They built the tech that powers our economy. Now, should they build our housing?
Silicon Valley is one of the most expensive real estate markets in the United States. While it’s known that a handful of tech companies are huge employers, what’s less obvious is that these firms are also some of the Valley’s biggest landowners. We spent nearly a year looking at half a million property records to figure out – Who Owns Silicon Valley? This series was produced by KQED, The Mercury News, NBC Bay Area, Renaissance Journalism and Telemundo 48 Área de la Bahía. It is part of Reveal’s Local Labs initiative, which supports lasting, sustainable investigative collaborations across the country.
They changed the world with their tech products, employ vast swaths of the Bay Area’s workforce and together own more than $16 billion in Silicon Valley property.
But Google and Apple – the Valley’s two biggest tech property owners – differ wildly in a critical aspect: the way they use their resources in response to the region’s chronic housing crisis. A side-by-side comparison reveals that Google is taking a far more proactive approach to corporate citizenship than Apple, a disparity that illuminates the question many tech companies struggle with today: How much should they be expected to help the people and communities who fall victim to Silicon Valley’s success?
The answer will play a major role in shaping the future of the Valley as residents grapple with sky-high demand for housing, soaring prices and painfully clogged roadways.
Google and Apple have similar portfolios – Google owned $7.5 billion and Apple owned just under $9 billion in taxable property in Santa Clara County as of the 2018 fiscal year, according to an analysis by a collaboration of local and national media, including this news organization, that has spent the last year studying land ownership patterns and their impact on the development of Silicon Valley. More of the collaboration’s work will be published and broadcast in coming days.
And Google has continued to expand its real estate empire after the 2018 tax roll closed, scooping up more than 60 properties in Santa Clara County with a total assessed value of at least $2.1 billion.
But while Google is baking housing into its new developments and centered its latest campus proposal around a South Bay public transportation hub, Diridon Station, Apple built its 175-acre “Spaceship” campus with no housing or access to major transit lines. Not everyone thinks Google is doing enough, given the displacement it likely will cause in San Jose, but few housing experts have any kind words for Apple. And the pressure is mounting for Apple to step up, after Google and Facebook each recently committed $1 billion in land and funding to help produce housing in the Bay Area and beyond.
“They have walled themselves inside their mini-Pentagon as if they don’t participate in community life here,” Amie Fishman, executive director of the Non-Profit Housing Association of Northern California, said of the Cupertino-based iPhone maker. “And that’s really insulting and wrong. So I welcome Apple to come to the table and be part of the community that they benefit from.”
Apple did not make a representative available for an interview but did email a statement.
“We’ve called the Bay Area home for the last 40 years and are proud of our many contributions to the economy and the community,” the statement read. “We’ve invested heavily in improving the community and our place within it, including contributions to Cupertino’s housing fund, thousands of volunteer hours, education and coding initiatives, and significant investments to improve traffic in the area. We believe that everyone should have access to affordable housing and we are committed to working with the state and local governments on solutions.”
Tech’s role in the crisis
The Bay Area housing shortage has a long and complicated list of causes, many of which are not tech-related: state tax policies, restrictive city zoning, neighborhood anti-development sentiment, the loss of funding for affordable housing and more. But experts agree a major factor is the skyrocketing demand for housing, driven largely by the region’s surging tech economy. Valley tech companies make the problem worse simply by doing what companies are supposed to do – create successful products, hire more employees, and expand. Google alone employs more than 45,000 people throughout the Bay Area, and Apple employs about 25,000 just in Silicon Valley.
“We’re overrun with traffic. Our housing prices are out of control. Even rent prices are out of control,” said Santa Clara County Assessor Larry Stone. “So obviously the tech companies are not doing enough to mitigate traffic and housing cost impacts. And you know, it’s going to kill us.”
But not everyone agrees that asking tech companies for help is the answer.
“I don’t think anybody should be under the illusion that this is a fair solution or a long-term sustainable solution,” said Matt Regan, senior vice president of public policy for the business-backed advocacy group the Bay Area Council. “We have a whole industry, and it’s not tech or social media, called the home-building industry that is supposed to, in a well-functioning world, build sufficient housing stock for our growing economy. That system’s broken, which is why these companies are having to step in and do things that are outside their core competencies.”
Apple: ‘We pay taxes’
On a Tuesday in June 2011, a guest speaker took the podium at a Cupertino City Council meeting and received an unusual reception – a round of applause and cheers. Spectators in the audience whipped out their cameras. Mayor Gilbert Wong said he was honored by the visit.
The star treatment was for none other than tech luminary and Apple co-founder Steve Jobs. On that day, Jobs had come before council members to present his plan for Apple Park. It was to be a striking, circular building that would hold 12,000 people — and 11,000 parked cars.
When Jobs finished, council members gushed. “The word spectacular would be an understatement,” Councilman Orrin Mahoney said.
But Councilwoman Kris Wang wanted to know what the new campus would do for Cupertino residents.
Jobs’ answer was a subtle threat.
