More info: I downgraded to from gcloud sdk version 276 to 274.0.1, and it resolves the issue. Here is the command:
```
Jacobs-MacBook-Pro:~ jacob$ gcloud components update --version 274.0.1
Your current Cloud SDK version is: 276.0.0
You will be upgraded to version: 274.0.1
┌─────────────────────────────────────────────────────────┐
│ These components will be updated. │
├─────────────────────────────────┬────────────┬──────────┤
│ Name │ Version │ Size │
├─────────────────────────────────┼────────────┼──────────┤
│ BigQuery Command Line Tool │ 2.0.51 │ < 1 MiB │
│ Cloud SDK Core Libraries │ 2019.12.27 │ 12.7 MiB │
│ Cloud Storage Command Line Tool │ 4.46 │ 3.6 MiB │
│ gcloud app Python Extensions │ 1.9.87 │ 6.0 MiB │
│ gcloud cli dependencies │ 2019.12.17 │ 3.3 MiB │
│ kubectl │ 1.13.11 │ 50.8 MiB │
└─────────────────────────────────┴────────────┴──────────┘
```
That downgrade changes "gcloud app Python Extensions" (i.e., App Engine SDK) from version 1.9.88 to 1.9.87. So it looks like something changed in version 1.9.88 to break the development application server.
No word yet from Google Support. It's a P2 issue, so hopefully today I'll hear something. Anyone else seeing this?