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Southern Sprawl

[whitespace] sewage treatment plant
Christopher Gardner

Flood of Development: Morgan Hill's sewage treatment plant is already swamped, yet the city is spending millions to attract more business and people.

Morgan Hill's $10 million effort to lure high-tech from up north in Silicon Valley may wash out, simply because there's no place left to pump the wastewater

By Jim Rendon

WHEN CYNTHIA COOK drives past the green, irrigated business park plunked down in the brown field on the outskirts of downtown Morgan Hill, she sees an impending disaster. Several new businesses and a fitness center all sit nearby on a few hundred acres bordering Highway 101. And bulldozers pushing dirt on the site, just off Cochrane Road, indicate that more of the same is on the way.

"We are creating our own mini-San Jose," she says, pointing out what doesn't need much highlighting--the stark difference between the rolling fields surrounding the area and the perky green landscaping that accents sprawling office buildings and clustered apartments.

Cook, 45, an athletic-looking woman with a fading Boston accent, moved to Morgan Hill nine years ago, and fell in love with the open space, the farms and wildlife. On her drive home from work or shopping, she used to pass through fields and trees--now the road is like a canyon, hemmed in by soundwalls that protect new development from the grumble of automobiles.

Over the last decade, this town has lurched away from its bucolic agricultural roots toward the kind of sprawling development that has made Silicon Valley famous for traffic congestion and ceaseless building. And in its rush to catch up with the boom at the northern end of the county, Morgan Hill is now planning to fork over millions of dollars to lure high-tech industry, with the hope that more business, people and money will follow.

Since early this summer, Morgan Hill has been trying to convince Candescent Technologies--a fast-growing manufacturer of new-tech flat-screen computer monitors--to build a huge manufacturing plant in town. The city is offering nearly $10 million in public money to motivate the company.

Most of the money, $6.5 million, will go to Candescent as an interest-free loan that will not be paid back to the city as long as the company operates in town. Morgan Hill sweetened the deal with an additional $2.5 million tax break.

Mayor Dennis Kennedy and other boosters point to the 1,000 jobs that Candescent promises as proof that this public money is well spent. They believe tax revenues will increase, and that the city will win some prestige through association with one of the first American firms to compete in the market for laptop screens.

But Cook, a City Council member who prizes the town's rural character, doesn't see any benefit.

"I don't know that I want Morgan Hill to be the flat-screen manufacturing capital of the world," she says. And the thought of paying a company to add to the valley's sprawl puts Cook on the offensive. "The city made a rotten offer," she says, adding that if the multi-million dollar company wants to do business in her town, it should pay its own way.

Ultimately, however, ideology may have little to do with future development in Morgan Hill. Sewage may prove to be more important than opinions about sprawl or corporate welfare.

Last winter, amid record rainfall, the city's sewage treatment plant had to discharge millions of gallons of treated wastewater into Llagas Creek to avoid an overflow. And now the ground is so saturated that the plant cannot get rid of the wastewater it treats. Adding 400,000 gallons a day from Candescent will make an already difficult problem much worse.

Buying Friends

ON COCHRANE AVENUE just off Highway 101, a squat gray sign proclaims Morgan Hill Ranch. But the cattle have long since left this south-county spread. Though the open vistas suggest a thriving agricultural community, the fields around the place are devoid of livestock. Inside the gates, a wide paved street twists though parking lots and fresh landscaping, ending up in a dirt lot. On the immediate horizon, a bulldozer sits cockeyed next to a pile of dirt. "Just to the left of that pile, over there," Cook says, pointing south and west, "that's where Candescent will go."

To Cook's right, construction crews are busy hammering 96 units of low- income housing together. Behind her is Anritsu, a cellular communications manufacturer. And behind that, a fitness center and Abbott Laboratories--which manufactures insulin pumps--share the east 40.

This 400-acre development with 28 businesses and 96 housing units is by far the largest in the south county. If Candescent picks Morgan Hill for its plant, it will be the largest presence in the business park. The proposed 320,000-square-foot manufacturing facility will be four times the size of Intel's plant in Santa Clara.

The Morgan Hill Ranch was established in 1980 by Napa-based developer Bill Jarvis. But the valley's stalled economy made it hard for the city to lure big companies southward. After a decade of casting line, only a few companies took the bait.

Then in 1994, Venture Corporation, a Marin-based development company, bought the ranch and things turned around. Robert Eaves, president of Venture, hoped to jump-start investment with a golf course and housing development on the site.

Cook, who was then on the city's planning commission and already a slow-growth advocate, opposed the project. Housing and golfing, she says, did not fit in with the business park's industrial character--or its industrial zoning.

Though she was not reappointed to the planning commission after the confrontation, the golf course and much of the housing were stopped. Today, only the small clustered rental units, which are just now nearing completion, survived the controversy.

Despite losing that battle, Eaves says he is doing well with the ranch. With 28 businesses on site, the ranch is already running out of room, and he believes the citizens of Morgan Hill want more.

