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Booming Internet economy crushing local communities

Industry Standard

July 10, 2000
Web posted at: 10:26 a.m. EDT (1426 GMT)

(IDG) -- After three straight years of spectacular growth, America Online's three buildings in Fairfax County, Va., were so crammed with young workers that company officials worried about visits from the fire marshal. "We had people sitting out in hallways," remembers Faith Denault, AOL's vice president of facilities and business services. Denault scoured northern Virginia for space and soon settled on a 154-acre tract of land in rural Loudoun County to build its sprawling headquarters that now includes five "creative centers," hundreds of servers and more than 3,000 employees. AOL's move in 1996, as well as cheap land, tax breaks and the proximity to a new toll road and Dulles International Airport, was enough to trigger an explosion of growth in the county, from 124 high-tech firms to 294 today.

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"You have here now a density of people in the communications, dot-com or Internet space," says David Kunkel, PSINet's vice chairman. "It's a wonderful place to do business. This is one of the economic boom stories of the late 20th and early 21st centuries."

But the residents of Loudoun County are not so thrilled about the impact of the high-tech invasion. Endless traffic snarls the roads and a slew of new roadside strip malls and matching subdivisions is rapidly turning this charming and historic area into an overbuilt eyesore. "We're bringing people in at such a rate that we cannot absorb them," says Loudoun County Supervisor James Burton. "A thousand people a month are moving in, and one-third are children. We're building two or three classrooms a week, and our debt is piling up like crazy."

The spectacular technology boom is creating similar growth problems nationwide. In Manhattan, the price of real estate has surged so high due in large part to the demand generated by the dot-com explosion that 50-year-old sewing factories are being forced out of their homes in the historic Garment District.

The pace of change and evictions is even swifter in San Francisco. Internet companies are spilling out of their first homes in the South of Market area and setting up shop in other neighborhoods. The result has been huge rent increases for commercial space and housing and the large-scale displacement of small businesses and low-income residents.

Addressing these growth issues is not high on the agenda of many Internet firms. But perhaps it should be, considering the growing backlash against dot-coms in at least a few places. In San Francisco, residents in one neighborhood have protested in the streets targeting Net companies as the enemy. "It's time to declare war on the dot-coms," wrote Juan Gonzales, editor of El Tecolote, a neighborhood newspaper. "With each passing week, the dot-com invasion of our community is escalating by leaps and bounds." And in Loudoun County, a grassroots group called Voters to Stop Sprawl led a campaign that radically changed the composition of the board of supervisors, electing a new crop of "smart growth" politicians.

Some firms like, whose occupancy of offices in a San Francisco building led to the eviction of nonprofit groups, are trying to sooth neighborhood tensions in the form of internship programs and philanthropy. But to date, government officials and business leaders have not spent a lot of time thinking about how best to integrate the booming Internet Economy into local communities. Governments have been more concerned with attracting companies with tax breaks, zoning exemptions and other favors. And companies have focused on finding the best deal in places where they can attract employees, leaving the growth problems to the planners and politicians.

But that may be changing as Internet firms realize that they, too, are victims of sprawl. Recruitment becomes more difficult and employees have a harder time getting to work, among other problems. Already, traffic congestion in Loudoun County has prompted Internet firms to push for more highway construction so employees can get to work on time. And AOL's Denault sits on the Dulles area transportation authority board, which is wrestling with how to ease the traffic problem and whether to push for a rail link to the Dulles Airport.

"The county let sprawl happen, and now they are paying the price for it," says AOL's Denault. "The slow-growthers on the new board of supervisors are concerned about the need for infrastructure for all this new growth in the county. We feel we are contributing significantly," she adds, by building roads, contributing to fire safety and participating in the political process.

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