Microsoft’s promise to pony up $500 million for Seattle-area housing has Silicon Valley buzzing, full of hope that tech titans here will pour similar sums into fighting the housing shortage in their own back yards.
The Redmond-based company pledged $225 million Wednesday evening for middle-income housing, $250 million for low-income housing and $25 million for homelessness solutions — the software giant’s answer to its hometown’s rising prices and jobs-housing imbalance. It’s a drool-worthy amount to Bay Area housing advocates, who for years have been urging local cash-flush tech companies to set aside more funds to build and preserve affordable and work-force housing.
“I’m hoping this exciting news is one more prompt for employers, individuals and foundations of all types to step forward,” said Carl Guardino, president and CEO of business-backed public policy and advocacy organization the Silicon Valley Leadership Group.
As pressure mounts, with residents blaming the Bay Area housing shortage on companies flooding the region with jobs without consideration for where those workers will live, a handful of local companies have stepped up to help.
Healthcare giant Kaiser Permanente on Tuesday said it will spend $5.2 million to buy an affordable apartment building in Oakland part of the company’s ongoing $200 million effort to tackle homelessness. In November, Cisco, LinkedIn and Pure Storage collectively pledged $20 million to build affordable homes in the Bay Area. Cisco had previously contributed $50 million to fight homelessness. Facebook has raised nearly $20 million for affordable housing through its Catalyst Fund. And both Facebook and Google’s plans to expand their Silicon Valley campuses include housing.
This month, local politicians have been ramping up the pressure for companies to do more. Gov. Gavin Newsom last week called on Silicon Valley corporations to “step up” and contribute to fighting the housing shortage, and said he’s already in talks to make that happen. San Jose Mayor Sam Liccardo on Tuesday expressed a similar sentiment, and hinted at similar plans in the works.
Money from private companies can play a crucial role in getting affordable housing off the ground, said Alex Sanchez, executive vice president of ROEM Development Corporation, which builds affordable and market rate projects throughout the Bay Area and the rest of California.
ROEM successfully partnered with Google to build affordable housing in Mountain View, and the company is in talks with other companies about funding additional projects, Sanchez said.
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It costs about $500,000 to build one unit of affordable housing in the South Bay, Sanchez said, meaning Microsoft’s money could fund only about 1,000 local homes. But when leveraged with tax credits and money from state and local governments, those funds could perhaps build three times that number, he said. And that’s when corporate money is the most useful, Sanchez said — when it’s combined with public funds, spread out over multiple projects and given with flexibility, so developers are free to use it to acquire land, offset construction costs, or anything else.
“There is a massive need,” he said, “and they have to be a piece of the puzzle.