Google has just committed $1 billion to address the Bay Area’s crippling housing affordability crisis, an initiative that CEO Sundar Pichai says will help create at least 20,000 new homes in the region over the next decade.

The stunning announcement on Tuesday marks the largest promise to date by a Silicon Valley company to invest in homes as a growing number of tech companies begin to seek out ways to ease the area’s housing shortage, which has been exacerbated in recent years by the tech industry’s breakneck growth.

Pichai released a blog post Tuesday morning outlining a three-pronged approach to provide a little more than $1 billion in value to create and maintain housing in the Bay Area over the next decade. The initiative will focus on cities where the company currently has major office outposts: San Francisco, Sunnyvale, San Jose and its hometown of Mountain View.

“Solving a big issue like the housing shortage will take collaboration across business, government and community organizations,” Pichai said in a statement. “We look forward to working alongside others to make the Bay Area a place where everyone who lives here can thrive.”

Alphabet Inc.-owned Google intends to divvy out its investment three ways: setting aside company-owned land for housing development, creating a new investment fund to maintain and create affordable homes and awarding grants to organizations focused on homelessness and displacement in the region.

“This is a really big day,” said Jim Wunderman, president & CEO of the Bay Area Council. “It signals that there’s a new day where private companies are stepping up and recognizing that they’re part of the fabric of our communities and they need to be part of the solution to the region’s most pressing problem: housing affordability.”

Landing housing near Google

Its largest planned contribution, valued at $750 million, will be through developable land, an increasingly scarce and expensive resource in the Bay Area.

The company intends to work with city officials to rezone swaths of Google-owned property, changing it from land where office or commercial space are currently the only types of buildings allowed to rise, into places where new residential units can sprout up instead. Pichai estimates 15,000 new units or more could rise on the land.

And that’s a key part of the plan because Google’s owned land today sits primarily around its office campuses, said Alicia John-Baptiste, president and CEO of planning think-tank SPUR, short for San Francisco Bay Area Planning and Urban Research Association.

“The fact that Google is enabling development of residential right where the jobs are is very significant,” John-Baptiste said. “You get not just a housing benefit, which is incredibly important, but you also get a transportation and reduced congestion benefit as well.”

Already, Google has worked with officials in Mountain View, where the company is by far the largest land-owner in the city’s North Bayshore area, to propose mixed-use campuses that include office, housing and retail space in close proximity.

Pichai said Tuesday the tech titan is now in “productive conversations” with officials in Sunnyvale and San Jose around designating Google-owned land for housing rather than office space.

Notably, Google has been clear in the past it isn’t in the business of housing development. Its approach so far to housing has been to lease the soil to a housing developer that will build and maintain the residential units. That appears to be the company’s plan in this case, too.

“We’ll continue to work with local municipalities to support plans that allow residential developers to build quickly and economically,” Pichai said. “Our goal is to get housing construction started immediately, and for homes to be available in the next few years.”

Funding affordable homes

The second part of Google’s just-announced housing initiative is creating a new $250 million investment fund that Pichai said will help build “at least” 5,000 new residential units, though the company hasn’t elaborated on what that fund will look like in detail.

An investment fund model has been the primary tack so far for major Bay Area companies looking to make a divot in the housing crisis.

One notable exception is Facebook, which has both created and contributed to housing investment funds, but has also submitted plans in Menlo Park to build 1,500 new residential units in a proposed mixed-use development known as Willow Village.

Other major companies, including Cisco Systems, LinkedIn and NetApp, have invested millions in the Housing Trust Silicon Valley’s TECH Fund in the past two years. That fund, dreamed up by the San Jose-based nonprofit to encourage corporate investment in affordable housing, offers low-interest loans to developers looking to build affordable homes.

Microsoft Corp., which owns Sunnyvale-based LinkedIn, this year pledged $500 million to tackle affordable housing woes in Seattle, where it is headquartered. Its approach is at least in part modeled after the Housing Trust’s, according to reporting by the Seattle Times.

Oakland-based healthcare giant Kaiser Permanente for its part last year said it would commit up to $200 million through its Thriving Communities Fund to address housing stability and homelessness.

“This is not something that one entity, one city or one corporation is going to solve,” said Leslye Corsiglia, executive director at housing nonprofit [email protected] “But the commitment of $1 billion from one corporation is significant and it is something to celebrate.”

San Jose Mayor Sam Liccardo said the city for months has encouraged Google to “make a bold commitment to address our region’s affordable housing challenge.”

“We look forward to working with Google to ensure today’s announcement manifests into housing that will benefit thousands of San Jose residents struggling under the burden of high rents,” Liccardo said.

Homelessness and displacement

The final piece of Google’s commitment is a promised $50 million in grants through Google.org that will help fund nonprofits working on homelessness and displacement issues.

That announcement is timely, as the company seeks to build a 6 million- to 8 million-square-foot mixed-use campus near San Jose’s downtown while local residents have expressed concern about rising rents and displacement as plans move forward.

One of the most vocal critics of Google’s potential impact on San Jose residents is public policy organization, Working Partnerships USA, which released a report last week that claimed Google’s new San Jose campus could herald in an extra $235 million annually in rent for existing renters without significant new housing construction.

“Our research found that Google needs to build more than 5,000 affordable homes in San Jose alone, not just regionally,” said Jeffrey Buchanan, Working Partnerships’ director of public policy. “There is clearly still more it needs to do, but it’s a very welcome first step towards fully addressing its impact on rent hikes, evictions and overcrowding.”

Contact Janice Bitters at [email protected] or follow @JaniceBitters on Twitter.