Recent moves by companies like tech giant Microsoft and health care provider Kaiser Permanente to invest in housing initiatives represent a form of “enlightened self-interest,” Facebook development manager Lewis Knight said during the recent ULI Housing Opportunity 2019 conference in Newport Beach, California.
“We know it’s absolutely critical to ours and our competitors’ continued growth,” Knight said.
The increasingly overlapping concerns of employers and the need for affordable housing were a key theme in the conference panel, “New Developers: The Entrance of Employers in the Housing Market,” which was moderated by Jenna Hornstock, executive officer of transit-oriented communities for L.A. Metro.
“Affordable housing is workforce housing,” Hornstock said.
Facebook started examining the issues facing employees and “our ability to be successful” soon after it set up its headquarters in Menlo Park, California, Knight said. “We came to three issues in the region: doors, desk, distance,” he said. “Where do you work, where do you live, and how much time do you spend commuting between the two places.”
Since 2008, more than 750,000 jobs have been created in the Bay Area, but only 130,000 new housing units have been developed, Knight said. “What we’re finding is, fundamentally, the market isn’t meeting the needs to support the region,” he said.
A shortage of housing is a perennial issue for employers in Aspen, Colorado, where housing prices have soared, said Philip Jeffreys, project manager for Aspen Skiing Company. In addition to the high value placed on vacation homes, Airbnb and short-term rentals are eating into the supply, accounting for 10 percent of the available homes, Jeffreys said.
To accommodate seasonal workers, Jeffreys’s company embraced the tiny-home movement. The company converted a six-acre (2.4 ha) campground into a housing park for employees, using 40 trailer coaches with a total of 112 beds. Each coach—with about 500 square feet (46 sq m) of living space—features 10-foot (3 m) ceilings, flat-screen TVs, name-brand appliances, and loft space.
Surveys found that employees were okay with paying a few hundred dollars a month for small spaces—some only wanted a bed to sleep in—but they didn’t want to share a room, Jeffreys said. By using mobile homes on the former campground, the facility required no special permitting, he noted.
“The key to making [employee housing] affordable is to put it on a diet,” Jeffreys said. “Build only what you need.” The mistake is trying to “create a unit for all people,” he said. “It gets expensive.”
His company learned several lessons from the experience, including the following: know your end user, know the zoning codes, and “be adaptable.” “I can’t tell you how many projects come to the mountains to die when developers bring a model that worked somewhere else,” Jeffreys said.
Flexibility also was essential “in terms of how they can play different roles for different folks at different times of the year,” Jeffreys said. The facility cost $4.5 million, including about $110,000 for each three-bedroom coach. But the company simply views it as “an operating cost,” he said.
Independent lettuce grower Tanimura & Antle, based in Salinas, California, was facing a significant labor shortage in 2016, when the company decided to build its own housing, said Wesley Van Camp, vice president of legal and general counsel for the grower. The company was unable to draw workers from other, more affordable areas, she said.
The company’s decision to build an employee-only housing complex was based on the clear need to “attract and retain the seasonal workforce,” Van Camp said. The facility, dubbed Spreckels Crossing, includes 100 fully furnished two-bedroom, two-bathroom units, each with enough room for eight employees. The complex also includes an on-site store; a lounge with access to computers; a laundry room; a recreation room; and baseball and soccer fields.
Every element from linens to silverware is included. “We make it so they don’t need a thing,” Van Camp said. Employees are typically charged about $125 a month for a bed.
In 2017, the facility housed 543 employees during the season, she said, “providing comfort, affordability, and safety,” that wouldn’t be accessible for workers with a starting salary of $13 an hour.
“It’s had a dramatic impact on the economic stability of employees,” Van Camp says.
Improving the housing situation for employees has far-ranging impacts for the community, beyond the company’s bottom line, panelists agreed. Partnerships with local agencies and access to transportation play key roles in making a housing project effective, the panelists said.
“We will not invest in projects that are not on transit,” said Jeffreys, who is planning a new three-story, 150-bed employee housing facility next to transit stop. “Transit allows us to spend more money on beds and less on asphalt.”
In the Bay Area, housing and transportation are deeply intertwined, Knight said. “For us to be successful, transportation has to be solved,” he said.
Facebook has focused its initial efforts on data, to move discussions beyond the “anecdotal” and “emotional,” he said. The company has also been “dipping its toe in the water” with financing, with mixed results, due to infrastructure issues and the NIMBY pushback on many projects.
The social media giant is looking for partners as it goes forward, Knight said. “We started to realize we’re not the experts and there are a lot of really smart people out there,” he said.
Facebook is recognizing that the only way for the company to meet the challenge is to take a leadership role, he said. It starts with recognizing that current ideas are not working, he said. Too often, the housing built is “not the right type, not the right location,” he said.
“The question for developers is: how do you think through the models differently?” Knight said. “How do you add density where we have existing infrastructure?”