Microsoft commits $500M for affordable housing in greater Seattle

To offset the tech sector’s effects on home prices in the area, the company is pledging grants and low-cost loans to develop reasonably priced dwellings—and address homelessness.

Microsoft wants to be a better neighbor, and it’s putting its money where its mouth is.

Big tech companies in West Coast cities have been like McMansions on modest suburban streets. As new workers and big salaries have flooded housing markets, many longtime locals have blamed the tech behemoths for “ruining” their city instead of celebrating the job creation.

Microsoft hopes to push back by devoting a half-billion dollars to develop affordable housing.

It shared its intentions in a blog post:

Today, we are committing $500 million as a company to advance affordable housing solutions. We’ll put this money to work with loans and grants to accelerate the construction of more affordable housing across the region. We will invest:

  • $225 million at lower than market rate returns to inject capital to subsidize the preservation and construction of middle-income housing. These investments initially will be made in six cities east of Seattle and Lake Washington: Bellevue, Kirkland, Redmond, Issaquah, Renton and Sammamish.

  • $250 million at market rate returns to support low-income housing across the entire King County region. We believe that additional capital at market lending rates can help accelerate the construction of low-income housing across the region.

  • $25 million in philanthropic grants to address homelessness in the greater Seattle region. We are announcing today the first $10 million of these grants. This will include a $5 million philanthropic grant to the newly announced Home Base program created by the Seattle Mariners, the United Way of King County and the King County Bar Association.

In its announcement, Microsoft explored why housing is such an important issue for the Seattle area:

Median income in the region hasn’t kept pace with rising housing costs, increasingly making it impossible for lower- and middle-income workers to afford to live close to where they work. Teachers, nurses, first responders and many in key roles at nonprofits, businesses and tech companies now begin and end their workdays with long commutes. And people who are homeless face problems that are even more daunting.

We’ve been working the past eight months to learn more about how best to help address this problem. We’ve put one of our world-class data science teams to work, and it has partnered with Zillow to access more data on the region. We’ve also worked with the Boston Consulting Group and Challenge Seattle to learn more about best practices – not just across the country, but around the world.

The company president explained the campaign to consumers.

NPR reported:

“The housing situation in the Puget Sound region has reached a point where it’s appropriate to use the word ‘crisis,’ ” Microsoft President Brad Smith told NPR member station, KUOW, on Thursday.

“The lack of available housing is forcing many people — the schoolteachers, the nurses, the first responders, many others who work at companies — to endure longer and longer commutes. And we have even far worse problems for people who are homeless,” Smith added.

[…]Smith noted the long-term aim of the company, which is headquartered in the Seattle suburb of Redmond, is to ensure lower- and middle-income workers can continue to live close to where they work, instead of being priced out.

“I think when you take people who play vital roles in a community and you force them to live in another community it really saps the vitality for all of us,” Smith said.

The plan coincides with Microsoft’s growing footprint in the Seattle area, which includes adding 8,000 jobs.

NPR continued:

The Seattle Times reported the software company is adding about 2.5 million square feet in new construction to the Redmond campus and plans to renovate another 6.7 million square feet.

According to Microsoft, it began working on the plan eight months ago, which means it preceded the Seattle City Council’s failed head-tax effort last year. The proposed tax would have required big businesses to help fund affordable housing and homeless services. But Amazon, the city’s other tech giant, was instrumental in killing that effort.

Microsoft has called on state lawmakers to play an active role in solving the problem.

It shared in its blog:

We believe the state government has an important role to play as well. In the state legislative session that began this week, we’ll encourage the legislature to support the private sector by making additional housing investments and through policy changes to preserve and develop affordable housing. These recommendations include a $200 million appropriation to the Housing Trust Fund to expand support for very-low-income individuals and families, which would almost double the investment from the last budget cycle. In addition, we will support condominium liability reforms, extending the Multifamily Tax Exemption (MFTE), and new incentives for local communities to enact more efficient land use polices.

If we’re going to make progress, we’ll all need to work together as a community. We recognize that Microsoft is in a unique position to put the size of its balance sheet behind this effort. But we believe that every individual and every business, large and small, has a responsibility to contribute. This includes new initiatives to share data on where jobs are being created and the home locations and commuting distances for employees. It also includes new work to develop the detailed public policy changes that will be needed to provide more affordable housing.

On Twitter, the move got kudos:

Employees also responded positively:

Others were quick to point out that the bulk of the money isn’t a donation:

However, these loans could still do a lot for Seattle developers and home-buyers.

The AP reported:

Dan Bertolet, a housing policy researcher at the Seattle-based Sightline Institute, said the $225 million Microsoft is putting toward making loans at below-market-rate returns could have an especially big impact. His recent research suggested that having to repay loans at 2 percent interest, instead of 5 to 6 percent interest, could allow building owners to cut the rent they charge by roughly half, he said.

Microsoft will loan the rest, $250 million, at market rate to finance construction of low-income housing.

Smith and Hood wrote that Microsoft had teamed up with the Seattle-based real estate firm Zillow over the past eight months to research housing data and that it had worked with others to study best practices for affordable housing around the world. Among the lessons: that providing short-term loans can help developers quickly acquire publicly owned land while they raise longer-term financing for construction.

What do you think of Microsoft’s move, PR Daily readers?

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