Leslye Corsiglia, executive director of SV@Home, notes that Apple’s commitment of $2.5 billion toward California’s housing crisis can provide a subsidy amount of $125,000 per unit, she said, which could be leveraged into 20,000 units.
By Jody Meacham │ Silicon Valley Business Journal
Nov 4, 2019, 3:06pm PST Updated Nov 4, 2019, 5:14pm PST
“That’s a lot of money.” — That was Joint Venture Silicon Valley CEO Russell Hancock’s reaction when asked to put Apple’s commitment of $2.5 billion toward California’s housing crisis, which was announced Monday morning, into perspective.
It’s the most money committed by a private sector entity toward the crisis in a year that’s already seen $1 billion commitments each from Facebook and Google. So that’s $4.5 billion from the three largest tech players in the region.
As a follow-on to Cisco’s March 2018 announcement that it would spend $50 million toward addressing homelessness in Santa Clara County, which was among the earliest notable corporate commitments toward addressing the crisis, the billion-dollar pledges could have the same effect and encourage others to be participants.
“There’s been a few other $50 million announcements since that tipped the scales,” said Jennifer Loving of housing nonprofit Destination: Home. “I think we’re seeing these magnitudes scale, thankfully.”
But a “lot of money” is a relative term. What is $2.5 billion relative to the size of the problem?
According to research data provided by Joint Venture, the need for affordable housing in Silicon Valley is at least 54,000 units, which would eliminate most of the need for adult children to live at home or families to share housing.
That would cost $40.5 billion to build at the $750,000 cost per unit cited in a 2018 federal study. If Apple’s entire $2.5 billion were committed to building affordable housing in Silicon Valley, it would produce about 3,333 units.
By another metric, known as the “regional housing needs assessment,” or RHNA, the nine-county Bay Area needs 187,990 units of affordable housing in four income categories: very low, low, moderate and above moderate, according to the Metropolitan Transportation Commission.
But Leslye Corsiglia, executive director of SV@Home, said “we don’t want other corporations to feel like we’re going to come out with a big chunk of money and it’s just going to be pooh-poohed.”
The better way to calculate the impact of $2.5 billion on affordable housing is to use a subsidy amount of $125,000 per unit, she said, which could be leveraged into 20,000 units.
“If you’re building affordable housing, you’re going to get tax credits,” Corsiglia said. “You can get some big financing. You’re going to get some other assistance.”
Apple’s commitment is for the entire state, however, although $500 million is specifically targeted in the Bay Area in the form of a $150 million fund through partners such as Housing Trust Silicon Valley to make loans and grants for affordable housing, $50 million to Destination: Home focused on homelessness, and $300 million in land in San Jose for affordable housing.
The greatest value of Apple’s announcement may be in encouraging more companies to take a role in solving the crisis and raising the bar for financial commitments.
“It shows that if you’re an employer and you care about the housing crisis for not just your employees but also for the community at large, that there are ways to get involved and there are models to follow,” said Kevin Zwick, CEO of Housing Trust Silicon Valley.
On the other side of the coin, it does not mean that government’s role in funding solutions has been eliminated, which Hancock said could be the public perception: “There’s a very real possibility that regular folks who vote in elections will say ‘Ah, the private sector’s going to solve this. And they’ve got the money — we always knew they did — and Apple finally came forward.”
Zwick thinks the opposite could happen.
“I think people are more likely to get involved when they see everybody else is getting involved, too,” he said. “I think voters are more willing to get involved when they see it’s not just voters being asked to support new measures.”