A picturesque California community full of Silicon Valley billionaires that was once called America’s richest city is on the brink of bankruptcy.
Portola Valley, about an hour’s drive south of San Francisco, is home to 4,500 people. Nestled on the eastern slopes of the Santa Cruz Mountains, the average cost of buying a home in the upscale enclave is a whopping $8.35 million per year. Redfin.
The small Bay Area community is known for its influential residents, including LinkedIn co-founder Reid Hoffman and recently retired Nike CEO John Donahoe. But it seems even billionaires can’t prevent the city from falling into the red.
Portola Valley’s cash reserves are quickly running out, due to the rising cost of a new sheriff’s contract that recently doubled to $2.1 million, coupled with Democratic state affordable housing requirements.
The housing rule forces the city to build 253 low-income housing units in exchange for receiving public money — despite little demand, according to wealthy locals.
The residents have hit back, spending more than $1 million on consultants and 150 hours of public meetings to come up with a blueprint for a deal that would satisfy both state lawmakers and the city.
Others have hired lawyers in an attempt to circumvent state laws through legal means.
“There are no neighborhoods where a billionaire wouldn’t be able to sue you,” Mayor Craig Hughes told the newspaper. Los Angeles Times.
A Northern California community full of Silicon Valley billionaires that was once called America’s richest city is on the verge of bankruptcy. (Photo: Portola Valley, CA)
Portola Valley, about an hour’s drive south of San Francisco, is home to 4,500 people. Nestled on the eastern slopes of the Santa Cruz Mountains, the average cost of buying a home in the upscale enclave is a whopping $8.35 million, per Redfin.
Portola Valley’s cash reserves are quickly running out, due to the rising cost of a new sheriff’s contract that recently doubled to $2.1 million, and California’s affordable housing regulations.
But locals are still at a standoff with the state. More than 70 percent of city employees have left their posts, while the last remaining employees are barely managing to “keep the lights on,” Hughes said.
Locals have recently raised concerns about their dwindling cash reserves, which despite being around $1.6 million, most of it has been set aside and earmarked for retirement benefits.
“The state just doesn’t understand it,” Councilwoman Rebecca Flynn told the LA Times. “They say, ‘Oh well, the billionaires live here, so they should be able to build all kinds of things.’
“Every project that comes to market causes the neighbors to complain about whatever people want to do on their private property,” she added. “They feel entitled.”
But church leader Mike Smith said there is some need for state-mandated low-cost units, even in Portola Valley.
“I just think some people need to get off their high horse and realize there are people in need,” he told the LA Times. “There won’t be an iota of change in the quality of life.”
Some even joked about asking some of the city’s wealthy residents, including LinkedIn’s Hoffman and Sun Microsystems co-founder Vinod Khosla, to donate. The couple have both campaigned for political causes in the past.
Portola Valley’s cash reserves are quickly running out and the city could soon go bankrupt
The city’s cash reserves are quickly running out due to rising costs, including a new sheriff’s contract, and the need for affordable housing in California. Pictured is the Portola Valley Library
Some even joked about asking some of the city’s wealthy residents, including venture capitalists Reid Hoffman, left, and Vinod Khosl, right, to donate
Despite the prosperity of Portola Valley residents, they, like many other small towns in the area, rely on the San Mateo County Sheriff’s Office for their policing.
In 2022, the sheriff’s union negotiated a more expensive labor contract, and the higher costs are now being passed on to local governments.
The city’s payments to the sheriff’s office have doubled in just three years from $1 million in 2021 to $2.1 million in 2024.
California housing rules were imposed by Governor Gavin Newsom in an effort to address the decades-long homelessness and housing affordability crisis.
According to the most recent verified data, about 181,000 Californians were homeless in 2023, while about 90,000 people were in unsheltered conditions.
According to Newsom’s office, the scarcity of available affordable housing in the state was a “key driver” behind these dismal numbers.
“Expanding the inventory of available housing is a critical part of the state’s strategy to address this challenge,” the governor’s office said.