After vociferous opposition from Starbucks, Amazon, and other large Seattle-based corporations last summer, the Seattle City Council voted to roll back a tax that would have raised $47 million towards building 591 units of affordable housing. Now, Microsoft has announced that it will invest $500 million for affordable housing over the next three years across King County, Washington.
Seattle has been plagued by rising rents and homelessness rates as the area has grappled with a housing shortage, caused in part by inflated demand and stagnant wages. Amazon and other so-called “mega-corporations” in the city had successfully talked the government down from imposing a $500-per-employee head tax that would have funded 1,700 new units of affordable housing in May of 2018 before the watered down version of the tax was ultimately killed in June. Affordable housing and homelessness advocates, who felt that the large companies headquartered in Seattle are partially responsible for its tight housing market, saw the move as adding insult to injury.
Microsoft, which is headquartered in neighboring Redmond, wouldn’t have been hit with the head tax, but the initiative sparked a dialogue between Microsoft and the business-led group Challenge Seattle. The plan, which is still being finalized, sprung out of their conversations last summer on how to close the gap in affordability in housing across the region.
The $500 million will be doled out as a series of grants that Microsoft is calling “targeted investments,” across three stratified tiers. The company will load $225 million at a lower-than-market rate to spur the construction of middle-income housing across six cities to the east of Seattle: Bellevue, Kirkland, Redmond, Issaquah, Renton, and Sammamish.
Microsoft will be lending an additional $250 million at market rate to support the construction of low-income housing across King County. The remaining $25 million will be distributed as grants to combat homelessness in and around Seattle. As part of its announcement, Microsoft revealed that $5 million of its grant will be going towards Home Base, a program that provides legal aid to families facing eviction, and another $5 million will be used to support a new joint agency being formed between Seattle and King County to tackle homelessness.
Rather than using that money to solely build housing, which Microsoft expects would only generate about 1,000 new affordable units, the tech company claims that its targeted investments have the potential to spark development of “tens of thousands” of new units. While the company doesn’t expect to make much of a return, it plans to repeat the process and reinvest the money after being repaid.
While this is Microsoft’s largest philanthropic gift to date, the company’s motives likely aren’t entirely altruistic. As the New York Times noted, the company is currently riding high with nearly $136 billion in cash on hand and is in the process of renovating its 500-acre Redmond campus. Supporting the region’s housing stock is a boon to lower-income residents, but will also provide a long-term solution for potential employees the company continues to woo as it expands.