Roberts: Solving housing with a new kind of company town?

The king of chocolate, Milton Hershey and his famous chocolate company, tried to build one, as did the founders of Pullman railroad sleeping cars and Steinway pianos.

All these visionaries and very successful entrepreneurs not only created world-renowned companies, they also tried to create utopian villages for their employees. We call them “company towns.”

Some experts would say that these unique privately-built housing developments failed. But perhaps those experts are wrong.

Today, communities are struggling with the dearth of affordable housing. We see the next generation of visionary companies moving into communities, forcing current housing values and market rents to soar out of reach of the average middle-class family. So perhaps we need to revisit the idea of a “company town.”

Take Santa Clara County, known around the world as Silicon Valley.

The new Hershey’s, Pullman’s and Steinway’s are now called Facebook, Google and a dozen other tech company names that most of the world knows. They have created hundreds of thousands of well-paying jobs that started a tech migration of job seekers from around the world.

From 2010 to 2018, the Bay Area’s job growth increased by 30 percent. It has been a new kind of gold rush for people looking to monetize their specialized education and skills. This wave of new employees had to live somewhere close to their companies and they bought up homes by the thousands, forcing the housing market to be cost prohibitive for anyone making less than six figures.

In San Jose, an average home is now valued at just over one million dollars.

These tech companies responded to their obvious disruption by proposing their own housing developments – you could call them “company towns.” But building a few thousand new homes, or even 10,000, is not enough when a company is creating a new office campus for 60,000 employees.

Near downtown San Jose, Google will be creating a new campus for 20,000 workers. Imagine how an influx of 20,000 new residents in San Jose will impact the housing market? Perhaps an average sale of a house will be $2 million? You would have to be an entertainer, an athlete or a high-paid tech titan to afford such real estate.

So, what is the solution when clearly our communities welcome more jobs, more restaurant customers and more store customers?

We need titanic investments in affordable housing.

These new titans of today’s industries have already jump-started a more effective approach toward addressing our affordable housing crisis. Microsoft is investing $500 million toward affordable housing in the Seattle area. Facebook, and its partners, are doing the same in the Bay Area. The California governor is also challenging tech companies to invest $500 million toward affordable housing. For most of us, $500 million sounds like a lot of money. And advocates are cheering such investments.

But it’s not enough.

In the last 20 years, the state of California passed seven housing bonds that funded $9 billion for affordable housing, and we are still in this crisis. We need more money, consistently.

Perhaps if a company’s annual profit is $1 billion, they could donate 10 percent (or $100 million) toward an affordable housing fund? Or perhaps we can encourage these tactics:

• Build enough housing for new employees. When a new billion-dollar company moves into a town, they should commit to providing housing for their new employees. Even a 50 percent commitment would help buffer a potentially soaring housing market. If a large company creates a campus for 10,000 new workers, they invest in building 5,000 new homes.
• Do not displace existing homeowners and renters. Increased housing values and rents force lower income residents to move away, even if these families have resided in these communities for decades. A company should not displace existing residents, as if they are conquering a new land.
• Prioritize housing for the most vulnerable in our population – people who are homeless. Yes, firefighters, teachers and nurses need homes affordable enough within their pay scale, and close enough to the cities where they work. But people with no homes living on our streets should be first in line for homes that are affordable.
• Invest in a “Company State” not just a “Company Town.” Developing isolated housing communities – even with 10,000 new homes – simply creates privileged housing for those who are lucky enough to work for a tech company. Instead, these large companies need to invest in a statewide housing infrastructure.

Welcoming billion-dollar companies into a new neighborhood certainly brings positive payoffs. But if we ignore the effect of housing, the negatives outweigh the positives.

San José Spotlight columnist Joel John Roberts is the CEO of PATH, a statewide homeless services and housing development agency that provides services and housing in San José. Joel is also a Board member of Silicon Valley’s Destination: Home. His columns appear every fourth Monday of the month.