“Well, as you know, we’re the largest taxpayer in Cupertino, so we’d like to continue to stay here and pay taxes,” he said. “Because if we can’t, then we have to go somewhere like Mountain View.”
What about providing free Wi-Fi for residents? Wang persisted cautiously.
“I’ve always had this view that we pay taxes, and the city should do those things,” Jobs replied.
The conversation never broached the profound housing impact the development would have – in part because some of the land Apple purchased had previously been earmarked for 130 townhomes, but primarily because of all the jobs the new headquarters would create. Toward the end, Councilman Barry Chang did bring up the potential impact on already-clogged roadways. He wanted to know: As Apple increases its employee headcount in Cupertino, how will the company alleviate traffic?
Jobs’ answer was simple. “Well, we’re not increasing the employment by much,” he said, explaining the increase would be “like 20%.”
“OK,” Chang said, and moved on.
Jobs died of pancreatic cancer three months later. But his vision for Apple Park lived on, as did – for a time – his philosophy that city governments and not local employers should provide the infrastructure and services local residents need.
When Cupertino officials approved Apple Park in 2013 – a time when few people were talking about a housing and traffic crisis – the project didn’t come with an outsized package of community benefits. Apple spent $70 million widening roads and making other improvements, and it contributed $5.85 million to Cupertino’s affordable housing fund. The city required Apple to pay just $2.5 million in affordable housing fees, but the tech titan voluntarily more than doubled the amount. That money has helped produce just 19 units of affordable housing in Cupertino – all at The Veranda, which opened in August and cost the city $3.67 million from the affordable housing fund.
“Six million dollars frankly just doesn’t go very far,” said Cupertino Councilman Rod Sinks, who recuses himself from Apple-related city decisions because his wife works for the company.
In a 2013 environmental impact report, Apple projected its new campus would spur demand for 936 new homes in Cupertino by 2020, as well as thousands more in neighboring cities. Between 2014 and 2018, Cupertino issued building permits for 269 new homes.
The city granted preliminary approval for another 1,250 units back in 2012 and 2016, but those developers still haven’t applied for building permits – the last step before starting construction. And the redevelopment of Vallco Mall into a mixed-use site with 2,402 housing units is in the works but bogged down in litigation, opposition from some residents and challenges from a city council that wants the site to retain its retail focus.
If Apple wanted to, it could use its clout to fight for Vallco and other housing projects and likely win, said Kelly Snider, a land-use consultant who teaches at San Jose State University and serves on the board of affordable housing advocacy organization SV@Home.
Cupertino officials considered asking Apple to do more in 2018, in the form of an employee “head tax” large companies would pay per worker, meaning giants such as Apple would bear the brunt. The tax, which would have needed voter approval, was expected to raise up to $10 million a year to help alleviate the traffic congestion exacerbated in part by Apple’s massive campus. Mountain View voters passed a similar measure last year without opposition from the city’s biggest employer: Google.
But it was different in Cupertino. Apple pushed back, and the City Council eventually shelved the tax. In exchange, Apple offered to spend $9.7 million on bike and pedestrian improvements in the city, but with a catch. Apple can void the agreement if Cupertino adopts an employee “head tax” or any other fee that disproportionately affects Apple.
How much housing is required to house Apple and Google employees?
“You could call it a poison pill,” Sinks said.
In hindsight, Sinks wishes his colleagues had pushed Apple harder in 2013, at least to help beef up Cupertino’s public transportation network. It’s hard to say how much of Cupertino’s congestion is a direct result of Apple’s new campus, but traffic slows to a crawl during rush hour along Interstate 280, State Route 85 and even some Cupertino city streets. And some experts argue that if there was more housing nearby, there would be fewer cars heading to Apple on those routes.
“I wish we would have demanded more of Apple and demanded more of VTA,” Sinks said, referring to the Santa Clara Valley Transportation Authority. “We should have said it is not enough.”
Housing by Google
In June, Google CEO Sundar Pichai made an unprecedented announcement – the online search giant planned to use $1 billion of its cash and real estate holdings to help address the Bay Area’s housing crisis.
It was a splashy, ambitious pledge, and the community took notice, with housing activists praising the move. Even Gov. Gavin Newsom chimed in to pat Google on the back.
Behind the scenes, Google had been building up to that day for years.
It all started in Mountain View in 2008, when local residents suggested adding housing to the site of an old office park in the North Bayshore neighborhood near Shoreline Amphitheater. The idea sparked the interest of Google, which began advocating for the housing while also developing plans to expand its own campus there. But Mountain View’s City Council was not convinced, and in 2014 council members approved a plan that allowed for no housing at the site.
Three years later, as the housing crisis picked up steam and new, more pro-housing council members came into office, the city pulled a dramatic about-face, updating the North Bayshore plan to allow 9,850 homes. Google viewed the move as a win, but there were several twists and turns along the way – like when Google made a late-night threat to scrap its housing plans if the city didn’t increase its allotted office space, or when Google swapped land with LinkedIn to get around a city planning decision it didn’t like.
