Microsoft is putting up $500 million to address the escalating affordable housing crisis in the Seattle area. The company argues that the industry has an interest and responsibility to help people left behind in communities transformed by the tech boom. The Seattle area’s median home price is now over $720,000 and emblematic of the affordable housing crisis that follows the explosive growth of tech hubs nationwide.
Microsoft’s largesse is the most ambitious effort by a tech company to directly address the inequality found in areas where the industry is concentrated, especially on the west coast. The company will fund construction for homes affordable not only for the company’s own non-tech workers, but also for teachers, firefighters and other middle-and low-income residents. It will also tackle homelessness through various grants.
Some critics are dubious and point out that there is very little land available in the Seattle region, the high paying job market is strong, and the area’s housing market remains highly competitive. However, Microsoft has been working the past eight months to learn more about how best to help address this problem. They assigned one of their world-class data science teams to the task, and it has partnered with Zillow to access more data on the region. They’ve also worked with the Boston Consulting Group and Challenge Seattle to learn more about best practices for housing initiatives.
Microsoft’s announcement comes less than a year after Amazon blocked a new tax in Seattle that would have made large businesses pay a per-employee tax to fund homeless services and the construction of affordable housing. The company said the tax created a disincentive to create jobs. Microsoft, which is based in nearby Redmond has few employees who work in the city and did not take a position on the tax.
The debate about the rapid growth of the tech industry and the inequality that often follows is spreading across the country. Amazon is drawing scrutiny with its billions of taxpayer subsidies and plans to build major campuses in Long Island City, Queens, and Arlington, Va., employing a total of at least 50,000 people. Government officials and residents in New York have raised concerns that the company has not made commitments to support affordable housing.
Other tech businesses have tried to address the homeless crisis including Amazon’s chief executive, Jeff Bezos, with support for homeless service providers through his personal foundation. Marc Benioff, Salesforce’s chief executive, helped fund Proposition C in San Francisco to tax businesses to pay for homeless services. Voters approved the tax in November, over opposition from some tech leaders, including Twitter’s chief executive, Jack Dorsey.
- A growing body of research has tied the lack of affordable housing to increasing homelessness. A December study from Zillow said that was particularly true when households pay more than a third of their income in rent. The New York, Boston, Los Angeles, San Francisco and Seattle regions — the country’s largest tech hubs — have all already crossed that threshold.
- A report in December by the Regional Affordable Housing Task Force said that the Seattle region needs 156,000 more affordable housing units and will need 88,000 more units by 2040 to accommodate future growth.
- The median home value in Apple’s home base, Cupertino, has approached almost $2.3 million, and the cost of living in the wider San Francisco Bay Area has reached the point at which families making $117,000 are now classified as low income.
Quests & Actions (Q&A)
Solving affordable housing requires creative solutions. Some actions you can take:
- Get involved with city leadership, government leaders, and nonprofits to creatively solve issues. Examples include: inclusionary zoning, removing parking minimums, changing building codes to make it easier to rehab old buildings, and creating new funding models. Denver launched a successful $10 million Revolving Affordable Housing Loan Fund to help increase the capital pool for affordable housing projects.
- Support artist housing initiatives where residents earn bonus equity every month they rent up to $10,000 over the course of 10 years, which can then be used to pay for a down payment on a studio or home. This is being done in Cleveland by Northeast Shores Development, a local nonprofit community development corporation.
- Advocate for developments that enable sustainable living on a budget such as the Rose in Minneapolis. Developers Aeon and Hope Community managed costs and created a healthy, energy-efficient, and low-maintenance environment that sets a template for future affordable projects.