Construction work observed in December 2020 at Light Tree Apartments in East Palo Alto, financed in part by Facebook's Catalyst Housing Fund, an earlier foray by the tech giant into affordable housing finance. The Light Tree Project by Eden Housing and EPACANDO rehabilitates 94 affordable housing units, and adds 91 new ones. (Courtesy of Facebook)
Facebook will focus $150 million to build 2,000 units of extremely low-income housing as part of the social media company's pledge in October 2019 to spend $1 billion on affordable housing in the San Francisco Bay Area. Facebook says this new Community Housing Fund would be the largest of its kind in California.
Facebook, Apple and Google have each invested hundreds of millions of dollars in the past year alone to finance the restoration and construction of affordable housing in the Bay Area, after pledging last year to spend billions.
Google was first to pledge $1 billion in June of 2019, and while Apple was the last of the three with an announcement in November of that year, it upped the ante significantly by pledging $2.5 billion. All three tech titans employ tens of thousands of employees, and tens of thousands more through subcontractors. The latter especially struggle to afford to live anywhere in the region, let alone in San Mateo or Santa Clara counties.
In a time when phrase "tech lash" was gaining currency in publications across the globe, the companies were also sensitive to growing criticism at home that the booming tech sector was responsible in large part for the housing crisis here.
Pledging Big Money Just the Beginning
Step one for all the tech titans has been to sit down with stakeholders in the Bay Area affordable housing world, including other financiers, local governments, community activists and organizations like Destination: Home, a public-private partnership fighting homelessness in Santa Clara County, which is contributing an additional $5 million to Facebook’s Community Housing Fund.
"The folks that have the expertise are the folks that have boots on the ground, right? Where is it where we can play a role? It takes partnerships," said Juan Salazar, director of local policy and community engagement at Facebook.
Destination: Home CEO Jennifer Loving says that, for her, the most exciting part of Facebook's latest housing announcement is the fact it's focused on extremely low-income individuals and families making less than 30% of a region's median income. For example, in the Bay Area, a family of four making under $45,000 a year or less would meet that threshold.
"It’s families who are minimum wage employed. It’s seniors on fixed income, individuals on disability. They might be paying 60, 70, 80, 90 percent of their income just on rent every single month, which puts them in a ridiculously precarious position of becoming homeless, and we’re seeing that now more than ever with the effects of COVID," Loving said.
She added that any entity trying to build affordable housing faces an uphill battle given the housing market in the Bay Area. Despite the exodus of locals fleeing high rents in recent years, the Bay Area is undersupplied by 699,000 housing units and needs to build 2.2 million more by 2070, according to a study published in March by the San Francisco Bay Area Planning and Urban Research Association (SPUR). And experts don't anticipate the current exodus of locals fleeing COVID-19 will budge those numbers much.
"The market will never create solutions for individuals and families with extremely low income. So the willingness [of tech firms] to use their positional power to say that this housing has to be for the most vulnerable people, that are disproportionately families of color that are really struggling in the Bay. That is the kind of leadership that frankly we need a lot more of," Loving said.
Facebook's Community Housing Fund will be managed by the Local Initiatives Support Corporation, the largest community development organization in the country.
"The size of the investment says that this is real. For these affordable housing developers that we work with, the more that one source of money can do more for their project, the faster they can get to construction," said Cindy Wu, executive director of LISC Bay Area.
One-third of the funding will be dedicated to Santa Clara County through Destination: Home, but projects from Alameda, Contra Costa, San Francisco and San Mateo counties are also eligible to apply. The $150 million is expected to fund at least six projects by 2026.
Even before Facebook joined its corporate colleagues in making a billion-dollar pledge, the company began to demonstrate a commitment to building local affordable housing with its Catalyst Housing Fund, launched in 2016. Facebook has also invested in local companies, like Factory_OS, which builds modular housing.
Apple, Google and Cisco Spending, Too
So far, Apple has allocated more than $500 million toward building affordable housing of the $2.5 billion it pledged to fight the housing crisis in 2019. Its portfolio of investments also includes homelessness prevention efforts and a partnership with the California Housing Finance Agency to provide down payment and mortgage assistance for hundreds of first-time home buyers.
“As communities face unprecedented challenges this year and many housing projects have been put on hold, we are proud to have been able to accelerate our work to bring more affordable housing options for people in need across California," wrote Kristina Raspe, Apple’s vice president for Global Real Estate and Facilities.
Google has spent $115 million of the $1 billion commitment it made last year, including $100 million in low-cost funding for housing developers and an investment in the aforementioned Factory_OS, to help it build a second factory.
"[Housing] is going to take things like policy reform and zoning regulations to change in order for us to really change this at scale," said Jacquelline Fuller, who leads Google's philanthropic arm, Google.org. "But in the meantime, we can ... help contribute to affordable housing financing."
Community housing activists say it's hard to find fault with the prospect of tens of thousands of affordable housing units coming online over the next 15 years or so.
But if there is a complaint, it’s that the tech companies are looking to get a return in the form of rents and tax credits. Geoff Morgan, president and CEO of the nonprofit affordable housing developer First Community Housing, would like to see the tech giants offer more outright grants than low-cost loans to affordable-housing developers.
"Don't get me wrong, I don't want to bite the hand that feeds me. There's some high-tech companies that, what they are doing is the reason why we're able to move forward on a lot of our projects. I just think [grants] would mean we could get deeper levels of affordability for the people that need it most — and we could build more housing units," Morgan said.
In contrast, Morgan praises another tech giant, San Jose-based networking hardware maker Cisco Systems, both because the company was one of the first to commit substantial resources to help solve the housing crisis, and because it's done so with direct donations.
"We worked with Cisco Systems to create Second Street Studios. That property is the very first 100% permanent supportive housing for the chronically homeless in San Jose," Morgan said. "Cisco really led the way and perhaps encouraged a lot of other high-tech companies by their actions to publicly donate even more funds."
Not that he isn't excited about the multifarious commitments from Apple, Facebook and Google rolling out this year. "You just can't ignore that. That's a phenomenal accomplishment for them to have the will to do it," he said.
But there's also a selfish reason that corporations might be interested in making these commitments, said Leslye Corsiglia, executive director of Silicon Valley at Home (SV@Home).
"Our communities are not places we want to live and where employees want to to locate if we don't have housing for everybody," Corsiglia said.
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