Apple asks San Jose for a handout: in exchange for about 3 acres worth more than $12 million Apple is offering bike lanes and $2.6 million

SAN JOSE - Apple has asked San Jose to give up about 3 acres of public street in North San Jose, at no price, so it can fold the land into a single corporate campus, according to city records for a Nov. 10 City Council hearing.  The streets are Orchard Place, formerly Atmel Way (about 1.3 acres), and Orchard Parkway between Orchard Place and Component Drive (about 1.7 acres), the city says.

Apple owns about 86 acres there, in six county parcels on both sides of the streets, covered by a 2016 development agreement with the city, a contract that locks in what a developer may build in exchange for public benefits.  That agreement lets Apple build about 4.15 million square feet of offices and research space.  County assessor records show the land changed hands in 2015 and 2018.

Legally this is a "street vacation," not a sale.  The city holds a public right of way over the streets, the public's right to travel on them.  Apple's amended agreement says that once the streets close, the right of way "will revert to" Apple's adjoining land and be "merged with" it "for APPLE's development purposes."  None of the city records requires Apple to pay for the land.  A city news release says the change would make the land "available for Apple's private use."

In return, the amendment lists community benefits given "as consideration for the benefits conferred."  Apple would build protected bike lanes on Component Drive, pay $90,000 for signal upgrades on North First Street and pay $2.5 million toward a Guadalupe River Trail crossing at West Trimble Road, an amount that rises with construction costs starting in 2028.  Those come due only after Apple applies for a building permit and gives notice it will close the streets.  Public Works also collected $16,456 in fees to process the request.

No city record released for the hearing puts a value on the street land or cites an appraisal.  One rough yardstick is the county assessor, which values the land in Apple's six parcels there at about $339 million as of June 30, or about $3.9 million an acre.  At that rate, 3 acres would come to roughly $12 million.  The figure is only a guide.  Under Proposition 13, assessed values are based on the 2015 and 2018 purchase prices plus at most 2% a year, not today's market price, and a strip of street could not be sold or built on by itself.  Set against that yardstick, the deal works much like a gift:  the benefits Apple offers, about $2.6 million, come to roughly $9.4 million less.

Location adds to what Apple gets.  Apple owns all the land on both sides, so the strip is worth more to Apple than to anyone else:  today the roads split its property into separate blocks, and closing them lets Apple join the blocks into one campus, the amendment says.  The amendment also keeps Apple's right to build about 4.15 million square feet even though Apple plans to transfer 9.7 acres to Pacific Gas and Electric Co. (PG&E) for an electrical substation.  No city record puts a dollar figure on the location advantage or on keeping that building right, and the PG&E price has not been disclosed.

What San Jose gives up

If the council approves, the city would give up the public's right to use the two streets, a route now open to drivers, cyclists and people on foot, and any say over the land beyond what the development agreement allows.  It would receive no payment for the land itself; the $2.6 million in benefits goes to bike lanes, traffic signals and a trail crossing, not the city's general budget.

In return, the Public Works memo lists the city's savings as ending its duty to maintain the streets and its liability for them, without estimating a dollar amount.  The memo says the deal is not a public subsidy under a state law that requires cities to report economic-development subsidies to businesses.  The city would keep underground rights for a 96-inch storm drain, sewer lines and a water main.  Whether the former street land will be added to Apple's property tax bill has not been disclosed.

A traffic study found cars would mostly shift to North First Street, which has room; people walking and biking would detour there too.  One resident's two emails oppose cutting off public walking and biking and want a deadline for Apple to act.

The draft ordinance says the Planning Commission recommended approval Oct. 28; the city has not posted the vote count.  The records do not say what Apple plans to build on the combined site or when.

Source:  Public Works memo, item 3.4; draft ordinance and amendment, item 10.2; planning transmittal memo; public letters; Oct. 28 Planning Commission video; City of San Jose news release; Santa Clara County Assessor parcel records 101-03-004, 101-03-007, 101-03-008, 101-02-011, 101-02-016, 101-02-017