Now, when Google builds its new North Bayshore campus, it plans to set aside space on its land for 5,760 homes – 20 percent of which would be reserved for low-income residents, and all of which would be open to Google workers and non-Google workers alike. The internet search giant also has proposed including housing as part of new campuses it’s planning in Mountain View’s East Whisman neighborhood, San Jose’s Diridon Station and Sunnyvale.
All in all, Google plans to use $750 million of its land for the construction of 15,000 homes over the next 10 years. All would be built and financed by developer Lendlease.
In a sense, Google – one of the first tech companies known for providing luxurious office environments and plush perks such as free food, bicycles and massages – is attempting to expand that bubble of “Googliness” beyond its walls.
“The founders understood the importance of place very early on,” said Mark Golan, Google’s vice president and chief operating officer of real estate investments and development. “They understood that creating a great environment for the employees had a profound impact on culture and productivity and the success of the company. And it’s a natural succession of that thought to just keep expanding the perspective.”
Google’s decision to set its largest campus expansion in San Jose instead of its hometown of Mountain View also was noteworthy. Company leaders realized neither Mountain View’s nor Sunnyvale’s streets could handle the traffic generated by another 6.5 million square feet of office space, Golan said. Instead, Google chose to build around San Jose’s Diridon Station, where commuters can catch Caltrain, buses or light rail nearby and, in the future, BART and maybe even high-speed rail. That means more employees taking public transit to work and fewer clogging the roads with cars and the ubiquitous Google buses.
“There’s sort of this impression that Google has all these buses, we must like them,” Golan said. “We don’t like buses. We do buses because we have no other option.”
Even so, some local activists say they’re waiting to see whether the company will make a dent in the housing crisis. It’s a particularly tense wait for San Jose residents who live near Google’s proposed Diridon Station campus. Many worry the development will drive up rent and home prices, forcing them out of their neighborhood and possibly out of the Bay Area.
“If I had to grade Google’s engagement to date, I’d give it an incomplete,” said Jeffrey Buchanan, director of public policy for Working Partnerships, which wants Google held accountable for the gentrification the Diridon project will cause. “It’s really just a question of: Will Google and the city prioritize making the investments that are needed to offset the rising rents and evictions that could come from a development of this scale?”
Google also pledged to contribute $250 million to affordable housing in the Bay Area. So far it has committed $50 million to Housing Trust Silicon Valley’s Tech Fund to help developers acquire property. Now advocates are waiting to see what Google does with the other $200 million.
That money will go toward specific low and middle-income housing projects in the Bay Area, focusing on projects with funding gaps that small sums of Google money could close, Golan said.
Google plans to release more details in the coming weeks, said spokesman Michael Appel.
Other tech players
If Google and Apple’s housing strategies represent extreme ends of the spectrum, other major tech companies sit somewhere in the middle. Cisco – which owned $3.4 billion in taxable property in Santa Clara County last year – has recently stepped up to help house some of the area’s most vulnerable residents. In 2016, the tech giant invested $2.5 million to help launch the Housing Trust Silicon Valley’s affordable housing Tech Fund and then upped that to $10 million in 2017. The following year, Cisco doubled its Tech Fund investment to $20 million and pledged to donate another $50 million to Destination Home to fight homelessness.
“I think there was a kind of realization and an understanding that there’s a real crisis in our own backyard,” said Erin Connor, the Cisco official who manages the Destination Home partnership and other Cisco funds for homelessness and humanitarian aid.
Cisco leaders also have talked among themselves about building housing, Connor said. But putting such a plan into action would be complicated – requiring approval and coordination from officials throughout the company – and it would be unlike anything Cisco has attempted before. So far, nothing is in the works.
Intel, with $2.5 billion in taxable property in Santa Clara County, has a similar footprint to Cisco. Intel donated $1 million to help launch Housing Trust Silicon Valley in 2000 but does not appear to have made a significant contribution to Bay Area housing since. The company declined an interview for this story.
Facebook has proposed building housing on its land and has invested cash into affordable housing programs. Earlier this month, Facebook pledged $1 billion to tackle the housing crisis, including reserving $225 million in Facebook-owned land in Menlo Park for housing.
Ten years ago, it would have been unheard of for corporations that specialize in running a social network, providing internet search tools or making computers and smartphones to pour that much money into housing – an area entirely outside their expertise. But as the Bay Area’s traffic and housing crisis deepens, more and more people are looking to these companies to step up.
Their involvement is crucial if the Bay Area has any hope of fixing the housing crisis within 10 years, said Snider, the land-use consultant who teaches at San Jose State University.
“It’s only tech companies who can do it, because they’re nimble enough,” she said. “They’re wealthy enough. They have the property.”
This series is being produced by The Mercury News, East Bay Times, NBC Bay Area, KQED, Renaissance Journalism, Reveal from The Center for Investigative Reporting, and Telemundo 48 Área de la Bahía.