"This is a pro-business community," Eves says. "It is receptive to new ideas and goals. You can get a building permit in 30 days. Try that in San Jose."

Land at the ranch can cost as little as $9 a square foot, whereas in San Jose, Mountain View or Santa Clara, the price is up around $40. But despite Morgan Hill's perks--cheap, easy on the red tape, a reverse commute--the city still believes it must wave some money around to attract new development.

Candescent has a small office in San Jose and is looking to build its first manufacturing plant. With backing from Hewlett-Packard and Compaq, substantial government funding, and high hopes for an upcoming initial public offering, the company hopes to become the first American company to strike it big in the flat-screen market.

Mayor Kennedy says Candescent offers the city a unique opportunity to get in on the ground floor of a new industry. "Candescent could put Morgan Hill on the map," he says.

Kennedy and other supporters dream about the possibility of Candescent's suppliers relocating to Morgan Hill, the possibility of increased sales tax revenue if the company starts selling individual displays. There is a lot of pie floating above Morgan Hill, but the reality of Candescent's offer is more humble than all that.

Cook is skeptical of the benefits the company claims it will bring. Even Councilmember Robert Foster, who supports the plan, scoffs at anyone's being able to live in the affluent town on the salaries the company will pay less-skilled workers.

But Candescent is so secure in its belief that its presence will be a boon, it has asked for far larger subsidies than the city has already offered. The company is seeking tax rebates across the board. Though the city's package adds up to $9 million in loans and tax breaks, Candescent is looking for $25 million, including much larger tax cuts.

Though he has engineered this deal from the beginning, even Mayor Kennedy admits "it is hard to give more."

While supporters like Kennedy might want to find more city money to throw in the pot, critics say the city has too few safeguards on the money it is already offering. Greg LeRoy, who has worked since the 1980s as a labor consultant on deals like Morgan Hill's, and now runs Good Jobs First, voices concerns about how the city will hold Candescent to its offer to hire locally and contract with local business once the money changes hands. While Mayor Kennedy says he is sure Candescent will stick to its side of the deal, LeRoy has seen enough subsidy abuse to be suspicious.

"What kind of money-back-guarantee language does the city have to protect itself if the deal goes sour?" he asks.

If Candescent folds or only hires a few hundred people or pays lower wages or dumps more water into the sewer than they estimated, the city has no recourse.

Water World

WHILE DEBATE OVER the handout continues, proponents may find themselves stalled by something less glamorous than an ideological split. The sewage treatment plant at the south end of the county has more wastewater than it can get rid of, and the addition of 400,000 gallons a day from Candescent may simply be more than the plant can handle.

The plant in south Gilroy actually has more treatment capacity than it can use--the problem is disposal. After treating the sewage, the effluent is either pumped into percolation ponds scattered around the plant or further treated and used for irrigation.

But with the last few years of heavy rains, the ground has become saturated, and water is taking its time sinking back into the earth. With the ponds so slow, the plant is doing everything it can to divert the water to irrigation. But irrigation customers are disappearing as sprawl spreads throughout the town.

"We're hunting for people to give water to," says Al Slechta, the plant manager.

Many of the farms that irrigate with the recycled water are disappearing. One Morgan Hill cherry orchard that Slechta says used 110 million gallons a year has been plowed under for a housing development. And the new homes add to the sewage inflow.

Inside the treatment plant, Slechta points to a collage of pictures taped together on the wall. The eight or ten shots show a panoramic view of the plant at the peak of last winter's rain. Huge lakes of water surround the concrete buildings. "I was standing right there," Slechta says, pointing to a tiny dot on top of a building in the middle of a vast puddle. Last winter, the plant ran out of places to put its treated water. Twice it had to dump millions of gallons a day of treated water into Llagas Creek.

The South County Regional Water Authority, which oversees the plant, has applied for a permit to discharge water into the Pajaro River and was denied. That decision is on appeal.

Candescent's projected needs have had city officials scrambling all summer. At first the city looked into "deep well injection"--shooting millions of gallons of treated water back into the ground at high pressure. It then looked into building a pretreatment plant for Candescent. But the answer the city has settled on is more of a paper fix, and one that might get a little soggy.

Rather than look at new infrastructure to increase the plant's capacity, the city is trying to get the plant repermitted to handle a larger flow. If that bid is successful, the plant, on paper anyway, will be able to handle Candescent's dumped water. But a few more wet winters in a row could put the facility back where it was last year, dumping treated water into the creek and searching for vacant land to irrigate.

The plant is scheduled to expand its capacity to 11 million gallons a day by 2003, at which time accommodating Candescent or other high-tech manufacturers will not be a problem. But Cook, who sits on the water authority board, says that no one is quite sure where all the wastewater will go.

In the end it may be a very unusual problem for a California community to deal with--too much water--that puts the brakes on industrial development at the south end of the county. The answer to whether Morgan Hill will be known for flat screens or flat fields may not lie with small-town politicians, public sentiment or the need for money. It may instead be decided by sewage.

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From the October 1-7, 1998 issue of Metro.

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