Apple’s announcement this month that it will drive $2.5 billion into affordable housing initiatives around the decidedly unaffordable Silicon Valley probably seemed like an easy, if pricey, public relations win. Neighboring Google and Facebook announced $1 billion commitments in June and October, respectively, and Microsoft kicked things off with a $500 million pledge in January.
Yet the company’s putative good deed drew a mixed response. Weighing in from the campaign trail, Senator Bernie Sanders lambasted the move.
“Apple is the latest tech industry tax evader that has portrayed its entry into the housing business as an act of philanthropic altruism,” Sanders, who is seeking the Democratic nomination for president, said in a statement. “We cannot rely on corporate tax evaders to solve California’s housing crisis.”
Like its peers, Apple’s housing pledge comes in the form of sub-market rate loans and land transfers it expects will turn a modest profit for the company. Whether the combined $5 billion in land and financing so far pledged by tech companies will actually address the core causes of the housing crises facing booming West Coast cities is an open question, however.
As Sanders noted, critics see corporate beneficence as a poor substitute for regulatory reforms or increased government spending on affordable housing. In recent years, taxes on companies like Apple and Amazon have been proposed to fund such programs — with vociferous opposition from the companies. Amazon is building a 63,000 square foot shelter with capacity for 275 people within its downtown Seattle campus, but ardently opposed a municipal “head tax” on employees to fund homelessness services.
“At the end of the day, these are some of the largest corporations in the United States, and they have a bottom line, which is to profit,” said Sam Lew, policy director for the San Francisco-based Coalition on Homelessness. “Oftentimes, what we think will end the homelessness and housing crisis is in direct conflict and tension with their bottom line.”
Representatives for Apple, Google, and Facebook did not respond to interview requests from Bitterroot.
Nearly one-third of Americans spend an outsized portion of their income on housing, and the affordability crisis is particularly acute in California. A 2016 McKinsey Global Institute report found half of Californians were paying more than 30 percent of their income for housing, and that essentially none of the state’s low-income residents can afford to live there. The state, McKinsey found, needs 3.5 million more housing units to meet demand.
Kelly Snider has been working in and observing Silicon Valley real estate since 1994. A developer and urban planner by training, Snider sees her community as a place inaccessible to middle-income newcomers. It is occupied by exceptionally rich property owners with no interest in seeing the astronomical values of their homes undermined by new construction.
“Two 35-year-olds with a kid — they can’t afford to be here,” said Snider, who teaches at San Jose State University and serves on the board of affordable housing advocacy organization SV@Home. “If you don’t have anyone living in your community except sick old people, sick impoverished homeless people, and uber-wealthy technocrats jetting around, then you don’t really have a community.”
The injection of money from Apple, Google, and Facebook will help launch housing developments currently stuck in the pipeline, said Amie Fishman, executive director of the Non-Profit Housing Association of Northern California. The billions, she said, are an indication that Apple and others are interested in “supporting the rippling community impacts” of their success. Fishman said the loans offered by Apple will help nonprofit affordable housing builders in Silicon Valley bridge the financial gap between a project’s inception and its completion, allowing developers to break ground more quickly. The challenge now, she said, is making sure those loans prioritize investments for the lowest-income, highest-need members of the community.
Some, however, say the real issue is political, not financial. Snider noted that there is “no shortage of capital in the system right now.” Institutional investors like pension funds interested in a modest, reliable return are eager to finance new construction. But homebuilding in West Coast cities — including those where tech firms have set up shop — has been slowed by permit caps, moratoriums on construction, zoning restrictions, and resident opposition. Fishman described a complicated dynamic in which residents support new affordable housing in general, but are reluctant, at best, to see new construction in their neighborhoods.
“I think … there’s a fear or lack of trust,” Fishman told Bitterroot by email. “I think the best way to combat resistance is to demonstrate what success looks like and show how we build the future that we want — one where all of our black, white, and brown neighbors have a place to live, and our region and state benefit from thriving, diverse, and equitable communities.”
For her part, Snider would like to see tech leaders help break the “stranglehold” municipalities have on development in Silicon Valley and elsewhere. They could do so, she said, by pressing state leaders to recast regulations currently empowering Silicon Valley homeowners, or by weighing in forcefully in city halls throughout the region.
Whether it comes from their pockets or government action, a fix to the housing crisis could greatly benefit Big Tech. Tensions surrounding rising rents and home prices in tech boomtowns have created an image problem for industry leaders reliant on their reputations to attract customers and talent.
“We want to create an environment where people have access to good-paying jobs, and producing more of them is seen as a positive and not a negative,” Facebook director of location strategy Menka Sethi told The New York Times in October. “Until we solve the housing crisis, I don’t think we are going to get back to that narrative.”
More concretely, lowering housing costs would allow Apple, Facebook, Microsoft and the rest to trim payroll spending, Snider said. McKinsey’s report said a household earning $140,000 a year is squeezed in San Francisco’s market, so cheaper housing would boost the value of Apple’s and Facebook’s salary expenditures.
Even so, Lew, who squared off against several large tech companies while managing the campaign for a homeless services tax in San Francisco, doesn’t expect to see these companies support tax hikes for affordable housing and rent control. “They’ll opt into it in ways that will benefit them,” she said.
But that won’t be enough to solve the problem — not by a long shot.
“Philanthropy isn’t the way we’re going to be ending homelessness and poverty,” Lew said.
