'The Course We Are On Is Unsustainable'; Apple Announces $2.5 Billion Investment In New Housing
SAN JOSE (CBS SF/CNN) -- Declaring "we know the course we are on is unsustainable," Apple CEO Tim Cook on Monday announced a $2.5 billion investment by the high-tech giant in a plan to help ease the ever-tightening San Francisco Bay Area housing market.
The company laid out a five-point plan, including $1 billion for an affordable housing investment fund, $1 billion in mortgage assistance for first-time home buyers and opening some Apple-owned land in San Jose valued at $300 million for development. The remaining $200 million will go toward a San Francisco housing fund to support vulnerable populations and to local housing advocacy groups like Housing Trust Silicon Valley.
"The technology companies and employers, like all of us, have a responsibility to be part of the affordable housing solution," said Kevin Zwick with the Housing Trust Silicon Valley. "California needs millions of homes and this has been a challenge for more than a generation."
"The scope of it, the breadth of it is really something to be commended," said Zwick, "This is going to create many, many homes, it's definitely going to make a huge difference from people who are experiencing homelessness, all the way up to people who are trying to buy their first home."
Apple has pledged to give $50 million to the organization Destination: Home.
"To work on initiatives to produce more deeply affordable housing, to prevent homelessness for families and to look at other creative solutions to helping our communities in need," said Ray Bramson of Destination Home.
Bramson said their $50 million would be used to fund 30 projects resulting in 2400 units of affordable housing, prevent 1500 households from falling into homelessness, and invest in dozens of non-profits and providers.
"We look to Apple, the great leadership, the commitment of funds to end homelessness, and we say that this community needs a lot of help from lots of different partners," said Bramson.
In San Francisco, roughly 7,000 people are homeless. There is a shortage of affordable homes across the Bay Area, which is pushing out middle and low-income workers like teachers and restaurant employees. Critics say the influx of tech companies and their well-paid workers has contributed to the ongoing housing crisis.
"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. Affordable housing means stability and dignity, opportunity and pride," Cook said in a press release. "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."
The money won't be distributed immediately or all at once. Apple said it will "take approximately two years to be fully utilized depending on the availability of projects." Money made on the projects will be "reinvested in future projects over the next five years," the company said.
The financial package was created in partnership with California Governor Gavin Newsom. Apple released a photo of Governor Gavin Newsom, who was pictured with CEO Tim Cook, looking over maps and plans.
"This unparalleled financial commitment to affordable housing, and the innovative strategies at the heart of this initiative, are proof that Apple is serious about solving this issue. I hope other companies follow their lead," said Newsom in a statement, "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."
Other tech companies have announced financial packages with similar goals, although Apple's is the largest.
Google pledged $1 billion in June to redevelop company-owned land for affordable housing and created an investment fund to incentivize developers to build at least 5,000 affordable housing units in the region. In January,
In mid October 2019, the day before Facebook CEO Mark Zuckerberg was to testify before members of Congress about its efforts to seek approval for a new universal currency, Facebook announced a $1 billion commitment for affordable housing, as well.
KPIX 5 contacted some of the Bay Area's largest tech companies regarding future plans of financial help for affordable housing, but received no response from Oracle and Intel. Nvidia also did not respond by deadline.
Reverend Sandy Perry, with the Affordable Housing Network, and a longtime homeless advocate, criticized Apple for its handling of corporate taxes.
"We shouldn't have to go begging corporation to get charity to solve our housing problems," said Perry, "Just giving a pittance, we should just get down and say thank you, thank you. And you're wonderful, you're wonderful? No!"
"I'm not going to say they're wonderful. They owe way more than that. Apple and Google, these large companies are notorious for funneling money to other countries to avoid taxes. It's just completely wrong," said Perry.
Senator Bernie Sanders, vying for the Democratic nomination for president, released a statement: "Apple's announcement that it is entering the real estate lending business is an effort to distract from the fact that it has helped create California's housing crisis – all while raking in $800 million of taxpayer subsidies, and keeping a quarter trillion dollars of profit offshore, in order to avoid paying billions of dollars in taxes."
California's affordable housing crisis has received national attention and was a topic of major debate during the last state election.
In November 2018, voters passed the largest corporate tax increase in San Francisco's history — an issue that pitted Salesforce CEO Marc Benioff against Twitter and Square CEO Jack Dorsey.
Benioff accused Dorsey and other tech leaders who opposed the ballot measure of not giving enough back to the city where their companies are headquartered. As tech companies expand, their high-paid employees create a supply-demand imbalance for housing, sending California's home prices through the roof.
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