More than a year after becoming one of Silicon Valley's first big tech companies to commit to creating more affordable housing, Facebook said recently 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 -- the nonprofit The San Francisco Foundation, which is adding $1 million to Facebook's original $18.5 million 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 potential 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 $18.5 million 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 $5.85 million to that city's affordable housing fund. And last year LinkedIn invested $10 million 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 recognizing 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 $10 million specifically going to development in East Palo Alto. Facebook in August brought on fund manager Local Initiatives Support Corp., which intends to take the nearly $20 million in the fund and grow it into $75 million by collecting outside loans.
"The San Francisco Foundation making that $1 million investment is a huge momentum-builder for us," said Local Initiatives Support Corp. 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 percent or less of the area's median income, one-third for families making 30 to 50 percent, and one-third for families making 50 to 80 percent.
Like most projects related to homebuilding, 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 Local Initiatives Support Corp. 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 nonprofit 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 $20 million 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."
SundayMonday Business on 03/11/2018