Tech companies commit funds for affordable housing: Is it enough? - Affordable Housing Online

Tech companies commit funds for affordable housing: Is it enough?

By on November 8th, 2019

Tagged As: Editorials

San Francisco skyline. Photo by Digon3 on commons.wikimedia.org: https://commons.wikimedia.org/wiki/File:San_Francisco_at_Sunset.jpg

This week Apple announced a commitment of $2.5 billion for affordable housing in California, surpassing a $1 billion announcement last week by Facebook. These pledges follow on the heels of large affordable housing commitments earlier in the year by Microsoft and Google. Many people, though, argue that these companies’ growth has played a major role in driving up housing costs in their home cities. They believe that these companies have an obligation to do more for affordable housing in their communities.

The success of technology giants like Apple, Google, Facebook, Microsoft and Amazon has had a devastating impact on housing costs in the cities where they are located. Silicon Valley, San Francisco, Los Angeles and Seattle are among the most expensive housing markets in the country. As these companies expanded, growing numbers of well-paid tech workers have put pressure on the local housing markets. 

Rising housing costs have pushed out low and moderate-income workers to less expensive suburbs with long commutes. Critical workers like teachers, police, and firefighters cannot afford to live in the communities they serve. Homelessness is on the rise in many of these cities, and the Trump administration has rejected local calls for more federal help.

Apple’s $2.5 billion commitment will target California’s affordable housing crisis. $1 billion of the funds will be given to an affordable housing investment fund. Another $1 billion will provide mortgage assistance for first-time homebuyers. In addition, the company will open up Apple-owned land for affordable housing development, valued at about $300 million. Finally, Apple will provide $200 million to a San Francisco housing fund and to support vulnerable populations like those who are homeless. Apple estimates it will take about two years for the funds to be fully used. Money made in the projects will be reinvested in more affordable housing developments over the next five years.

Last week, Facebook offered aid by committing $1 billion over ten years to address the affordable housing crisis in the Bay Area and other parts of the country. Facebook allocated $250 million for a partnership with the state of California to develop mixed-income housing on excess state land. $150 million is dedicated to the Bay Area Future Fund, which supports affordable housing development in the San Francisco Bay area. Facebook also donated $225 million in land for affordable housing developments in Menlo Park, where its headquarters are located. $25 million will support affordable housing for teachers and essential workers in San Mateo and Santa Clara counties. Finally, Facebook set aside $350 million in reserve funds to make additional commitments across the country. These commitments would support affordable housing efforts that “are deemed effective.”

Google made its own $1 billion affordable housing commitment last June. Google will re-purpose $750 million of its own land in the Bay Area for affordable housing. This will support development of at least 15,000 new homes. $250 million will go towards incentives for developers to build 5,000 more affordable housing units.

Microsoft led this string of affordable housing pledges when it committed $500 million in January. The commitment will support affordable housing development and address homelessness in the Seattle area. The funds will be distributed over the next three years. $225 million will provide low-cost loans to build new workforce housing in six cities around the Seattle area. $250 million will fund market-rate loans for low-income housing in King County. This housing will be affordable to households making 60% of the area median income. Microsoft will also provide $25 million in grants to tackle homelessness. These funds include $5 million for Home Base, an organization that provides legal aid for people facing eviction.

Congested Los Angeles street. Modified photo by peter boy12qq12 on commons.wikimedia.org: https://commons.wikimedia.org/wiki/File:City_West,_Los_Angeles,_CA,_USA_-_panoramio_(11).jpg

Large tech companies have not always supported affordable housing initiatives. Last year, the Seattle City Council adopted a tax on large employers. It would raise about $48 million per year to tackle homelessness and affordable housing. The measure would apply a $275 tax per employee for companies that had gross annual income of more than $20 million. This is called a “head tax,” and many large businesses opposed it.

Although Amazon originally supported the head tax, it reversed course. Before the City Council voted on the head tax, Amazon announced that it was halting construction on a new office tower in downtown Seattle. They said the company was considering subleasing space instead, implying they would leave Seattle if the head tax was approved. Amazon was also a contributor to a fierce business movement to repeal the tax. The City Council repealed the tax less than a month after its passage.

Something similar happened when Amazon selected New York City as one of two new headquarters locations. Residents of the Long Island City neighborhood chosen for the new headquarters were upset about the large tax breaks the company would receive. They were also concerned about local residents being displaced through higher rents and gentrification. Other issues included crowding on subways and in schools, and that a lot of the jobs created would be low-paying. Because of the local opposition, Amazon reversed its decision and settled on northern Virginia as its only new headquarters location.

These large companies should certainly be applauded for their recent commitments to affordable housing. But their growth has driven the affordable housing crisis in Western cities and other booming sectors around the country.

Companies who drive gentrification should be held accountable for what their growth does to the communities they move into. Some companies will do it voluntarily, but most will not. It is up to local governments to ensure these companies are paying for the costs their success brings to the communities where they are located. This includes special taxes and investments in affordable housing.

This is a tough problem because these companies have a disparate impact on voters vs. non-voters. Those being dislocated by gentrification tend not to vote, and therefore don’t have a say in policy. On the other hand, the people benefiting the most from these companies’ success do vote regularly and are making all the decisions.

Relying on voluntary action by tech companies won’t solve the problem. The affordable housing investments they are making now pale in comparison to the damage they’ve done to the communities where they work.