The Puget Sound region has been facing a housing crisis in recent years, with housing prices growing by 96 percent since 2011. The Greater Seattle area has thus become the sixth most expensive area in the United States. Housing construction in the region has only increased by 13 percent in the past eight years, compared to a 21 percent increase in jobs.
Today, Microsoft has announced that it will be committing $500 million in order to increase affordable housing in and around Seattle. This becomes the tech giant’s largest ever pledge, and also one of the largest investments in housing from a private company, according to Microsoft. The mayors of the nine largest cities in the same region have also released a joint statement in tandem with this announcement, outlining their desire to provide incentives to increase affordable housing.
The following is the breakdown of the investment:
- $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. This program helps keep people facing eviction in their homes through legal aid, access to flexible funds and case management. We are also committing $5 million to support a new joint agency on homelessness being formed by the city of Seattle and King County.
Microsoft will also be providing construction companies with short-term loans, giving people in need of affordable housing the time to go through the process of acquiring land in the public sector. These loans can be repaid in a relatively shorter period, with other similar loans being then provided to the same companies multiple times, if required. Furthermore, a request to double the state housing trust fund from $100 million to $200 million will also be made to state legislators. New incentives for local communities will also be supported in a state legislative session to be held this week, in order to sanction better land use policies for them. Microsoft President Brad Smith believes the aforementioned fund should also motivate other businesses to provide similar aid.
Mayors of the nine largest cities outside Seattle – Bellevue, Kirkland, Redmond, Issaquah, Renton, Sammamish, Auburn, Kent and Federal Way – have also released a joint statement focusing on the need to provide incentives to increase the supply of affordable housing. The recommended steps outlined to address the issue include updating of zoning and land use regulations, offering publicly-owned under-utilized properties at deep discounts, provision of tax exemptions, and more.
Interestingly, in an interview with The Seattle Times, Smith did mention that the company’s investment would be “nowhere close to what’s needed to solve this problem”. However, he also believes that it is an important first step in years of work that are required to address the housing crisis.
Source: Microsoft (1), (2) via The Seattle Times