Apple Commits $2.5 Billion to Bay Area Housing Funds

Apple has joined other high-tech giants in a commitment to help alleviate a problem partially of their own making.   On Monday, the Cupertino, California firm announced a $2.5 billion plan to help address the housing availability and affordability crisis in Northern California. The company said that costs have skyrocketed for renters and potential homebuyers and, as a result, community members like teachers, firefighters, first responders and service workers are increasingly having to make the difficult choice to leave behind the community they have long called home.  

While affordability is becoming a problem in many areas, the large numbers of highly paid professionals employed in the Bay Area have driven prices especially high.  Even after a recent downturn in area prices, the median home price in the area is over $900,000.  Apple says nearly 30,000 people left San Francisco between April and June of this year and homeownership in the Bay Area is at a seven-year low.

The company's commitment breaks down to:   

• A $1 billion affordable housing investment fund. This is a first-of-its-kind venture that will provide the state and others with an open line of credit to develop and build additional new, very low- to moderate-income housing faster and at a lower cost.

• A $1 billion first-time homebuyer mortgage assistance fund: Working with the state, this first-time homebuyer fund will provide aspiring homebuyers with financing and down payment assistance. Apple and the state will explore strategies to increase access to first-time homeownership opportunities for essential service personnel, school employees and veterans.

• $300 million in land owned by the company in San Jose will be made available for developing affordable housing.

The funding commitment to the state is expected to take approximately two years to be fully utilized depending on the availability of projects. Capital returned to Apple will be reinvested in future projects over the next five years.

In addition to these initiatives, Apple is working to identify private developers who, with the right financing and investment, are ready to start construction on affordable housing projects in the Bay Area immediately.

Apple will also provide $200 million to support new lower-income housing and help some of the most vulnerable populations in the Bay Area. The majority of the funds will be in the form of a $150 million affordable housing fund.  The fund, administered with partners in the area, will consist of long-term forgivable loans and grants.  The $50 million balance will be donated to Destination: Home's efforts to address homelessness in Silicon Valley. Apple will focus its contribution on driving systemic change across the many factors affecting homelessness and will also work to identify similar efforts in Northern and Southern California, focusing on strategies that both end and prevent homelessness.

In announcing the program, Tim Cook Apple's CEO said "Before the world knew the name Silicon Valley, and long before we carried technology in our pockets, Apple called this region home, and we feel a profound civic responsibility to ensure it remains a vibrant place where people can live, have a family and contribute to the community.  Affordable housing means stability and dignity, opportunity and pride. When these things fall out of reach for too many, we know the course we are on is unsustainable, and Apple is committed to being part of the solution."

California Governor Gavin Newsom said, "The sky-high cost of housing - both for homeowners and renters - is the defining quality-of-life concern for millions of families across this state, one that can only be fixed by building more housing. This partnership with Apple will allow the state of California to do just that."

Apple efforts are similar to earlier plans announced by Microsoft and Google.  In January Microsoft, headquartered in Seattle, said it was putting up $500 million to help address affordable housing problems in its hometown.  The money will be used to fund construction of homes affordable not only to the company's own non-tech workers, but also for teachers, firefighters, and other middle- and low-income residents.

Then in June, Google announced it would provide $1 billion over 10 years to promote affordability. Those funds consist of company own land repurposed to build 15,000 new homes, a $250 million investment fund to incentivize builders to construct 5,000 affordable housing units, and another $50 million to combat homelessness in the area.