(Reuters) – Apple Inc on Monday said it would commit $2.5 billion to easing a housing shortage that has driven up prices across California, with most of the money dedicated to funds that will be run either with or by the state government.
FILE PHOTO: Tim Cook, CEO of Apple, attends the annual Allen and Co. Sun Valley media conference in Sun Valley, Idaho, U.S., July 10, 2019. REUTERS/Brendan McDermid/File Photo
One billion dollars will go to a jointly run fund with state officials aimed at jumpstarting delayed or stalled affordable housing projects. Another $1 billion will go to a state-run fund to provide first-time home buyer financial assistance to teachers, nurses and first responders such as police and firefighters, among others.
In an interview with Reuters, Apple Chief Executive Tim Cook said the company felt a “profound responsibility” to improve California’s housing crisis. Apple’s current headquarters – a ring of gleaming metal and glass nicknamed the “spaceship” in Cupertino, California – sits less than five miles from the suburban family home where co-founders Steve Jobs and Steve Wozniak assembled the first Apple computers in the 1970s.
“We want to make sure that it is a vibrant place where people can live and also raise a family,” Apple Chief Executive Tim Cook told Reuters in an interview. “And there’s no question that today that isn’t possible for many people, that the region suffers from an affordability crisis that is existential.”
The move comes after Facebook Inc and Alphabet Inc-owned Google both committed $1 billion toward California housing initiatives while Microsoft Corp committed $500 million in the Seattle, Washington area.
Apple said the project-financing fund was the first of its kind. Real estate developers often secure bonds for affordable housing development but must service the debt during construction until the houses are built and start to generate revenue. Apple and state officials hope to provide bridge financing during construction at rates below those from commercial lenders.
Apple said the funding could take two years to deploy but that it hopes to recycle the funding for future projects over five years.
“This unparalleled financial commitment to affordable housing, and the innovative strategies at the heart of this initiative, are proof that Apple is serious about solving this issue,” California Governor Gavin Newsom said in a statement.
The $2 billion in funding will be deployable across California, while the remaining $500 million will go toward efforts specific to Apple’s home region in Northern California, where fast-growing tech companies have drawn protests from residents who blame them for rising housing costs.
Apple will make available about 42 acres of land in northern San Jose, California valued at $300 million on which it hopes nearly 3,800 affordable housing units can be built. It will also donate $150 million to a Bay Area affordable housing fund and $50 million to Destination: Home, a public-private group addressing homelessness in Silicon Valley, home to some of the world’s most valuable public companies.
“Tech has grown a lot, and it has become a larger portion of the economy,” Cook said. “We’d like to be part of the solution, so that’s why we’re jumping in.”
Reporting by Stephen Nellis in San Francisco; Editing by Shri Navaratnam