Future code: How will a tech boom change the city?

Photo: Skyclad Aerial Photo: Skyclad Aerial

By Sydney Halleman

It’s 10am on the Downtown Mall, and already the sounds of demolition flood the area. Pedestrians stream past Mudhouse Coffee and The Whiskey Jar, and a few glance at the tall fence erected recently across the walkway, and the signs that read, “Do not trespass. Construction site.” Machinery looms over the area and a loud boom echoes across the mall, making a few restaurant patrons jump in their seats. If you look closely, through a crack between the fence posts, you’ll see a giant dirt pit, 10 feet away from the bustling crowd of people, on a plot of land that used to hold the downtown ice rink.

The construction is literally remaking the west end of the Downtown Mall, displacing not only the ice rink (a new one is being built up Route 29 North), but also adjacent small businesses like The Ante Room, a beloved music venue, and Escafé, a longtime center of the local LGBTQ scene. What will rise in their place is the Center of Developing Entrepreneurs, a 167,000-square-foot office building dreamed up by millionaire hedge fund manager Jaffray Woodriff, that aims to be ”the nexus of entrepreneurial activity in central Virginia,” according to the building’s website.

The multi-million dollar project, which will include a green roof, podcast recording space, electric car charging, and ample bike parking, will bring a decidedly new look (and more than 600 tech workers) to the low-rise, red brick pedestrian mall. And it’s a not-so-subtle metaphor for the way a rising tech boom may reshape Charlottesville—for better or worse.

The CODE building, which will include a green roof, podcast recording space, electric car charging, and ample bike parking, will bring a decidedly new look (and more than 600 tech workers) to the Downtown Mall. (Rendering courtesy developer).

Tech businesses have flourished in Charlottesville since at least 2008, when companies like WillowTree, the mobile app development start-up, and ChartIQ, a “fintech” start-up that provides software solutions to financial institutions, were founded. An extensive network of “angel investors” and various initiatives at UVA aimed at nurturing entrepreneurship have helped other local start-ups get off the ground.

In recent years, however, what began as a gradual shift has gained momentum. In 2016, the National Venture Capital Association named Charlottesville the fastest-growing venture capital ecosystem in the United States. That same year, UVA launched its Seed Fund, a $10 million investment in UVA-based tech ventures. Start-ups, especially in biotech, have proliferated. WillowTree is reportedly one of the fastest-growing digital companies in the nation, and is expanding into a new, 85,000-square-foot headquarters currently being built at the site of the old Woolen Mills, just outside the city limits. (The company, for which former mayor and current City Council member Mike Signer serves as vice president and general counsel, did not reply to requests for comment.)

The city’s small-town vibe, pipeline of talent and resources from the university, and access to capital make it attractive to start-up businesses. “If you had a company, you’d bet that Charlottesville is the place to grow it,” says Paul Beyer, who founded the now-annual Tom Tom Festival in 2012 to celebrate and encourage innovation.

Woodriff (who declined to be interviewed for this story) is the latest tech leader who wants to see Charlottesville become a center for digital innovation. He’s offering a subsidized rate to start-up companies that rent space in the CODE building, and wants it to become a collision of creative minds. “You need to be able to get up from your desk and randomly bump into a wide variety of people who are bright and motivated,” Jaffray told Bloomberg’s Joe Nocera earlier this year. “Palo Alto has that. Bell Labs had that. And I’m trying to facilitate that in Charlottesville.”

In addition to CODE, Woodriff, a UVA alum, has given $120 million to establish a School of Data Science at his alma mater. He hopes that graduates will see the appeal of Charlottesville, and build their companies here. “I want people to come here and say, ‘I aspire to this,’ and not interviewing with Google,” he told Nocera.

Boosters say growing the tech industry will transform the economy, bringing in new jobs and revenue that could translate to better infrastructure and a higher quality of life.

