"Our employees are being driven from their homes by rising rents," Brewster Kahle, founder of San Francisco-based non-profit The Internet Archive, said in a talk this month that's been published on his blog. "[T]hey are commuting great distances because of the lack of affordable housing; they are living in insecurity because of the fluctuation in rent and home prices."

Noting that his workers spend an average of 30 to 60% of their income on housing, Kahle has been pushing hard for an alternative to market-rate housing. With a new nonprofit, the Kahle/Austin Foundation House, he wants to provide his own permanently affordable housing to non-profit employees by purchasing apartment buildings.

These rental units are then made available to employees of select nonprofits at a “debt free” rate- basically equivalent the condominium fee and taxes. Typically, the debt makes up about 2/3 of the cost of a building and the other costs (tax+maintenance+insurance) makes up about 1/3. Since the employee does not pay the debt part, the monthly fee is now about $850-1000/month rather than $2700-3000 current market rent. This way, the fee to those employees is about 1/3 of the cost of market rent, and we believe more stable than market based rents.

So far the Kahle/Austin Foundation House owns an 11-unit apartment building that RichmondSFblog reports is at 19th and Clement, a short 6 blocks from the Internet Archive itself. All apartments, per Kahle, will "become available through normal attrition — we do not force the existing tenants out." Units are currently available to two nonprofits with three employees already living there.

Though it's clearly a great idea insofar as attracting and retaining top talent, RichmondSFblog points out the potential difficulty of leaving a job that provides housing for you. If this were down the peninsula at Facebook, where that company is plotting more housing in Menlo Park for its employees, we might be singing a different tune. But the situation is probably different here. Facebook isn't a non profit, and The Internet Archive provides a vital service — not a dig at Facebook, just saying, they're the ones backing up important events that might happen on Facebook. If you're a subscriber to the New Yorker and haven't read this story on how it works, I suggest you do that.

Here's the plan for how to make the housing work, or rather a few ideas already being tested according to Kahle,

  • We built a credit union with this idea in mind, called the Internet Credit Union. It has plenty of deposits to start creating Foundation Housing, but alas, the credit union regulators (indirectly controlled by the banks) are not allowing us to make mortgages. This is a sad state of affairs for our nations new credit unions, but is not the subject of this talk.
  • We have tried the “endowment” approach with the current Foundation House, where we appealed to major donors for an endowment in the form of a building. The attraction is that it is much like an endowment, but instead of having money in a Goldman Sachs account, where they do their magic to make some return, the building-as-endowment is both good deal financially, and helps the nonprofit support their employees.
  • Beyond this, we would like to look into raising money through a low-interest bond, say for $100 million, to government and local investors, to fund the purchase of these houses, then using market based renters to pay off the bond. This way the buildings would slowly transition into debt-free Foundation Housing. We have not tried this yet.

So, as the non-profit figures out a plan for its employees, might this model become a blueprint for similar organizations? We'll know soon enough.

Related: 16th And Mission Developer Doubles Number Of Affordable Units