If they do that and it succeeds at all, here is what will quickly happen.
1. The area will be full of smart well paid people, and will be a place where those people want to live. House prices and rents will go up.
2. Since it was aimed at engineers, and prices are (now) expensive, it will tend to be occupied largely by engineers and other highly-paid people. Which, society being what it presently is, will lead to the same sort of sex ratio as you see in Silicon Valley.
End result: just one more SV-like area. And that's if it works, which it probably won't. (It's very easy to say that "companies should" develop an area with sunny weather and a balanced gender ratio and neighbours who are good at other stuff and willing to share their knowledge -- but not so easy to do it.)
Austin also has that potential I hear too and it's a sunny place. Texas also doesn't have state income tax.
I was trying to formulate an ideal living area, not just for engineers but for anyone who loves knowledge(think Quora).
I feel modern cities have so many problems, why not just start from scratch or from the ground up.
I think companies should do something really crazy. They should go and develop a new area which would eventually beat silicon valley. Where engineers can find very affordable rents, and very affordable modern deco houses. Where the weather is sunny, driving engineers who sit all day in offices to go outside and get some vitamin D. Where the gender ratio is balanced. Where your neighbors are good at other stuff and are willing to share there knowledge, like a real world quota.com.
A engineer, earning 120k from year 0 - 4, should very easily be able to save 250k and live comfortably in a 5 year timespan and not have to cut corners.
PG, there is a real problem here with silicon valley. I don't think the salaries are too low but I think the cost of living is too high.
If you truly want to be innovative and crazy, broaden your world beyond the web.