Illustration: Sarah Grillo/Axios
One year ago, Microsoft announced it would invest $500 million to address the affordable housing crisis in Seattle. Today, it announced an additional $250 million in the form of a line of credit to the Washington State Housing Finance Commission.
Why it matters: The additional allocation brings Microsoft's total investment to $750 million, deepening its role in its hometown as part financier, part philanthropist in trying to lessen the low- and middle-wage housing shortage plaguing many tech hubs around the country.
- Microsoft was the first tech giant to make a substantial commitment for affordable housing after realizing that essential workers like teachers and nurses could no longer afford to live in the area.
- As homelessness and skyrocketing housing costs have worsened in the tech industry's backyard, Apple, Facebook and Google in November announced investments to address the problem.
Flashback: Jane Broom, senior director of Microsoft Philanthropies, told me in October that that the company would likely make a follow-on investment. She also noted the high interest from the Seattle business community to help fill funding gaps for affordable housing projects.
Yes, but: Despite the interest, the pipeline of affordable developments that met Microsoft's criteria for investment was surprisingly small, underscoring how hard it has become to create affordable housing in the Puget Sound region.
- "There are discussions happening that weren’t happening before," Broom told me this week. "But right now there’s still a lot of talk, a lot of hypothesizing and listening. We really want to move toward action and work with developers to help prime the pump with some clearly defined projects."
Details: The $250 million line of credit to the WSHFC will preserve and recycle tax-exempt bond status, essentially providing more funds for incremental affordable housing projects.
- How it works: The commission has a limited number of tax-exempt bonds available. But the demand far outweighs the supply. So the line of credit will allow the commission to repay a tax-exempt bond used for an affordable housing project, which then allows the bond to be re-allocated to another project.
- Microsoft expects the money could create up to 3,000 more affordable housing units over the next decade.
As part of its initial investment, the company also announced today a $50 million investment in the Evergreen Housing Impact Fund that will create about 1,250 units of low-income housing on Seattle's Eastside.
- Microsoft also announced two $2.5 million philanthropic grants to organizations building affordable housing in neighborhoods including Central District, Capitol Hill and White Center, all of which have become unaffordable in recent years.
- With these projects and the additional investment, Microsoft has committed $380 million of its total $750 million commitment. The money will support preserving or creating more than 6,671 housing units, Microsoft says.
Bottom line: As we've written before, the affordable housing crisis is so severe that corporate investments won't be the silver bullet. Zoning codes, tax laws, construction costs, the price of land and cut-backs on federal affordable housing assistance are all factors — and will take years to address.