Microsoft Pledges $500M for Housing in Growth-Strained Seattle
Microsoft announced a new, $500 million initiative late Wednesday that’s aimed at making housing more affordable and available to low- and middle-income residents of the Seattle area.
The Redmond, WA-based software giant pointed to data indicating that in this decade, population increases in the metropolitan area that Microsoft (NASDAQ: MSFT) calls home have outpaced growth in housing construction. As a result, housing prices in the Puget Sound region have nearly doubled since 2011, Microsoft president Brad Smith wrote in a blog post about the initiative. Greater Seattle is the sixth most expensive place to live in the United States, Smith says.
Microsoft says it plans to deploy the majority of the big funding trove over the next three years. The $500 million total will be a combination of loans and grants to build new housing units and address homelessness.
A recent flash point in the debate over how best to address the Seattle area’s affordable housing “crisis,” as Microsoft calls it, came over the summer. The Seattle City Council enacted what became known as an annual “head tax” of $275 per employee on for-profit companies that gross at least $20 million a year in the city. But the council later voted to repeal the tax, which was aimed at financing the construction of affordable housing and providing services to the homeless, following a public opposition campaign by Amazon (NASDAQ: AMZN) and other businesses that would have had to pay the tax. Microsoft reportedly stayed neutral on the proposed tax while the debate played out.
Microsoft says its new initiative, on which the company has partnered with local nonprofits and the mayors of nine Seattle suburbs, is aimed at both catalyzing the construction of new affordable housing units and preserving existing ones. The mayors will consider zoning changes that could create more housing stock in certain areas, and use tax incentives to spur development, Microsoft says.
According to a report published late last year by the Regional Affordable Housing Task Force of King County, which encompasses greater Seattle, the county needs 156,000 additional affordable housing units to meet current needs. The task force estimates the county will need another 88,000 such units by 2040 to be able to sustain expected future growth.
Microsoft says it plans to lend builders $225 million at below-market rates to preserve and develop middle-income housing in cities on the county’s east side, which includes Redmond. The initiative calls for the company to lend another $250 million to support the construction of low-income housing throughout the county. Microsoft says the remaining $25 million would be in the form of philanthropic grants for addressing homelessness in greater Seattle.
In his blog post, Smith writes that leaders at Microsoft believe its “financial commitment can have a multiplier effect.”
Based on Microsoft’s housing research, the company believes “one effective approach is to provide short-term loans to enable those who want to build affordable housing the time needed to navigate the process of acquiring land from the public sector and raise longer-term construction financing.” The process Microsoft envisions involves lending money to accelerate progress, getting paid back, and then making more loans, he says.
Loan recipients could include real estate developers or government agencies such as the King County Housing Authority, The New York Times reported Wednesday.
“We recognize that Microsoft is in a unique position to put the size of its balance sheet behind this effort,” Smith says. “Ultimately, a healthy business needs to be part of a healthy community. And a healthy community must have housing within the economic reach of every part of the community.”