But cities like Austin, Texas; Boulder, Colorado; and Palo Alto, California, all home to explosions in tech, tell a more complicated story. In those communities, tech has brought new jobs, new revenue, and new facilities, but it’s also come with increased traffic, gentrifying neighborhoods, and a loss of longtime residents and culture.  Austin, for example, repeatedly makes lists for the worst traffic in America and has massive shortages of affordable housing. These new tech cities, while bringing in wealthy residents and vibrant cultures, have struggled to provide the same opportunities for their working classes.

”I think in the last 10 years, it’s been a real struggle for Austin to keep its identity and keep its soul, as downtown is being razed and converted into condos and high-rises, and you have people like Google and Facebook and Apple taking over the town with these buildings,” Austin reporter Omar Gallaga told The New York Times. “If you have all the artists and the creative people that make it interesting move away because they can’t afford to live there, then it becomes a different place.”

 

Jeyon Falsini’s Ante Room provided a space for little-booked music genres like hip-hop, metal, and garage rock. Photo: Eze Amos

Jeyon Falsini, former owner of alternative music venue The Ante Room, is sitting at The Southern Café & Music Hall on a Tuesday morning. He leans back in his creaking bar chair, running a hand through his floppy hair. “This town has a way of making the news a lot,” he says, tapping the counter. “Charlottesville on the outside is all sunshine, sandals, and daydreams, but on the inside it’s as red in tooth and claw as the Amazon itself.” He laughs. “It’s cutthroat.”

Falsini has experienced the downside of the tech boom first-hand. As owner of The Ante Room for almost six years, he oversaw the most diverse range of music bookings in Charlottesville’s modern history. The venue was known for up-and-coming artists as well as genres—metal, garage rock, and hip-hop—that weren’t catered to at other area venues. Falsini likened the wide variety of artists to his own passion for music. “If you’re open-minded enough,” he says, “You can work with any genre of music.”

The dark, low-ceilinged space, with its trademark bathroom doors painted to resemble playing cards, quickly became a favorite community hang out. Since The Ante Room closed its doors in 2018 for the CODE building’s construction, music fans have felt the loss.

The demolition of Escafé, the similarly beloved restaurant/bar next door, has also hit hard. “The obvious thing Escafé added to Charlottesville was an openly gay bar, though that liberality spread to include a range of people who felt more at home there than anywhere else,” says songwriter Brady Earnhart, who hosted a monthly showcase and open mic there, and talked to C-VILLE shortly before the bar closed for good. “It was a broadly and effortlessly diverse crowd.” Owner Todd Howard said he’d initially hoped to move Escafé to a new location, but couldn’t find the right spot.   

Falsini, who is now the assistant manager at the Southern, says he, too, has been unable to find a new space for a sequel to The Ante Room. “How am I going to stop it?” he says, referring to the influx of tech companies. “I’m just trying to swim above water. You can’t stop them, they’re already here.”

The closing of these two venues is one example of the kind of culture shift that can accompany the arrival of a tech boom in a small city like Charlottesville. At only 10.5 square miles, we have a fundamentally limited infrastructure, with many businesses fighting for a coveted spot on the historic Downtown Mall. The price of commercial real estate has been rapidly increasing over the last few years, and developers have expressed concerns over inventory shortages in the city. This won’t stop when the tech industry moves in—rather, it’s likely to get worse, says housing advocate and Democratic City Council candidate Michael Payne.

“If the tech industry moves in and you see land speculation, and rents and land prices start to skyrocket, soon you can’t afford your rent,” says Payne, talking about commercial real estate on the Downtown Mall. “Then you’re going to have a business that can afford [it], which is oftentimes an expensive chain, or a business owned by a wealthy entrepreneur. It’s a risk to our small businesses, too. It’s not just an affordable housing thing, it’s a small business thing.”

