Facebook plan falls short
The above article from today's Silicon Valley Business Journal discusses Facebook's deal with the City of Menlo Park, CA regarding its plans to expand its presence with an additional 960,000 square feet of office space and an additional 6,500 jobs.
Just my thoughts on a BETTER option for Facebook: Put 50% of the 960,000 sq. ft. of office space and 3,200 of the new jobs in San Joaquin County! Plenty of lower cost space options; affordable housing ALREADY AVAILABLE and a talented workforce with the skills needed for those 3,200 positions!
Yes, Menlo Park needs more affordable housing and cheers to Facebook for making an effort to address one of the critical problems facing the Bay Area. But the contributions Facebook is making in this transaction will NOT move the needle in any meaningful way! For example: Facebook will provide $1M to a "Housing Preservation fund to identify and purchase housing...". This contribution will buy 60% of a house in Menlo Park today (Per Trulia median sales price ~ 3bd home in Menlo Park is $1.6M!).
Facebook plans to build 1,500 homes in the City and subsidize 15% of them to make them affordable. Subsidizing only 225 homes (15% of 1,500) to be built in the future will hardly help the majority of the additional 6,500 folks Facebook is bringing in…unless Facebook plans to pay them about $450,000 per year to qualify for a standard 30-yr mortgage in order to afford that median $1.6M price tag. Oh wait, that is the 2016 value, what will that value be when Facebook finally get those homes built, and will these folks have the needed 20% downpayment ($320,000 for $1.6M today)?
Subsidizing rent on 22 units at 777 Hamilton (a self described luxury apartment complex) for $435K per year works out to about $19,700 per unit per year, or $1,600 per month. Hamilton is still in construction, but according to Apartments.com, the lowest rental rate at Hamilton is $3,200 per month. This 50% subsidy on the lowest price units is helpful, but still only a "band-aid" for these 22 “community serving professions”. They will still have to move out of Menlo Park when they want to buy a home (see above)…and probably end up in places like San Joaquin County! Chances are when they get to San Joaquin they will be able to secure a job in their field and avoid the nightmare commute back into the Peninsula, so Menlo Park ends up losing these community serving folks anyway; AND the underlying problem of lack of affordability is still not addressed. Facebook is paying the City's full affordable housing impact fee of $6.3M. [However it is interesting to note that when the Hamilton project was approved by the City back in 2015, there was no affordability restrictions put in place for the project.] Perhaps some of these funds will be used for more of the 1,500 Facebook "to be built" homes?
Call me crazy, but perhaps if Facebook and other tech firms had spread their offices and workforce around the region (like in San Joaquin County), maybe there would not be such a housing problem in Menlo Park?
Again, at least Facebook is making an effort…but the better play is for Facebook and other expanding Silicon Valley based firms to look outside the Bay Area at places like San Joaquin County for expansion of operations. You do not have to make the problems of housing and congestion worse and still be part of Greater Silicon Valley(greatersiliconvalley.com )!
Again, just my thoughts...