Facebook announces $1 billion investment package to bolster affordable housing | October 30, 2019 | Almanac | Almanac Online |

Almanac

News - October 30, 2019

Facebook announces $1 billion investment package to bolster affordable housing

by Kate Bradshaw

Facebook, the social media behemoth headquartered in Menlo Park, announced Oct. 22 that it plans to invest $1 billion over the next decade toward affordable housing in California and elsewhere, including some existing commitments.

In an post on the company's newsroom website, Facebook's Chief Financial Officer David Wehner stated that the funds will go toward creating up to 20,000 new housing units "to help essential workers such as teachers, nurses and first responders live closer to the communities that rely on them."

These job types typically represent what policymakers refer to as the so-called "missing middle," or middle-income earners who don't qualify for existing subsidy programs but are increasingly not earning enough to live in the Bay Area.

Wehner announced a new $250 million investment from Facebook for a partnership with the state of California aimed at developing mixed-income housing on excess state-owned land "in communities where housing is scarce."

(This refers to areas where affordable housing and a housing supply are scarce compared with the demand, not necessarily rural areas where there is a low housing supply overall, a Facebook spokesperson confirmed via email.)

As part of the press release, Gov. Gavin Newsom said, "State government cannot solve housing affordability alone, we need others to join Facebook in stepping up — progress requires partnership with the private sector and philanthropy to change the status quo and address the cost crisis our state is facing. Public-private partnerships around excess land is an important component in moving us forward."

Facebook announced it also plans to contribute an additional $150 million to an affordable housing investment fund operated by the "Partnership for the Bay's Future," a coalition announced in January that has dedicated $540 million over 18 years to preserving and building affordable housing and promoting policies that support housing affordability.

Facebook was an initial contributor to that partnership, along with the Chan Zuckerberg Initiative, a separate limited liability company funded by Facebook CEO Mark Zuckerberg and his wife, Dr. Priscilla Chan, that supports a number of charitable projects.

In reiterating older news, the announcement confirmed Facebook's plans to build more than 1,500 units of mixed-income housing on land that has been recently rezoned for housing in Menlo Park. Facebook says the value of that newly-rezoned land it already owns is $225 million, which it counts as part of its $1 billion investment commitment.

Specifically, the $225 million figure is based on an assessment of the improved land value of the mixed-use part of Willow Village, according to a Facebook spokesperson.

Facebook's Willow Village development proposal has just initiated its environmental review process. In documents submitted to the city of Menlo Park, Facebook makes clear it plans to explore the impact of building up to 1,735 housing units on the site.

Menlo Park mandates that no less than 15% of the apartments be dedicated as below-market-rate housing, but it's not yet clear whether Facebook plans to go beyond that minimum.

Wehner also counted Facebook's plans, announced last week, to commit $25 million toward building teacher and "essential worker housing" on public land in Santa Clara County to support local school districts. This includes an offer to provide permanent housing for the 22 teachers currently housed at 777 Hamilton Ave. in Menlo Park.

Years ago, Facebook agreed to subsidize housing for the teachers currently in the Hamilton Avenue housing as part of a pilot project, a condition agreed to in negotiations with the city during its last expansion cycle. Until last week, it wasn't clear what would happen to the teachers after the pilot program ended.

Last week's announcement stated that the $25 million will increase the number of homes a future housing development at 231 Grant Ave. in Palo Alto can offer to between 90 and 120 housing units. Units will also be available to teachers and school staff from the Palo Alto Unified School District, Mountain View Whisman School District, Mountain View-Los Altos High School District, Los Altos School District and Foothill-De Anza Community College District.

Lastly, Wehner noted in the announcement, Facebook plans to commit an additional $350 million for further to-be-announced efforts to support affordable housing in other communities where Facebook has offices, "based on the rollout and effectiveness" of the other initiatives it plans to fund first.

A new emphasis

Altogether, the announcement represents a dramatic ramp-up of the company's commitment to housing.

In the past, most of its efforts around housing have been focused locally, with numbers that have represented contributions on the order of tens of millions of dollars, not hundreds of millions.

And while $1 billion is a lot of money, it is not enough to fully build the 20,000 housing units from scratch, as it would only cover about $50,000 per unit if split evenly across all of them.

At the same time, Facebook has been rapidly expanding its office footprint throughout the region. In August, it opened a new 351,000-square-foot campus in Sunnyvale, with plans to accommodate 5,000 employees at over 1 million square feet there at two additional buildings by March 2021, according to a Facebook spokesperson.

Last year, it also announced plans to lease a 767,000-square-foot office development in Burlingame, and more than 1 million square feet in Fremont, via rental deals with commercial real estate firms Peery Arrillaga and The Sobrato Organization.

In June, Maya Perkins, strategic initiatives manager at Facebook, talked to The Almanac about why Facebook was getting involved in housing — not with this set of investments specifically, but in its work with local youth on a housing study and its contributions to a local "Catalyst Fund."

That fund was started in 2016 as the company negotiated with community stakeholders and activists in its last round of expansions. Facebook initially contributed $18.5 million to the fund, managed by Local Initiatives Support Coalition, with a goal to leverage funding up to $75 million for investing in affordable housing projects in Menlo Park and East Palo Alto.

She explained that Facebook is "taking the long view" when it comes to investing in housing production at all levels.

"It's not just teachers who are in need of an affordable place to live with reasonable rent," she said. "Broader change is necessary."

She added that the housing crisis can't be solved by just one sector or community.

"It really does take all folks working together to make something like this happen," she said at the time. "We're proud to be a partner with others, and proud to be a leader."

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