SAN JOSE (CN) – Google unveiled plans Tuesday to invest $1 billion to help solve the San Francisco Bay Area’s worsening housing crisis.
The initiative involves transferring the technology giant’s significant real estate holdings in the Bay Area from commercial space to residential housing in the hopes of creating 20,000 new homes.
“We hope this plays a role in addressing the chronic shortage of affordable housing options for long-time middle- and low-income residents,” said Google CEO Sandar Pachai in a blog post published Tuesday.
It’s not Google’s first foray into the field of housing creation, having recently agreed to a deal with the city of San Jose to buy parcels around the rail and bus transportation hub to build office space and both market-rate and affordable housing.
But much like previous efforts, Google’s efforts to combat a housing affordability crisis spurred in large part by the exploding tech sector was met with suspicion.
“Google announces plans to become your landlord and profit from record-high Bay Area rent prices,” resident Joe Lagace tweeted in reaction to the news.
During the public hearings at San Jose City Council several residents expressed concern allowing Google to develop around Diridon Station, saying it would result in higher rents and gentrification.
One housing study released last week confirmed those fears, finding Google’s move to San Jose could result in a $235 million rent spike through 2030.
However, the study also found Google could offset those spikes by creating new housing.
Google has also said it would not be in the business of constructing and owning housing developments, but instead will lease their land to housing developers to build and maintain a variety of units.
“In the coming months, we’ll continue to work with local municipalities to support plans that allow residential developers to build quickly and economically,” Pachai said. “Our goal is to get housing construction started immediately, and for homes to be available in the next few years.”
The nonprofit community welcomed Google’s announcement.
“This is not something that one entity, one city or one corporation is going to solve,” said Leslye Corsiglia, executive director of Silicon Valley at Home. “But the commitment of $1 billion from one corporation is significant and it is something to celebrate.”
Making land available is one prong of Google’s approach to the crisis in Silicon Valley, with the other being a $250 million contribution to an investment fund that Pachai said will “enable developers to build at least 5,000 affordable housing units across the market.”
The investment fund is a common technique used by technology companies looking to alleviate high housing prices in places like San Jose, San Francisco and Seattle – all places where Big Tech has flourished.
For instance, Housing Trust Silicon Valley created a similar investment fund designed to provide low-interest loans to affordable housing developers, home ownership assistance and services to the homeless.