As tech giants throw billions at Silicon Valley's housing crisis, Seattle leaders and businesses are taking a targeted approach to creating more affordable housing.
Driving the news: Senior Director of Microsoft Philanthropies Jane Broom told Axios in an interview this week that "the probability is high" that the software giant will invest more in housing in its backyard, following an initial $500 million pledge announced in January.
“The number one thing we want to do is create or preserve more housing. But I think what we’re realizing [is] that our greater impact may be creating on-ramps or tangible new vehicles for other companies to figure out how to play in this space. It may be through investment capital, philanthropic capital, or advocacy.”— Jane Broom
The big picture: Seattle residents last week elected a super-progressive City Council that may try other initiatives to address the housing and homeless crisis, such as a per-employee tax on businesses that drew significant opposition from Amazon.
- Seattle residents have been more open to zoning changes for more density, a different dynamic than the San Francisco Bay Area, where there is more resistance to new development.
- "There was a period of transition with a more project-based focus," said Seattle Mayor Jenny Durkan, who is assembling a regional plan to address housing for Seattle and the surrounding communities, including setting goals for low- and middle-income housing.
- "We have to go big as a region, and we won't be able to get there without the strong help and support from the tech industry and other businesses, and state and local governments working together," Durkan told Axios.
How it works: There are government and financial tools that make low-income housing possible for certain income brackets, but most of that assistance is spent within Seattle borders. That means there's very little low-cost housing available in surrounding job-centered communities such as Bellevue, Redmond, Kirkland, Renton and Issaquah.
- Middle-income housing — needed by teachers, nurses and public safety workers — is much harder to finance because there are no government or tax incentives at that level, and developers can't make money on the projects.
- That's where Microsoft is trying use its own balance sheet to design loans at below-market interest rates (around 1%).
- In September, Microsoft announced a $60 million loan to King County Housing Authority, combined with $20 million in low-interest debt by King County, and $140 million in bonds issued by the housing authority — totaling $245 million to acquire and preserve 1,029 affordable rental housing units.
Microsoft's Broom said other local companies want to be involved, but aren't quite sure how, "so we need crisp roadmaps and direction for how we can make a difference. We are going to learn and share as much as we can so we can get more businesses involved.”
- “It’s flexible capital that can be used innovative ways," Broom said. "I do think it’s a perfect place for business and philanthropy to play and take on the risk that a lot of governments simply can’t do.”
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