Google to invest $1B toward housing
20,000 homes could be built under company’s plan to ease Bay Area crisis
MOUNTAIN VIEW >> Google on Tuesday announced a stunning $1 billion commitment to ease the Bay Area’s housing crisis, pledging to add about 20,000 homes across the region. It is the largest single commitment from a tech company to fight the housing shortage that threatens to stall the economic engine of Silicon Valley, as even well-paid workers wrestle with escalating rents or finding a home
to buy.
“We look forward to working with Google to ensure today’s announcement manifests into housing that will benefit thousands of San Jose residents struggling under the burden of high rents,” San Jose Mayor Sam Liccardo said in a statement.
The initiative comes as Google faces enormous pressure to alleviate the impact of its rapid growth, particularly as it plans a transit- oriented mixeduse campus in downtown San Jose where 15,000 to 20,000 of its employees would work.
“I applaud Google’s leadership for stepping forward to build affordable homes for California’s working families,” Gov. Gavin Newsom stated in a Twitter post. “I hope today’s announcement inspires other companies — big and small — to make similar direct investments in housing affordability throughout our state.”
Other tech companies have made financial contributions to housing, but nothing on this scale.
In January, the Chan Zuckerberg Initiative, the
San Francisco Foundation, Facebook, Genentech and others announced a new $500 million fund to build or preserve more than 8,000 homes in five Bay Area counties over the next five to 10 years. Microsoft has committed $500 million to build affordable housing and tackle homelessness in the Seattle area, and Wells Fargo recently said it would spend $1 billion for affordable housing as part of a broader national philanthropic push.
But Google, in an unusual turn, said in a blog post it would spend $750 million to build housing on its own land.
Aimed at freeing up space for 15,000 homes, the process could take up to 10 years. Google would work with cities to rezone land that is mostly designated now for office or commercial uses. In 2018, 3,000 homes were built in the South Bay, Google noted.
While Google has not specified where the homes would be built, the company has already taken preliminary steps to create potential housing sites that would flank its future mega- campuses in downtown San Jose, northern Sunnyvale and north Mountain View. In all of these areas, Google has assembled
sufficient parcels that the company could provide stretches of land for homes within walking distance of its offices of tomorrow. In Mountain View, Google already is helping develop up to 8,000 homes near its Googleplex.
The tech titan also will create a $250 million investment fund that will enable developers to build at least 5,000 affordable housing units across the region, according to the blog post from Sundar Pichai, Google’s chief executive officer.
The announcement comes as groups like Working Partnerships USA, a laborbacked organization, have raised concerns that Google’s foray into San Jose could trigger gentrification and displacement.
“It’s encouraging to see Google taking the concerns of local communities seriously by recognizing some responsibility for its role in our region’s housing crisis,” Jeffrey Buchanan, the group’s director of public policy, said in a statement.
In a report published last week, Working Partnerships pressed Google to commit to helping build more than 17,000 homes in San Jose to help ensure tenants won’t be saddled with an estimated $235 million
in rent hikes by 2030, the approximate completion date for Google’s transit village near the Diridon train station.
“Today, more than 45,000 of our employees call the Bay Area home,” Pichai wrote. “Across the region, one issue stands out as particularly urgent and complex: housing.”
The tech titan’s quest is a remarkable effort, said Carl Guardino, president of the Silicon Valley Leadership Group, whose members include all of the region’s major tech employers.
“Google has clearly shown they are a company that believes in ‘ Yes in our backyard’ and will donate their own backyard to make it happen,” Guardino said.
In San Jose alone, Google’s deals could bring the Bay Area’s largest city 22,000 to 27,000 new tech jobs.
In addition to the neighborhood near the Diridon train station in the city’s downtown district, consisting of office buildings, homes, shops and restaurants, the search behemoth has plans in north San Jose. There, near the city’s airport, Google has leased four big office buildings where another 3,600 could work. And near San Jose’s Alviso district, the company has
bought five office buildings where 3,500 more could be employed. Google also has bought three giant industrial buildings near Alviso.
Google hasn’t specified what the mix of new construction and renovation will be, so it’s difficult to evaluate how many units of housing the $1 billion will actually fund.
Still, the announcement could help satisfy a commitment the company made to San Jose to include affordable housing in its development near Diridon station. But it doesn’t absolve Google of other commitments. For instance, if the city passes a commercial impact fee — a fee paid by companies to help fund affordable housing — Google would still be obliged to contribute to that fund.
And while San Jose’s planning department has resisted some attempts to rezone its shrinking supply of industrial land, Liccardo has also called for some 25,000 units of housing to be built in the city in the next several years.
“The housing crisis is the effect of the Bay Area being an economy that is the envy of the world,” said Jim Wunderman, president of the Bay Area Council. “It’s reasonable that we are seeing major institutions like Google stepping up to the next level to help.”
Google said that it hopes the first new homes can be quickly launched.
“In Mountain View, we’ve already worked with the city to change zoning in the North Bayshore area to free up land for housing, and we’re currently in productive conversations with Sunnyvale and San Jose,” Pichai stated.
How easily could this happen? San Jose’s mayor noted that some challenges could arise in connection with the shrinking number of available sites that are suitable for office, research or industrial development, especially in jobspoor communities such as his city. Liccardo said he’s had discussions about these situations with Google’s top real estate executives.
“We do need more resources and we also need smaller cities, particularly our suburbs, to step up in a big way,” Liccardo said. He added, “That means they have to have a willingness to build the housing within their city limits, and right now there are too few cities with a willingness to build the housing.”