It’s official. The campaign arm of Silicon Valley’s chamber of commerce is no more.

“As a first step toward restoring its 130-year reputation, the Silicon Valley Organization voted to immediately dissolve the SVO PAC, subject to state and local campaign finance laws and reporting requirements,” SVO’s damage-control spokesflak Terry Downing announced less than a day before the general election.

“The SVO PAC will immediately cease all PAC operations.”

The decision culminates a week of fallout from a PAC-paid racist hit piece designed to undermine Jake Tonkel’s progressive challenge to SVO-favored incumbent Dev Davis in San Jose’s District 6 council race.

It’s a remarkable development for the fundraising powerhouse, which has long served as a political counterweight to South Bay Labor and whose PAC drums up hundreds of thousands of dollars per election to put business-friendly candidates in local office.

The photograph in the attack ad is what pushed the SVO into headlines—a monochromatic image of Black man, some holding sticks, in a fog of what might be smoke or tear gas—and precipitated a chain of events that led to CEO Matt Mahood’s ouster last week and the PAC’s dismantling days later.

But the controversy traces back to another campaign piece, which kindled a conversation that the image sparked into a very public uproar.

Fail Mail

Shiloh Ballard, head of the Silicon Valley Bicycle Coalition, said she hadn’t been paying much attention to the D6 race until she got the SVO-bought mailer.

The campaign piece sent to thousands of voters knocked “opportunity housing”—that is, fourplexes and denser multi-family developments that the city may pave the way for in its next general plan update—which Tonkel supports and Davis opposes for neighborhoods zoned for single-family homes.

It depicted brightly colored renderings of single-family homes between drab high-rises meant to represent so-called opportunity housing.

As someone who spent 14 years working on affordable housing policy and having just participated in a discussion about opportunity housing at San Jose’s General Plan Task Force, Ballard said she felt outraged by the ad’s racist and classist undertones.

“I got the mailer, got mad, drafted a letter and over 40 nonprofits signed on,” she said.

Ballard said she hadn’t even seen the black-and-white photo when she began to organize with the nonprofit and faith community around the housing mailer. Greg Kepferle, head of Catholic Charities of Santa Clara County, is credited as the one who first sounded the alarm about the incendiary image.

Kepferle said he read Ballard's concerns in the draft letter and, since his organization is a longtime SVO dues-payer, went on the business PAC’s website to find out who’s on the board, intending to send them his own letter as a member of the business group.

On the PAC’s landing page, was the now-infamous photograph.

“I cried,” Kepferle said. “I cried when I saw it because in all of my 31 years in social services … never have I seen such blatant racism from a business organization.”

The outcry didn’t happen in a vacuum.

Ballard and Kepferle had spent much of the past year collaborating with faith groups and nonprofits to talk about how to place equity at the heart of their work. Sacred Heart CEO Poncho Geuvara had been hosting regular meetings since the start of the pandemic about how to help the people most impacted by Silicon Valley’s economic divide. Rev. Ray Montgomery, who leads the interfaith nonprofit PACT, spent the better part of 2020 collaborating with religious groups about how to address the same issues.

“That’s why this came together so quickly,” Montgomery told San Jose Inside Tuesday. “We’ve been doing this work the whole time.”

In a joint statement signed by dozens of fellow service-organization leaders, Kepferle called for the resignation of SVO leaders.

“This wasn’t about the [D6] race,” he said. “It was about a civic organization using their lobbying arm to spread racial hatred and having a systemic pattern of this over the years. So, our position as [community-based organizations] that were part of the SVO was that it needs to shut down its PAC entirely—not just suspend it, but to dissolve it.”

Reform won’t cut it, Rev. Montgomery said.

“What we need is a reckoning,” he explained. “A reckoning doesn’t end with pointing fingers, assigning blame or getting rid of a few individuals. It starts with listening to the people who are impacted and involves a complete and systemic reimagining.”

The fallout so far, he added, has erred more toward reform than reckoning.

That’s more than an abstraction, according to Destination: Home CEO Jennifer Loving: it’s a solution to the region’s material needs.

“Here’s the thing,” she said, “when business and political leaders use racist tropes to advance their causes they know they are tapping into painful legacies of policies, practices and systems that have deliberately caused inordinate amounts of suffering, persecution and a denial of justice and equity for Black and brown people. The injustices associated with this legacy are atrocious, and it will require extreme measures, including all of us demanding we have leaders in our community who are demonstrably committed to a valley that is equitable for everyone who lives here, for real change to occur.”

Fierce Fallout

On Oct. 28, the morning after the nonprofits expressed their disappointment in the campaign ads, the SVO board voted to put Mahood on leave.

SVO Vice President Madison Nguyen apologized profusely for the online ad, which the organization blamed on an unnamed “web administrator.” She promised that everyone at SVO would undergo cultural sensitivity training and that a third-party firm would investigate the matter to find out who was responsible for the controversial ad.

Over the ensuing days, the SVO saw an exodus of prominent board directors and dues-paying members. Google, Adobe, Cisco, Comcast PG&E, Kaiser Permanente, the San Francisco 49ers, San Jose Sharks and Earthquakes all left. As did San Jose State, Lockheed Martin, Texas Instruments, Sand Hill Property Co., Team San Jose, Core Companies, Pivotal Now, Good Samaritan Hospital, SPUR, Regional Medical Center and the California Apartment Association (CAA).

The CAA, whose name appeared on the housing mailer because of the size of its donation ($50,000) to the PAC, disavowed both ads.

