On the campaign trail, it's one of former eBay CEO Meg Whitman's favorite stories.
The Republican candidate for governor has told supporters around the state how it took the company "two and a half years" to break ground on a building in North San Jose for eBay subsidiary PayPal. She has used the story as an example of why California is such a terrible place to do business -- and why so many firms are fleeing.
A Mercury News review of documents at San Jose City Hall, however, clearly shows that the city processed eBay's development application in record time and that fulfilling all the city's requirements took just 11 months.
Much of the lag apparently was due to eBay's decision to build an environmentally friendly structure -- which was neither a state nor a city requirement.
San Jose officials say they scurried to make sure PayPal didn't decide to build elsewhere. And Whitman at the time effusively praised the city for speeding the process.
"The city of San Jose has always been extremely flexible in helping to anticipate and meet our rapidly changing needs," she said then.
A campaign spokesman said Thursday that Whitman stands by the story she tells on the stump.
"She was talking about the larger problem of businesses that encounter government regulations that make it more difficult to grow and create jobs," Darrel Ng said. "Employers like PayPal shouldn't be saddled with a three-year process and enormous expense to
But eBay chose to make the PayPal building "LEED-certified." The environmental certification, which is awarded by the nonprofit U.S. Green Building Council, can save companies thousands of dollars on their annual utility bills but adds additional hurdles.
Ng conceded that "officials in San Jose tried their best," but he blamed Sacramento for lacking "common sense."
Whitman's campaign said there's no doubt "certain provisions" of the 40-year-old California Environmental Quality Act were stifling the state's economic expansion. The law requires an impact report stating how a project might affect everything from traffic to wildlife.
For the PayPal project, that was done as part of the six months it took to secure changes to San Jose's general plan, a state-required blueprint for long-term development.
The city needed to amend its general plan because PayPal's building exceeded height limits. The amendment application was submitted on June 2, 2003, and approved by the City Council on Dec. 2, 2003.
"That's about as good as it gets for general plan amendments," said Mayor Chuck Reed, who at the time was a councilman representing the district where the building was constructed.
Once the general plan amendment was approved, it took eBay two years and four months to submit building permit applications. Officials say that's not an unusual amount of time for a company to develop detailed design plans.
All the permits were subsequently approved within five months of PayPal filing them, records show.
When Whitman began using the PayPal building as an example of government regulation run amok, San Jose officials quietly steamed. Sunnyvale officials were also miffed because in a Fox News interview in May 2009, Whitman inadvertently placed the PayPal building in that city, which prides itself on its pro-business image.
Sunnyvale Mayor Melinda Hamilton noted the slip-up "will live on the Internet forever."
The story behind the story began leaking out a few months ago, when political blogger Phil Trounstine called former San Jose Vice Mayor Dave Cortese and asked about Whitman's lament. Cortese, now a Santa Clara County supervisor, put in a public-records request and passed along the paperwork to Trounstine, who reported it this week on his website, Calbuzz.com.
Cortese -- a Democrat who supports Whitman's opponent, Jerry Brown -- told the Mercury News that, if anything, Whitman should have used the 200,000-square-foot PayPal building as an example of how a city can work with businesses to create jobs.
Whatever issues Whitman had with navigating regulations on the PayPal project, she didn't seem to blame them on San Jose at the time.
On March 11, 2008, she offered high praise during a visit to City Hall, where she accepted a city commendation for the contributions she and her company had made to the local economy.
Whitman called San Jose "a world-class place to grow and operate a business" and said, "It's been a tremendous partnership between the city and our company."