Google Commits $1 Billion To Housing -- WSJ
June 19 2019 - 03:02AM
Dow Jones News
By Nour Malas
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (June 19, 2019).
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, helping fuel 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.
Critics say these investments don't go far enough. "There is
clearly still more it needs to do, but it's a very welcome first
step towards fully addressing its impact on rent hikes, evictions
and overcrowding," said Jeffrey Buchanan, director of public policy
at Working Partnerships USA, a nonprofit focused on addressing
inequality.
According to a study the group commissioned, the city of San
Jose alone would need more than 17,650 new homes -- at least 5,200
of them affordable -- to offset rent increases expected from new
demand for housing as Google builds out in the city.
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 each 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.
Write to Nour Malas at nour.malas@wsj.com
(END) Dow Jones Newswires
June 19, 2019 02:47 ET (06:47 GMT)
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