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By Nour Malas
Alphabet Inc.'s Google said it would commit $1 billion to boost housing construction in the San Francisco Bay Area, the latest in a series of commitments by tech companies to address an affordability crisis in the region.
Google Chief Executive Sundar Pichai announced the moves Tuesday in a blog post in which he said the commitment will include the repurposing of $750 million of company-owned land from commercial to residential use on which an estimated 15,000 units will be built, across all income levels.
Google will also create a $250 million fund for loans and other types of financing. The funds will go to developers to help them preserve affordable housing and build new homes, including at least 5,000 new below-market-rate units, Mr. Pichai said.
"As we work to build a more helpful Google, we know our responsibility to help starts at home," the CEO wrote. The company will also give $50 million through its charitable arm, Google.org, to nonprofits working to address homelessness and displacement, he said.
The world's biggest technology companies are facing pressure to turn their attention to their hometowns on the West Coast where a tech-driven jobs boom has strained a housing market already short on supply. Rising rents around tech hubs from Seattle to Silicon Valley have pushed out low-to-middle-income workers from once-affordable neighborhoods, fueling poverty, inequality and widespread homelessness.
Cities and states struggling to stem these issues have increasingly turned to the tech industry for help. In California, Gov. Gavin Newsom, who praised Google's announcement in a statement, has specifically called on Silicon Valley to invest in helping address the state's housing shortage, which he estimates at 3.5 million homes.
Google's new housing play comes at a time when the company is growing its footprint in the region. It is building a new campus in its hometown of Mountain View, Calif., which extracted a commitment from the company to build affordable housing as part of its expansion. Google is also in talks with San Jose for a potential new campus that would bring 20,000 employees to the city. Housing and displacement have been flashpoints for local communities there.
The industry at large has taken note: In January, a group of Bay Area companies and philanthropists including Facebook Inc. CEO Mark Zuckerberg raised $260 million to help build at least 8,000 homes in the region, part of what they envision as a $500 million fund for affordable housing. A separate fund seeded by LinkedIn, the Cisco Foundation and other tech philanthropists has raised $62 million.
In the Seattle area, Microsoft Corp. in January pledged $500 million to support affordable housing: $475 million for construction loans and $25 million in grants to address homelessness.
Microsoft and Amazon.com Inc. last week gave $5 million to a Seattle nonprofit that operates housing and support services for homeless people. Amazon also said it would put $3 million toward affordable-housing initiatives in Arlington, Va., the site of its planned new headquarters.
In Northern California, the Bay Area has led the nation in home prices for the past two decades, and new jobs continue to far outpace the addition of new homes. Proposed legislation aimed at making it easier to build more dense housing in California has stalled amid opposition, mostly from suburban homeowners resistant to new development.
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(END) Dow Jones Newswires
June 18, 2019 15:58 ET (19:58 GMT)
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