By Nicole Friedman
New investments from Alphabet Inc.'s Google and from Apple Inc.
offer the first detailed look at how the big technology companies
are following through on their pledges to help ease the West
Coast's shortage of affordable housing.
Major tech corporations have invested hundreds of millions of
dollars in the past year to increase the supply of affordable
housing in their backyards, after years of criticism that the
booming tech sector was partly to blame for housing shortages in
Silicon Valley and Seattle.
Google said Thursday that it has deployed the first $115 million
of the $1 billion commitment it made last year to affordable
housing. Its investments so far have included $100 million in
low-cost funding for housing developers and an investment in a
modular-housing company, Factory_OS, to help it build a second
housing factory.
Mountain View, Calif.-based Google said it expects its
investments to create about 24,000 new units of affordable housing
by 2029.
Apple said last week that it has allocated the first $400
million of the $2.5 billion investment it made in 2019. In addition
to loans to affordable-housing developments, Apple has worked with
the California Housing Finance Agency to provide down-payment and
mortgage assistance for hundreds of first-time home buyers.
Many tech giants made multiyear housing-related commitments last
year. In addition to the pledges from Apple and Google, Microsoft
Corp. committed $500 million, and Facebook Inc. $1 billion.
Microsoft upped its pledge to $750 million in January.
The commitments came after years of rising housing costs in both
Silicon Valley and Seattle, as job growth outpaced new construction
and longtime residents were displaced. New jobs outpaced new
housing supply in all of the Bay Area's nine counties between 2011
and 2017, according to a March study by SPUR, a public-policy think
tank focused on Bay Area urban planning and land use.
"We're not going to solve the entire housing affordability
problem through philanthropic dollars from large tech companies,"
said Sarah Karlinsky, senior adviser at SPUR. State and local
policy changes are also needed, she said. "It's certainly great
that they're taking it seriously, but the amount of money that's
needed is going to be significant."
Rents in the Bay Area have started sliding in recent months,
though they remain high compared with most other parts of the
country. Some tech companies have laid off workers due to the
pandemic, and others have announced they will allow workers to work
remotely indefinitely, which could prompt some Bay Area residents
to move to lower-cost areas.
Still, the region's housing shortage is likely to persist for
years. The Bay Area is undersupplied by 699,000 housing units and
needs to build 2.2 million more by 2070, according to the SPUR
study.
One common approach for large tech companies has been investing
in low-cost loans to affordable-housing developers. While that
financing is helpful, there is more need for down-payment grants
for these projects to cover upfront costs, said Fernando Martí,
co-director of the Council of Community Housing Organizations, a
coalition of affordable-housing developers and advocates in San
Francisco.
"These big investments from the corporations are great," he
said, but added, "We'd like to see more of that be on the side of
deep equity investment" instead of loans.
For Apple, Google and Menlo Park, Calif.-based Facebook, part of
their commitments included the value of their own land where they
plan to build developments that would include housing. All three
companies said those projects were in the planning phases.
Some of Facebook's initiatives, including $25 million t o build
housing for teachers and other workers in San Mateo and Santa Clara
counties, have gone slower than expected due to the regulatory
approval process, said Menka Sethi, the company's director of
location strategy.
"We cannot approve the housing fast enough," she said.
Facebook's $250 million partnership with the California
government to develop state-owned land has also gone slower than
expected, she said, because the pandemic has reduced the
availability of construction loans.
"Major corporations stepped up big for housing when the governor
asked. Now those efforts are starting to bear fruit, even despite
the pandemic, " said Jesse Melgar, spokesman for California Gov.
Gavin Newsom.
Redmond, Wash.-based Microsoft said it has allocated $380
million of its $750 million pledge, largely through a line of
credit to the Washington State Housing Finance Commission to help
build new affordable housing. It has also made investments and
donations to build new housing in the Seattle area.
Microsoft said its total commitment would create or preserve
more than 6,600 housing units. When Microsoft introduced its
housing plans last year, it said the Seattle region had a shortage
of 305,000 affordable-housing units.
Amazon.com Inc., which is based in Seattle, has made a $100
million investment in housing by building and operating a homeless
shelter on its corporate campus for Mary's Place, a local
homeless-services organization. The shelter opened in March.
Amazon said it plans to do more partnerships with housing
organizations, either in Seattle or in other cities where it has a
large presence, such as Arlington, Va.
"We're not a company that just throws money at issues," said
John Schoettler, Amazon's vice president of global real estate and
facilities. "As we continue to grow in other locations and getting
to know those communities, we'll be looking at their specific
needs."
Write to Nicole Friedman at nicole.friedman@wsj.com
(END) Dow Jones Newswires
July 23, 2020 14:00 ET (18:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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