Microsoft to loan housing developers money to jump start affordable housing projects
Microsoft is ready to loan housing developers $475 million to jump start the region’s need to build more affordable housing. The official announcement came Thursday morning when Microsoft President Brad Smith was joined by area politicians who thanked the tech giant.
Smith also said Microsoft will provide $25 million in grants to service providers who deal with low-incomer earners and the homeless.
The idea came during the summer and after executive staff seeing the Employee Hours Tax fail in Seattle. The tax was targeting the city’s largest companies with the money going toward building affordable housing.
“It stimulated thought,” Smith said after the announcement. “It got us asking ourselves if that wasn’t the answer what is, because a new answer is needed."
Smith admits his company doesn’t have all the answers, but the company believed it could do what possibly no other regionally based company, outside of Amazon, could do — provide capital.
Microsoft is reportedly sitting on a cash reserve of $135 billion.
The company eventually decided on a loan program to developers of low to middle-income housing.
“We will make loans at below market rates so in effect we will subsidized the construction of new housing,” Smith said.
Traditionally low-to-middle income housing has not been nearly as profitable to developers as higher priced housing. Microsoft hopes builders will be incentivized by the lower rates to create the affordable housing needed in the area.
Working with the web real estate marketer Zillow, Microsoft determined 305,000 units need to be built just to match the new jobs that have been created in the region over the last several years.
It’s target is primarily areas east and south of Lake Washington, where most of Microsoft employees live. The housing is intended for people’s whose lower paying jobs support the growth that Microsoft has experienced since it moved to the east side 40 years ago; jobs such teachers, police officers, firemen and small businesses.
“This is the catalyst that we needed moving forward,” Seattle Mayor Jenny Durkan said following the announcement.
But that catalyst won’t work if the local governments don’t hold up their end of this offer and streamline development of affordable housing.
“The cites should take this as an incentive to do more, to allow more housing,” said King Council Council member and former mayor of Bellevue Claudia Balducci. “That’s a real win.”
Smith said the plan is to keep the money flowing to housing projects for three years and possibly reinvest the loan payments from those project into other affordable housing developments.