Microsoft’s leaders announced Jan. 16 that the company would forward $500 million in loans and grants to spur the construction of affordable housing throughout King County in an effort to lessen the twin crises of housing affordability and homelessness in its home region.
The company will invest $225 million at lower-than-market-rate returns targeted at subsidizing the preservation and construction of middle-income housing on the east end of the county as well as $250 million at market-rate returns to support low-income housing throughout the county.
The remaining $25 million will be doled out in grants to address homelessness, according to a blog post by President Brad Smith and Chief Financial Officer Amy Hood. The first $10 million of that money will go to boost existing efforts, including the Home Base program, which helps people avoid eviction and funding the new joint agency between Seattle and King County to combat homelessness.
To put the scale of the investment in perspective, Mayor Jenny Durkan wrote that the city of Seattle and other partners have invested $710 million in affordable housing over the past two years, which they anticipate will create 4,000 new affordable homes by 2022.
According to the post, the company spent eight months designing the plan in partnership with real estate site Zillow, the Boston Consulting Group and Challenge Seattle, an alliance of leaders from the region’s 18 largest employers.
The infusion of funds is important, but it’s only the beginning, Smith and Hood wrote.
“Even more capital will be required. And more critical still is the need for public policy changes to make it easier and more attractive to build affordable housing,” the post reads.
The gap between the number of jobs created and the number of housing units is vast. Microsoft found that since 2011, the number of jobs has spiked 21 percent while the number of housing units constructed rose by only 13 percent. The result is a severe pinch in supply that caused housing prices to rise 96 percent in just eight years.
The increase in prices has a direct impact on homelessness. An oft-cited study found that for every $100 increase in rent, homelessness jumped up by 15 percent. Despite significant improvements in the number of households exiting homelessness, the overall homeless population continues to grow year on year.
Elected officials celebrated the announcement but acknowledged that the new investments were just part of a regional solution and that more help was needed from all levels of government and the private sector.
“The problem is tremendous. This investment is a wedge of the pie chart that is a solution but just a wedge,” said King County Councilmember Claudia Balducci. “I hope this will motivate and challenge the rest of us, in government and the private sector to fill out the rest of that pie. We need workforce housing, affordable housing, assisted living, housing for people experiencing homelessness, senior housing, all of it.”
"We need workforce housing, affordable housing, assisted living, housing for people experiencing homelessness, senior housing, all of it.”
Funding to build and preserve housing is one critical piece of the solution, but the political will to get it built — sometimes in the face of severe public opposition — is another. Seattle is in the midst of a fight over its Mandatory Housing Affordability policy, which opponents believe will disrupt the character of their neighborhoods and potentially result in more displacement of households that are hanging on by a thread.
“That is one of our big challenges, that’s a rock we have to push up the hill,” Balducci said.
Balducci represents the east side of King County, and lives in a neighborhood that was developed to house workers being reintegrated into communities after the wars of the mid-20th century. There was opposition then too, she said.
“People who lived there before my single-family neighborhood was built used to charmingly refer to it as ‘the monstrosity up the hill,’” Balducci said.
She argues that creating new housing for low- and middle-income households will make for a healthier community by providing access to high-opportunity areas that are aligned with upward mobility and success.
“That’s what we should be all about,” Balducci said. “We should be all about opportunity.”
Ashley Archibald is a Staff Reporter covering local government, policy and equity. Have a story idea? She can be can reached at ashleya (at) realchangenews (dot) org. Follow Ashley on Twitter @AshleyA_RC
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