PALO ALTO — When your net worth is $25.3 billion, you can afford to spend $30 million to become your neighbors’ landlord. That’s approximately how much Facebook founder and CEO Mark Zuckerberg paid to buy four residential properties behind and next to the gated home where he and his wife Dr. Priscilla Chan live in the Crescent Park section of Palo Alto, California.
The San Jose Mercury News reported Zuckerberg, who turned 30 this week, is uninterested in knocking down the neighbors’ homes and building an estate on the combined properties (which is what Google’s Larry Page is doing on four adjacent lots he acquired in another Palo Alto neighborhood). Instead, in a bid to preserve his privacy, the Facebook CEO is leasing the properties back to his neighbors to keep out developers who may market them based on their proximity to the Zuckerberg residence.
Zuckerberg paid well above market price (reportedly $14 million) for one of them.
So how does this controlling move by Zuckerberg play with his fellow Palo Altans?
“It definitely shows a lack of community orientation,” local realtor Arti Miglani told The Times of Israel. “People move here because of the strong community, not for privacy. If you live in Palo Alto, you need to be willing to embrace your neighbors, whoever they are.”
Palo Alto resident Michelle Hansen agreed. “It’s a matter of private enterprise. He can do whatever he wants with his money. But what he did is not very friendly.”
Long-time Palo Altans are ambivalent about the changes vast amounts of Silicon Valley wealth are bringing to their city. Nechama Tamler, who has lived here for forty years, worries about growing income inequality.
Tamler has no problem with what Zuckerberg did, so long as he is a good landlord to his neighbors. However, she is unhappy that the above- market rates at which he bought his neighbors out will likely drive housing prices higher.
Miglani confirmed this to undoubtedly be the case. “His neighbors are happy that he has raised the prices in the neighborhood. Sellers’ expectations have definitely gone up.”
According to a Palo Alto Online report, a fraud suit recently brought against Zuckerberg earlier this month reveals that, at least in the case of one of the adjacent properties, he actually paid below market value.
Developer Mircea Voskerician claims that he acquired a property abutting Zuckerberg’s back yard in November 2012 and planned to build a large home on the site. He says Zuckerberg approached him about buying the property from him, offering far less than the $4.3 million another potential buyer was willing to pay.
In the Palo Alto Online report, Voskerician claims Zuckerberg offered to compliment the discounted price with personal references and promotions for Voskerician’s business. Voskerician agreed to these terms and accepted a $1.7 million payment in December 2012.
The developer says Zuckerberg did not make good on his promises to make business referrals for him. He is suing the Facebook CEO for promissory fraud, intentional misrepresentation, concealment, rescission, and breach of contract. He wants Zuckerberg to pay him the remainder of the $4.3 million he would have received had he sold the property to the other buyer.
Zuckerberg’s attorneys deny the suit’s allegations.
Miglani told The Times of Israel Zuckerberg’s approach is not one the late Steve Jobs, who also lived in Palo Alto, would have taken.
“He wasn’t focused on his privacy. You would see him walking the dog, buying groceries at Whole Foods, and eating in local restaurants,” she recalled. “If you walked by his house, you’d see his window shades were always open. You could see him at his desk, with his back to the window.”
Hansen perceives what she calls “a slight cultural shift” whereby Palo Alto’s “uber-wealthy” have become more ostentatious. “In the past, they tried to fit in with the rest of us,” she says.
She suggests that if Zuckerberg wants more privacy, he should consider living in one of the surrounding communities like Woodside, Portola Valley or Los Altos Hills, where homes come with lots of acreage.
“Or perhaps, if he stays in Palo Alto, his outlook will change if and when he and his wife have children and they start going to the local schools,” Hansen suggests.
“But then again, how can I judge him?” she asks. “He will always have privacy and security issues that I will never have.”