More than a year after becoming one of Silicon Valley's first big tech companies to commit to creating more affordable housing, Facebook said that its Catalyst Housing Fund is a step closer to backing new units.
The fund has reached a key milestone by landing its first outside investor – local non-profit The San Francisco Foundation, which is adding US$1mil (RM3.90mil) to Facebook's original US$18.5mil (RM72.21mil) contribution.
"We're ready to go," said Facebook global mobility manager Menka Sethi. "And I think you'll see us fund projects hopefully very early in this year."
The move comes as the booming tech economy has flooded the Bay Area with high-paying jobs, driving up the cost of renting or buying a home, pricing out many local residents, and leading many in the community to demand that tech companies like Facebook do something to combat the problem. After East Palo Alto-based community coalition Envision, Build, Transform threatened to sue Facebook over its expansion in Menlo Park, the tech giant in December 2016 pledged US$18.5mil (RM72.21mil) to fund affordable housing construction in the area.
A handful of other large tech companies have taken similar steps. Google is working with Mountain View officials to add nearly 10,000 new homes and apartments to North Bayshore. While building its new "spaceship" campus in Cupertino, Apple gave US$5.85mil (RM22.83mil) to that city's affordable housing fund. And last year LinkedIn invested US$10mil (RM39.03mil) in Housing Trust Silicon Valley's Tech Fund.
But there's pressure for cash-flush tech companies to do more, and some housing advocates hope the Catalyst Fund will inspire other tech companies to step up.
"More and more companies are recognising that it's a crisis," said Carl Guardino, president and CEO of the Silicon Valley Leadership Group trade association, "and those that have the capacity...to also be a part of the solution, more and more are stepping forward. Do we need more to step forward? Absolutely."
Facebook's goal is to back affordable housing projects within a 15 mile radius of its Menlo Park campus – with US$10mil (RM39.03mil) specifically going to development in East Palo Alto. Facebook in August brought on fund manager Local Initiatives Support Corp (LISC), which intends to take the nearly US$20mil (RM78.06mil) in the fund and grow it into US$75mil (RM292.74mil) by collecting outside loans.
"The San Francisco Foundation making that US$1mil (RM3.90mil) investment is a huge momentum-builder for us," said LISC CEO Maurice Jones.
In a blog post, The San Francisco Foundation said its contribution to the Catalyst Fund, which is a low-interest loan, will help finance the development and preservation of more than 500 low-income housing units. Facebook intends to reserve about one-third of the units it funds for families making 30% or less of the area's median income, one-third for families making 30% to 50%, and one-third for families making 50% to 80%.
Like most projects related to home-building, Facebook's Catalyst Fund has run into some delays along the way. In August, the company said it planned to begin investing in affordable housing projects by the fall of 2017, but that date was pushed back after it took longer than anticipated to get LISC nailed down as fund manager and approved by the city of East Palo Alto, which is partnering with the Catalyst Fund, Sethi said. And though teaming up with outside investors has been the stated goal from the time Facebook launched the fund in December 2016, it's taken more than a year to land the first investor.
The Catalyst Fund held its first meeting last month with community members and potential developers, and Sethi said there will be more to come. The fund is researching potential projects for investment, she said. Whatever projects they choose may be further delayed in waiting for city approval.
Tameeka Bennett, executive director of East Palo Alto-based non-profit Youth United for Community Action – one of the groups that threatened to sue Facebook and now is involved in the Catalyst Fund – said the nearly US$20mil (RM78.06mil) initiative is encouraging, but it's just a "drop in the bucket" given the Bay Area's housing shortage.
"No, this isn't going to solve the problem," she said. "And I think Facebook and other tech companies...they have to think about things like housing. They can't just build and not be intentional about that." — The San Jose Mercury News/Tribune News Service