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The tech industry exacerbated the housing crisis. Here’s what Google is doing to fix it

A year ago, Google pledged $1 billion to address the Bay Area housing crisis the tech boom helped cause. How much affordable housing does that build?

The tech industry exacerbated the housing crisis. Here’s what Google is doing to fix it
[Photo: Morning Brew/Unsplash]

A year after Google pledged to invest $1 billion toward tackling the housing crisis that the tech industry helped exacerbate in Silicon Valley, the company now expects to help fund more affordable housing than it originally anticipated. While it will still be a fraction of the homes needed in the area, it’s an example of how corporate funding—like the $2.5 billion that Apple has pledged for affordable housing, or the $1 billion pledged by Facebook, or the $500 million committed by Microsoft in Seattle—can be part of the solution to this problem.

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So far, Google has allocated $115 million of the $250 million investment fund that it created in 2019 to build affordable housing, a subset of that $1 billion pledge. It expects that money will help build around 24,000 new affordable housing units over the next decade. Originally, the company projected that the fund could support the construction at least 5,000 units; now, by supporting modular housing construction, that money could support nearly five times as many homes. Google is also repurposing $750 million of its own land—the remainder of that $1 billion investment—for the development of at least 15,000 additional units. “When you talk about long-term solutions, we really just have to increase supply,” says Jacqueline Fuller, president of Google.org, the company’s nonprofit arm, which is donating another $50 million to organizations focused on homelessness in the area.

The housing shortage in the Bay Area is far larger: A report earlier this year from SPUR, an urban planning policy think tank, found that the region should have built an additional 700,000 homes over the last 20 years to keep up with growth and will need to build 2.2 million housing units by 2070. “The shortage is only going to continue if we don’t zone for enough housing, both in the Bay Area and in the state at large,” says Sarah Karlinsky, a senior adviser at SPUR. “Even when we do zone for housing, there are a whole series of rules and regulations in place that make it really hard to actually build that housing. That one-two punch that has created a housing shortage.” The shortage has driven up overall housing costs, and there’s also a shortage of permanently affordable housing.

Because the deeper challenges lie with policy—zoning laws and other regulations that make it difficult to build housing—Karlinsky argues that tech companies, as large employers with political clout, can do more to advocate for better laws to increase construction. They could also lobby for permanent state funding for affordable housing, rather than a patchwork of bond measures and other temporary support. “What we really need to do as a society is say, ‘If affordable housing is important to us, we need to have an ongoing, permanent source of affordable housing funding that can be utilized to build this housing,'” she says. “Other countries have figured out how to do that. I know in America we’re a very individualistic society, but this is a problem that affects us all.”

Google isn’t currently lobbying for changes in state policy, focusing instead on working with local communities and elected officials so that it can build on its own land. The process is slow-moving; one project in Mountain View, designed to help reduce driving in the area, is on hold while the city works on a master plan for the development. In San Jose, the company submitted a plan for a mixed-use development that the city will vote on next spring. The funding for affordable housing is moving more quickly. Working with the nonprofit Housing Trust Silicon Valley, Google is helping affordable housing developers get early funding for new projects that otherwise would be difficult to get from a bank.

“Acquiring the land and pre-development work is the riskiest piece of the work,” says Julie Mahowald, interim CEO of Housing Trust. “So they need somebody like a bank that will help them close on time because they’re competing with market-rate developers to acquire the land, but banks don’t traditionally want to take that kind of risk—at least not for the return they’re going to get, because affordable housing opens as low-interest rates as possible.” Google’s funding through the Housing Trust has already gone to six affordable housing projects, some of which will break ground in 2021. Another new fund with the nonprofit will fund an additional 4,000 units.

The company has also invested in Factory OS, a startup that lowers construction costs by building apartments in factories. This will help Google’s money stretch further in California, where it’s incredibly expensive to build new housing (a single affordable apartment, not a building, can cost as much as $750,000 to build in San Francisco using traditional construction). Factory OS now plans to build a second factory and aims to create tens of thousands of units of affordable housing this decade.

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The causes of the housing crisis and homelessness are issues Google thinks about holistically, Fuller says. “Part of this is looking at the larger trends that are happening in places like the Bay Area,” she says, citing how the Gini Index, a measurement of income inequality, has been growing there. “Part of why Google philosophically is contributing to things like homelessness is we recognize that while the tech industry has brought many benefits to the Bay Area, there are also negative externalities that are associated with this kind of growth, and that the benefits are unequally distributed.” In response, Google.org is investing in job training, particularly for the most vulnerable, including people of color and low-income communities, as it continues to support new housing and organizations that help house the homeless. “It’s multifaceted—housing insecurity is just one piece of the puzzle.”

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About the author

Adele Peters is a staff writer at Fast Company who focuses on solutions to some of the world's largest problems, from climate change to homelessness. Previously, she worked with GOOD, BioLite, and the Sustainable Products and Solutions program at UC Berkeley, and contributed to the second edition of the bestselling book "Worldchanging: A User's Guide for the 21st Century."

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