon Valley’s industry did.

Santa Clara County, home to the cities that make up Silicon Valley, is a place where housing is in short supply and where housing prices are so steep many workers have to commute in.

Philip Serna, vice president for regional governmental affairs for the San Ramon-based Home Builders Association of Northern California, cited the $562,200 price tag for a 2,500-square-foot, 3-1/2 bedroom house in Santa Clara County.

Apartments can rent for $2,000 a month, added Carl Guardino, president and CEO of the San Jose-based Silicon Valley Manufacturing Group.

Long Commutes, Low Productivity

Steven Tedesco, president and CEO of the San Jose/Silicon Valley Chamber of Commerce, spoke of employees living in Central Valley communities like Manteca, making two-and-a-half-hour commutes one-way.

“When they get to work they’re not running at top speed,” said Tedesco. “We’re seeing a productivity problem happening at companies.”

Santa Clara County is a place where a half-cent sales tax for traffic relief was approved last month by a 71 percent vote.

“It’s not over a love of being taxed,” said Guardino, who urged an “invest and prosper” rather than a “tax and spend” mentality.

It’s also a place where outlying communities sue over fears of development associated with business growth.

Santa Cruz County and the city of Salinas were among at least three entities filing separate suits last week to stop Cisco Systems from building a 20,000-worker campus in a semi-rural area of San Jose. A published report said local leaders fear the campus will drive up housing prices and worsen traffic.

Outlying communities are “screaming at us,” said Tedesco of the San Jose chamber.

Dot-Coms Shot Down

On top of the screams and litigation associated with a booming economy, San Diego might join the Downtown dot-com scene.

Active urban areas featuring nightlife attract dot-com workers who are predominantly young, said Tedesco. Downtown San Diego is livelier than downtown San Jose, he added.

San Diego might expect dot-com companies to move into storefront spaces as they have in other urban areas. The city of Palo Alto has outlawed that practice, he said.

In San Francisco, people are concerned with the gentrification associated with dot-coms coming downtown, added Serna, noting city voters recently considered two ballot measures to increase the supply of office space and thereby decrease rents.

San Diego already has a taste of the Silicon Valley effect.

Traffic backs up in Sorrento Valley, home to San Diego tech powerhouse Qualcomm Inc.

One of the biggest complaints the company receives from its employees is traffic, said Shawn Covell, Qualcomm’s senior manager for government affairs.

San Diego’s transportation infrastructure has not kept pace with business growth, she said, naming several streets and highways in her area that could use improvement.

Local Concerns Already Evident

She also noted Qualcomm employees have moved to South Bay and other areas with lower-priced housing, which in turn has affected traffic.

Employees at Hewlett-Packard Co.’s Rancho Bernardo facility share traffic and housing concerns, said company representative Mitch Mitchell, who added education and energy to the list.

“The energy issue is moving to the forefront” of employee worries, he said.

Issues like an area’s housing, schools and traffic frequently outweigh financial incentives companies can offer prospective employees, said Qualcomm’s Covell.

She predicted that when traffic congestion becomes unbearable in San Diego, and housing prices become unreasonable, talented workers will refuse to move here.

Instead they will consider offers from northern Virginia, Boston, Seattle and Austin, Texas, as well as Stockholm, Helsinki, Seoul and Tokyo.

“This is going to hurt Qualcomm and many other businesses and ultimately, San Diego’s blossoming economy,” she said.

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