“A campaign mailer the SVO PAC sent opposing a candidate for San Jose City Council District 6, which detailed the candidate’s stance on single-family zoning, does not represent CAA’s policy positions,” the organization declared in a news release published online last week. “In fact, it espouses a position that is opposite of CAA’s work on policies to encourage housing production.”

CAA Vice President for Public Affairs Anil Babbar became one of the first few to step down from the SVO board.

“We recognize the outrage caused by the actions of the SVO PAC,” the apartment lobby wrote in the same statement posted online after Babbar’s resignation. “These actions remind us that we have not overcome California’s tragic history on housing policy. That history included laws that prevented people of color from buying homes in this state. It’s taken legislation and decades of court decisions to remove racially restrictive covenants embedded in deeds. Even today, restrictive zoning by local governments limit the types of housing permissible in certain neighborhoods which prevents equal access to housing opportunities. We will keep working every day to change exclusionary housing policies.”

The denunciations continued with a press conference Friday in which the San Jose council’s five-member Latino caucus—comprising Sylvia Arenas, Raul Peralez, Sergio Jimenez, Maya Esparza and Magdalena Carrasco—brought up past instances of racist hit pieces targeting minority candidates.

Councilwoman Sylvia Arenas slammed the SVO PAC for a mailer in the primary election that showed an apparently darkened image of her next to a brighter photo of her challenger, Jim Zito. Her council colleague Sergio Jimenez mentioned a 2016 mailer that tried to cast him as an outlaw because of a public drunkenness arrest from decades prior (an arrest that, it should be mentioned, was made by SJPD, a police department with a documented history of discriminatory enforcement).

“I believe it was sent with a clear message,” Jimenez said. “Brown person. Crime. Bad. Don't vote for this person.”

On Monday came another press conference. This one was packed with scores of electeds and community leaders, including state Sen. Jim Beall and Assemblyman Ash Kalra, who spoke outside the SVO’s downtown San Jose office to pile on the condemnation.

SVO-aligned politicians echoed the calls for change.

Change Agents

Davis was among the first to speak out. In a Facebook post, she said she was ashamed of all the past support she ever received from the PAC. Lan Diep, the SVO-endorsed incumbent who’s defending his D4 seat against South Bay Labor-backed David Cohen, expressed a similar sentiment.

“The SVO PAC was wrong to use this photo in a political ad against Jake Tonkel,” he wrote in a statement on his campaign website. “The ad misconstrued Mr. Tonkel’s platform and maliciously appealed to voters’ basest of instincts. I’m glad the SVO PAC took down the racist ad and is taking steps towards structural changes to ensure such appalling incidents do not happen again. Campaigns should be about vision, experience, and records. Tactics that stoke racial tensions have no place in our politics.”

Mayor Sam Liccardo, who has enjoyed considerable support from the PAC, agreed that the SVO needs to do more than just hire a new CEO.

“The organization obviously needs to reckon for this action—involving the use of a photo with racist overtones—and for past conduct on other recent campaigns,” he told San Jose Inside. “I do not endorse the prevailing narrative that this is all Matt Mahood’s doing, however. I called Matt … as soon as I learned about the photo, and he told me he had also just learned about the photo, that he was livid over it, and that he had already ordered it be taken off the site, and that he would publicly apologize immediately. I understand well the obligation of leadership to take the fall for the failings of the organization, and Matt has done so. I look forward to seeing cultural changes emerge as a result of whatever is learned from the investigator’s report.”

Matt Mahan, another SVO-funded candidate who won the D10 council seat in the primary, called the controversial ad appalling for stoking fear by tapping into long-running racial stereotypes.

“There's no place for racism in our political discourse,” he said. “A chamber of commerce like the SVO ought to be focused on building a more inclusive economy because it's the right thing to do, and also because it's the economically smart thing to do. It's beyond time to invest in our Black and Latino communities. I hope the reckoning we're witnessing this week, in addition to calling much-needed attention to racism in our community, opens up a broader conversation about expanding opportunity and access in our city. San Jose must be a city for all.”

A letter issued on the eve of Election Day and signed by more than 100 local faith-based organizations, calls for much the same thing. “The recent incident of the racist image is neither an isolated event nor something that can be blamed on a single individual,” it began. “The use of this racist image reflects our divided nation and the persistent denial of the needs, welfare, and security of communities of color, causing generations of harm and suffering. As a community, we have not fully faced that history nor engaged in a process of truth telling and reconciliation with the goal of healing from our racist past and racist present. This is the work that we must do now as we commit ourselves and this valley to an anti-racist future.”

The letter included demands for “people in power” at the SVO, CAA and the Santa Clara County Association of Realtors to:

• Push back against the scapegoating of racial and religious communities in this time of fear and insecurity
• Prioritize human needs over corporate budgets and ensure that the economic impact of the pandemic was not unfairly borne by certain segments of society
• Support those who are building below-market-rate housing in their neighborhoods
• Accelerate the implementation of existing plans that will create high-density housing near transportation hubs
• Build on the recent no-eviction resolution to offer long-lasting help for those without income security
• Extend further unemployment and family-leave benefits to guarantee that families can make it through this crisis.

“In this moral response, we recognized that when this crisis has passed, we, the religious community, will be judged alongside all community leaders for the reach of our compassion and the impact of our response,” the letter goes on to state.

As the community continues to react, the SVO’s investigation into the ad is already underway. According to the group’s spokeswoman, the results of the probe will be unveiled on Nov. 10—a week from today and two from the start of this ordeal.

The next evening, the American Leadership Forum, PACT, NAACP and the city of San Jose will host an online town hall to talk about race. The letter from faith groups ends with an invitation for the SVO, CAA and Association of Realtors to attend, and to invite their respective members to join the discussion, too.