Apple housing pledge expected to have little impact

The news that Apple had pledged to give $2.5 billion to address housing needs in the San Francisco-Silicon Valley region and California in general – on top of $1 billion each previously promised by Google and Facebook – led to praise from politicians as well as from civic groups and housing nonprofits. Gov. Gavin Newsom called the announcement “proof that Apple is serious about solving this issue.”

But news analysis pieces prompted by the announcement were downbeat on the likelihood that it would bring any significant relief to a housing market that is so expensive that nearly half of Bay Area residents say they want to move – much less “solve” the crisis.

Leslye Corsiglia, executive director of the San Jose-based housing advocacy group SV@Home, told the San Francisco Chronicle, “It’s really great to get all this land and money, but in order to get units under construction and moving forward, we need to get project approvals. That does require policy and advocacy work to get the votes to move forward.”

Getting projects approved can take many years

The difficulty of getting projects approved in the Bay Area and Silicon Valley was cited in virtually all coverage of Apple’s pronouncement. Some cited the fate of the Vallco mall in Cupertino, less than a mile from where Apple opened its $3.6 billion headquarters in 2017.

Developer Sand Hill Property Co. acquired the mostly vacant 58-acre mall in 2014. But despite the region’s housing shortage, Sand Hill faced bitter opposition from the Cupertino City Council and local activists to its plans to build 2,400 residential units (half considered affordable), 400,000 square feet of retail space and 1.8 million square feet of office space on the site.

The $4 billion project was rejected first by local planners and then by voters in 2016. In early 2018, after state officials listed Cupertino as one of the hundreds of cities in California that had not built enough housing, Cupertino Mayor Darcy Paul defiantly said his city would not be pressured to respond to a housing crisis that he suggested was exaggerated.

City officials finally gave approval to the project a year ago after an analysis concluded that under Senate Bill 35 – the measure by Sen. Scott Wiener, D-San Francisco, that bars cities from rejecting certain projects that are properly zoned and include affordable housing – they had no choice. But because of further foot-dragging and legal threats, demolition of the main mall building was delayed until Oct. 2018 – four years after Signal Hall bought the property.

‘Affordable’ housing costs $700,000 in Bay Area

The second reason that Apple’s pledge was downplayed has to do with the extreme cost of building even what’s considered affordable housing in the Bay Area. While the average cost for a subsidized housing unit in California is about $420,000, housing officials say the cost is about $700,000 in the Bay Area and Silicon Valley.

If all $4.5 billion pledged by Apple, Google and Facebook were spent on such housing, that would add about 6,300 homes. Housing advocates say at least 54,000 such units are needed in the region – and far more if there is going to be enough supply to actually bring down rents that average more than $2,500 for small studio units.

Apple plans to provide a $1 billion line of credit for affordable housing projects. It also will set up a $1 billion fund to help first-time home buyers with down payments.

“We know the course we are on is unsustainable, and Apple is committed to being part of the solution,” Apple CEO Tim Cook said in a statement.

Nonetheless, the view that Apple was addressing a problem its explosive growth helped create was common – especially among progressives who see tech giants as a malign force. Sen. Bernie Sanders, the Vermont independent who is running for the Democratic presidential nomination said Apple’s announcement  “is an effort to distract from the fact that it has helped create California’s housing crisis.”



Chris Reed

Chris Reed

Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.

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