And it’s more than a physical space or cost issue. Wealthy individuals want businesses and buildings that cater to their interests, and that can change the culture of a neighborhood. “Think about restaurants like Mel’s or Riverside,” Payne says. “You know, these are staples of the local community that had been here for decades, that people love, but I can perfectly envision people in the tech industry moving here, and being like, ‘What is this? We want something where we can get an $8 coffee.’”

In a contentious thread on Twitter last August, some locals complained about a new luxury apartment building, Six Hundred West Main, whose “neighborhood guide” for future residents included gourmet food store Feast! and the cycling studio Purvelo, but left out local black-owned businesses, including Mel’s. “That map is basically the cheat code for gentrification 2.0,” wrote Niya Bates, director of African American history at Monticello.

 

“The danger is that Charlottesville itself just sort of becomes this playground for rich people working in the tech industry,” says City Council candidate Michael Payne. Photo: Eze Amos.

Charlottesville is bracing for a population boom. By 2040, the area is projected to add an additional 6,000 people in the city and 33,500 in the county, according to the Weldon Cooper Center for Public Service, bringing our total population to more than 196,000. That poses a challenge for housing and other infrastructure, like transportation.

At the same time, the city is also grappling with an affordable housing crisis that’s been building for years. Since 2011, rents in Charlottesville have risen from an average of $931 per month for a two-bedroom apartment to $1,325 per month. In August, The Daily Progress reported that of 895 full-time city employees, 338 cannot afford a one-bedroom apartment without being cost-burdened.

A number of luxury housing developments, like C&O Row, 550 Water, and Six Hundred West Main, have sprung up near downtown, as the city grows increasingly wealthier. According to the Orange Dot Report released last year, the number of Charlottesville families earning more than $150,000 jumped by 96 percent between 2011 and 2018.

An influx of highly-paid tech workers could exacerbate the problem. “Wealthy people and people graduating from college in the tech industry, they will want to live on a Charlottesville property. They will want to live as close to the Downtown Mall as possible,” says Payne. “The danger is that Charlottesville itself just sort of becomes this playground for rich people working in the tech industry.”

That could push middle-class and low-income residents into surrounding counties to find housing. It’s a phenomenon that’s happened in cities like Austin, where the majority of the city’s working class has been priced out to the edges of the city.

In Charlottesville, says Payne, “This is already happening, where there’s a lot of people living in Buckingham and Greene and Nelson, who commute into the city because nothing else is affordable.”

Elaine Poon has noticed this housing change intimately. The managing attorney for the Legal Aid Justice Center, she says that residents, especially in traditionally black neighborhoods, have been noticing changes for the past 10-15 years. “There is an uproar, but it’s coming from a historically silenced community,” she says.

“Provision of affordable housing and protection for existing housing most of all, if it’s affordable, is the most powerful weapon against gentrification,” she says. “But it can take a long time and we’re so behind the curve already. It’s going to be really hard”

 

UVA alum Jaffray Woodriff wants to help make Charlottesville an innovation hub. Photo: Eze Amos

With all the fears that an impending tech boom comes with, there’s no denying some of the obvious benefits: New, well-paying jobs and a healthy boost to the economy would bring revenue to the city and could improve residents’ quality of life across the board. WillowTree alone is expected to generate 1,412 area jobs between 2019 and 2025, according to a study by the Weldon Cooper Center for Public Service, and spur $70.5 million of value-added economic activity for the Charlottesville metro area in 2019.

Julia Farill, director of human resources and brand strategy at the data science company CCRi, points out that growth involves jobs beyond those in tech itself. “As a tech company grows, it doesn’t necessarily mean you’re hiring all really wealthy people…you’re opening up positions that are providing jobs not just for external tech-type people but also other people in the community,” she says.

Charlottesville Vice Mayor Heather Hill believes that developing and hiring local talent for these industries could also curtail some fears. She stresses education, like an emphasis on STEM in public schools, and programs at CATEC and Piedmont Virginia Community College that train community members for tech jobs. “We need our local job-seekers to be able to earn their ways to these jobs to afford to live here,” Hill says. “I don’t think we’re valuing our local resources enough.”

