Home FinanceEconomy Facebook Pledges $1 Billion to Ease Housing Crisis Inflamed by Big Tech

Facebook Pledges $1 Billion to Ease Housing Crisis Inflamed by Big Tech

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SAN FRANCISCO — The technology industry’s biggest companies show no signs of leaving the places they call home. But to stay there, they’re deciding that they need to play a role in fixing a housing crisis they helped inflame.

Facebook said on Tuesday that it would give $1 billion in a package of grants, loans and land toward easing California’s severe crunch by building an estimated 20,000 housing units for middle- and lower-income households.

The move is the latest in a series of efforts by technology companies to put their vast financial resources toward addressing the dire housing affordability problems that have afflicted tech centers around the country. In June, Google pledged $1 billion for a similar effort in California, while Microsoft pledged $500 million toward affordable housing in Seattle in January.

The steep cost of housing in California, which politicians colloquially refer to as “the housing crisis,” clouds nearly all aspects of life across the state. Despite having some of the highest wages in the nation, California has the highest state poverty rate once the cost of housing is figured in. Three-hour commutes are expanding, there are stories of police officers sleeping in their cars, and a growing homelessness problem has made the sight of sidewalk tents commonplace.

[Read more about the rise of homelessness in California, and the backlash.]

Taken together, the investments by Facebook and other companies show the degree to which large employers in the Bay Area and other tech centers are having to aid in the basic governance of their regions if they plan to keep expanding — which they absolutely do. Facebook and Google have continued to add employees and office space at a rapid clip, expanding north from Silicon Valley to become some of the largest tenants in San Francisco.

Growing in the Bay Area increasingly means not just figuring out where your top-paid employees live and how they get to work, but also helping other employees do the same. Long before they got involved in affordable housing, Google and Facebook hatched plans to build housing around their campuses. Each weekday morning, an estimated 1,600 private buses — bigger than many municipal public transportation systems — fan across the Bay Area to ferry tech workers to their offices.

“Our cities and local leaders are facing dilemmas that are hard to solve,” said Mila Zelkha, founder of Manzanita Works, a nonprofit that has worked to build housing for teachers by bridging the public and private sectors. “Gifts like this from industry can help fund opportunities so that the fabric of our communities is held together.”

Still, while housing advocates generally applaud the efforts by Facebook and other companies, beneath the large numbers and press-release headlines are a whole bunch of details and fuzzy accounting that have yet to be worked out. For starters, these are not donations but investments on which the companies expect to make money, and substantial portions of them come in the form of land instead of cash.

The investments also give the companies an opportunity to deliver positive news as they face increased scrutiny for their power and influence. Mark Zuckerberg, Facebook’s chief executive, is scheduled to testify on Wednesday before federal lawmakers about its plan to create a cryptocurrency called Libra, as well as online privacy and discriminatory advertising on the site. Facebook has been accused of illegally allowing advertisers to target ads on the platform based on characteristics like race, religion and national origin. This year, the company said it would stop allowing advertisers in key categories to show their messages only to people of a certain race, sex or age group.

Facebook said in a statement that its money for housing would be used over the next decade. The package includes a $250 million partnership with the state for mixed-income housing on state land, $150 million for subsidized and supportive housing for homeless people in the Bay Area, $250 million worth of land near its headquarters in Menlo Park, $25 million for teacher housing in the Silicon Valley, and $350 million that the company said would be spent based on the effectiveness of the programs.

Numerous dull but important details — like the breakdown of equity and debt, how the loan terms will operate and how “low interest” they will really be — have yet to be worked out. Facebook said most of its efforts would focus on middle-income housing for people like teachers and public employees.

“If we are going to solve housing, we have to hit every income level,” Menka Sethi, director of location strategy for Facebook, said in an interview. “The market is not building this housing, and we are currently working with nonprofit developers to figure out what our capital needs to look like to make that happen.”

The mother of all local housing questions is when and how these plans, whatever their specifics, will be approved.

It is widely acknowledged that the root cause of California’s decades-long housing and homelessness problems is a widespread shortage of housing. And yet building lots of housing — in particular, housing accessible to middle- and lower-income residents — has proved difficult. A bill to vastly expand housing production stalled in the State Senate this year over the protests of suburban communities that argued that it would lead to more traffic and ruin their quality of life.

Construction costs have risen so high that building even no-frills subsidized units routinely costs $500,000, and often more in big cities. At that rate, building 20,000 homes could cost $10 billion.

Those kinds of numbers can make a mockery of any effort to solve the problem with money. Public officials and economists are blunt that it will take a decade or longer for their efforts to have any material impact. In the latest annual counts, the homeless populations of Los Angeles and several Bay Area cities increased significantly; Oakland’s grew close to 50 percent in just two years.

Exactly how much tech companies are responsible for the housing crunch, and how much money they could or should put toward housing, are matters of continuous debate. Last year, a contentious ballot initiative to fund homeless services in San Francisco split the local tech community. Marc Benioff, the chief executive of Salesforce, became the measure’s biggest backer, leading to a public feud with Jack Dorsey, the chief executive of Twitter and the payments company Square, who was against it.

The Democratic governor, Gavin Newsom, has called on technology companies to contribute more and asked big corporations to use their substantial cash hoards to aid state housing efforts through instruments like low-interest loans.

Facebook’s announcement on Tuesday was made jointly with Mr. Newsom, who said in a statement released by the company: “State government cannot solve housing affordability alone, we need others to join Facebook in stepping up — progress requires partnership with the private sector and philanthropy to change the status quo and address the cost crisis our state is facing.”

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