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.”

Fears that heavy housing costs could undercut Silicon Valley and the Bay Area’s economy have grown steadily in recent years as gains in wages have been outstripped by soaring rents and home prices.

Now a poll of 1,568 registered voters in the region done on behalf of the Silicon Valley Leadership Group and Bay Area News Group paints one of the starkest pictures yet of public dissatisfaction.

Those polled were nine times as likely to say life in the Bay Area and Silicon Valley had gotten worse over the past five years than to say it had gotten better. Forty-four percent of respondents said they wanted to move out of the region because of housing costs, bad traffic and declining quality of life; 6 percent intended to leave in the next year. African-Americans and Latinos were those most likely to want to move elsewhere.

But even 64 percent of homeowners – normally much more content than others in surveys on life satisfaction – said their lives had gotten worse.

The results produced yet another warning from the Silicon Valley Leadership Group, which has cautioned for years that the region will struggle to attract workers for tech and blue-collar jobs alike unless housing costs stop spiraling upward. The group’s CEO, Carl Guardino, told the San Jose Mercury-News that “not working at our weaknesses will come at our own peril.”

School districts launch own projects

Most of the cities in the region haven’t come close to meeting state goals for either affordable or market-rate housing. Recent new state laws meant to spur more housing construction have yet to pay off.

Meanwhile, school districts in and near San Francisco and Silicon Valley are increasingly impatient with the status quo and open to new approaches. Three districts which struggle to keep teachers from leaving for cheaper communities are going into the housing business to ensure teachers have affordable rents.

In Mountain View, the city plans to meet its state affordable-housing mandates by working with Los Gatos-based developer FortBay to build a 144-unit subsidized apartment building for use by Whisman School District teachers and other employees.

The Whisman district’s board backed a $56 million agreement that commits the district to lease the building for at least 55 years. The project could be finished by the end of 2021, depending on the pace of city approvals and other factors. Long-term funding options include bonds or certificates of participation (bond-like measures that don’t require voter approval).

District Superintendent Ayinde Rudolph has also voiced the hope that substantial gifts from philanthropic groups could reduce the cost to Whisman.

In Daly City, the Jefferson Union High School District is using a $33 million voter-approved bond to build 116 apartments for teachers and other employers.

The Palo Alto Unified School District is evaluating how to fund a 120-unit project for its employees.

Legislation signed by Gov. Jerry Brown in 2016 allows the districts to give housing preferences to their employees. It also gives them access to state and federal low-income housing credits.

Can districts afford housing subsidies?

A recent UC Berkeley study of teacher housing issues in Berkeley Unified showed strong support from employees for a similar approach in their district. More than half reported difficulty paying rent.

But to date, no study has examined the long-term financial feasibility of having districts provide subsidized housing, as is contemplated by the three districts pursuing construction plans.

Employee compensation already consumes 85 percent or more of most school districts’ general fund budgets. With districts’ pension contribution rates more than doubling from 2014 to 2020 as part of the bailout of the California State Teachers’ Retirement System, dozens of districts are pleading poverty.

Silicon Valley is the epicenter of the state’s housing crisis, with even run-down older homes routinely selling for nearly $1 million and with apartment rent averaging over $3,400 in communities within a 10-mile radius of Mountain View. With some exceptions, local leaders generally say the right things about the urgent need to add more housing units.

But a new report about the region’s largest city, San Jose, shows the city has made little progress on its goal of adding 10,000 affordable housing units by 2022. According to a new report issued by city housing officials, 64 units were completed in the 2017-18 fiscal year. While 594 units are now being built and 270 are approved for construction, even if these units are counted, that means the city is on track to achieve less than 10 percent of its target by mid-2019.

Adding to this bad news is a recent San Jose Mercury-News report in which city officials expressed frustration on several fronts. Among the complaints:

• While Mayor Sam Liccardo has been consistent in pushing affordable housing, the head of the city’s housing department – Jacky Morales-Ferrand – sees an overall lack of focus at City Hall (pictured). One week, City Council members are touting rent-control ordinances, then they push the “tiny homes” concept, then it’s on to other issues.
• Morales-Ferrand also expressed disappointment that the state government has never provided cities with a new tool and new funding source to replace redevelopment, which Gov. Jerry Brown convinced the Legislature to gut in 2011.
• Councilman Johnny Khamis also has a complaint. He believes that the series of crime-reform initiatives touted by Brown and state lawmakers have complicated San Jose’s efforts to address housing and homeless issues. “I feel that the state just dumped a whole mess of people out of our prison system, and now we’re just having to deal with them,” he said.

Congress ‘0 for 115’ in approving helpful housing bills

Frustration with a lack of progress locally and in the state Legislature has led the influential, well-funded Silicon Valley Leadership Group to look for relief in a new place: Congress. While CEO Carl Guardino said the Silicon Valley and Bay Area congressional delegation had been helpful on major regional issues such as electrifying CalTrain and expanding the Bay Area Rapid Transit (BART) system to San Jose, he told the Mercury-News that there had been little help on housing from Washington.

Housing experts say ultimately, local and state land-use policies, fees, taxes and regulations are most crucial in whether new units can be built. But federal agencies regulate mortgages, enforce fair-housing laws and have provided billions of dollars over the years to develop housing projects and to subsidize low-income housing.

According to the Apartment List group, in its current session, which began in January 2017, Congress is “roughly batting 0 for 115” in approving housing legislation introduced by federal lawmakers. Rep. Barbara Lee, D-Oakland, has by herself introduced 11 bills that focus on creating affordable housing. In a March speech, Rep. Ro Khanna, D-Santa Clara, said, “I don’t want to live in the Silicon Valley that only has Facebook or Google engineers able to live here.”

But the Trump administration and the Republicans who control the House and Senate have shown little enthusiasm not only for bold new plans but for continuing policies that have led to 3 million affordable homes being built since the late 1980s. The Affordable Housing Credit Improvement Act, which would provide developers of low-income housing with a substantial tax credit, has languished in House and Senate committees since it was introduced in March 2017.