Hill says growth, if properly managed, could be good for the city. “I see that there could be a lot of benefits about this. There’s an opportunity for this type of growth to be a big success if we work together.”

In addition, she points to groups like Smart Cville, a newly formed nonprofit that seeks to use technology to improve local communities. In 2016, Smart Cville launched Civic Innovation Day, an annual event focused on gathering community members to brainstorm how technology can improve Charlottesville and address its current challenges. And just last month, the organization opened its Center for Civic Innovation, a space on Fourth Street that focuses on bringing people together to focus on common community problems, like transportation development and localized flooding.

“We need to be open to the fact that the community will change,” says Tom Tom founder Paul Beyer. Photo: Ryan Jones

The growth of the tech industry remains a polarizing topic, especially in Charlottesville. “Cities are really complicated,” says Tom Tom’s Beyer on a recent afternoon in his downtown office. “You have legacies of discrimination, lack of affordable housing, and criminal injustices. Those are the cities that we live in as Americans.”

Tom Tom’s offices are located in the Pink Warehouse, a local landmark on Water Street that has been home to dozens of artists over the years (Dave Matthews Band famously played its first official gig on the rooftop there in 1991). Posters of Tom Tom festival events line the walls of his office.

Beyer was born and raised in Charlottesville, and he recognizes the problems of growth in a city that has a history of displacing its African American residents. But he sees the construction of new buildings and commercial real estate as a benefit for a city that needs to expand, and argues that tech companies will bring the revenue and means to make it happen. He and others seeking to make the city an innovation hub also believe that the influx of tech companies could improve upon the city’s existing culture. “We need to be open to the fact that the community will change,” he says. “Creativity, architecture, and the population could flourish with growth.”

Chip Ransler, the executive director of HackCville, also sees the CODE building and new companies moving into Charlottesville as an opportunity for the city to change. If you love the city that you live in, he says, you’re going to want it to evolve. “It’s a transformative gift.” Ransler says. ”We like this area, there’s good and bad, it’s a great place to be. Anybody who is somewhat invested in this town is going to want to see this town fleshed out.”

But what that looks like on the ground, and how welcome it is, depends a lot on who you talk to. It could mean upheaval for residents of neighborhoods like 10th and Page, Starr Hill, Fifeville, Belmont, and Woolen Mills, all of which are within walking distance of either the CODE building or the new WillowTree headquarters, and have seen the effects of rapid gentrification over the past 15 years.

In historically black neighborhoods in particular, “If you walk around some of these neighborhoods, a lot of them do not look the same way that they looked three to five years ago,” says Legal Aid’s Poon.

Walking around 10th and Page, it’s clear that black residents are being forced out of one of the city’s largest continuous African American neighborhoods. More affluent white families have been tearing down houses and adding expensive additions, driving up property values (and taxes) and driving residents out. The community feels in flux—modest houses with lawn decorations and rocking chairs next to new, modern homes with fenced-in yards.

Advocates like Poon are not optimistic about the impact of an incoming tech population on these neighborhoods.

“When I ask the activists that I work with,” she says, “I think a lot of them think that it’s too late.”

Tech companies are not a monolith, and the potentially negative consequences of becoming an innovation hub are not inevitable. CCRi, which started out with just three employees in 1989, and now has 140, has tried to grow mindfully and sustainably, Farill says. The company was co-founded by her father, a longtime professor at UVA, and its leadership is committed to staying in the community.

But individual tech companies may not be thinking about the big picture impact of their industry on the city, she says. “The incentives of a company change, depending on what’s happening for that company.”

That may be where local government needs to step in, to protect whatever we don’t want to lose. As Farill puts it, “The doomsday scenario for having a lot of wealthy people only becomes that if you let it.”

   

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