Microsoft will invest 500 million dollars in affordable housing in Seattle

Seattle and its surrounding areas have already become a symbol of the affordable housing crisis that has followed the explosive growth and development of technology centers in these parts. This is where giants such as Amazon and Microsoft are located. The latter recently announced that he plans to allocate $500 million to solve the problem, since “the industry is interested” in the well-being of the region’s residents.

Microsoft's money is a very ambitious effort to address the inequality that exists in the areas where the industry is concentrated - especially on the West Coast, writes New York Times. The company will finance the construction of houses that are affordable not only for its employees, but also for teachers, firefighters and other residents with middle or low income.

Microsoft moved into action less than a year after Amazon successfully pushed through the blocking of the new tax in Seattle. This tax was to force large companies to pay tax on each employee. The money would go to finance services for the homeless and the construction of affordable housing. Amazon said the tax created an obstacle to the emergence of new jobs. Microsoft, which is based in nearby Redmond, Wash., Has not taken a stand on this tax.

The debate about the rapid growth of the high-tech industry and the inequality following from it spread throughout the country, especially when Amazon announced plans to build large campuses in Long Island City, Queens and Arlington, Washington. All these places would employ at least 50 000 people. Officials and residents of New York expressed concern that Amazon had not committed itself to supporting affordable housing for workers.

Microsoft was at the forefront of those who warned about potential negative effects of technology, such as personal data problems or the unintended consequences of artificial intelligence. Managers hope that efforts to create budget housing will also encourage other companies to follow his example.

“We believe that everyone has a role and everyone has a role to play,” said Brad Smith, president and general counsel of Microsoft.

The stable financial situation, which speaks of the revival of the company under the leadership of Satya Nadella, gave resources for deployment, Smith said. In October, the company reported that net profit for the last quarter was 8,8 billion dollars, which is 34% more than before. On the Microsoft balance sheet almost 136 billion dollars in cash and short-term investments. Shares of the company under the leadership of Nadella steadily grew, and now Microsoft is estimated at more than 800 billion dollars.

Other technology companies have already tried to cope with the crisis of the homeless. Amazon CEO Jeff Bezos supported home-based supply providers with his personal fund, and Salesforce executive director Mark Benioff helped fund a proposal to pay service taxes for the homeless in San Francisco. Voters approved this tax in November, rejecting opposition from some technology leaders, including Twitter's executive director, Jack Dorsey.

There are those who are planning to build housing for their employees. Such housing may help with demand, but this idea has reinforced the impression that companies are too concentrated in their own backyards.

"This is long-term thinking for a company that has been around for a long time and plans to be around for a long time," said Margaret O'Mara, a University of Washington professor who studies the history of technology companies.

Microsoft began exploring housing in the region last summer, after a fierce tax struggle in Seattle and at the height of housing prices. The company analyzed the data and hired a consultant to decide how to focus its work. Housing prices in this area have nearly doubled in the last eight years. Smith said that “the region is illogical to do less for housing for middle-income people than for low-income people, especially in the suburbs.”

This problem affects many employees.

“The reality is that Microsoft employs a lot of people, and not all of them are software developers. We have cafeteria workers, bus drivers,” Nadella said this week at a meeting at the company’s headquarters. “It’s a supply problem, a market failure.”

Microsoft plans to provide 225 millions of dollars at subsidized rates to preserve and build housing for middle-income people in six cities located near Redmond headquarters. This will add an extra 250 million dollars to the low-income housing fund across the region. Some of these loans can be provided through federal programs that provide tax incentives for low-income people.

The company plans to invest money within three years and expects that most of it will go to the suburbs of Seattle. Loans can be made available to private or non-commercial developers or government groups, such as King County Housing Authority. According to Smith, when the loans are repaid, Microsoft plans to borrow money again to support additional projects.

The remaining 25 million dollars will be provided to local organizations working with the homeless in the form of grants, including legal assistance to people struggling with eviction. The Seattle Times reported on Wednesday that if 500 million dollars were invested in one project, it would create only about 1000 housing units, so Microsoft would likely invest smaller amounts in many projects instead to help create "tens of thousands of units" .

City of Seattle, WA. Photo: depositphotos.com

The first public reaction to the company's announcement was positive.

A report from the Regional Task Force on Affordable Housing, published in December, states that the region needs 156 000 housing units at affordable prices, and by 2040, 88 000 housing units will also be needed for future growth.

Research has linked a lack of affordable housing to increased homelessness. This is especially true when households pay more than a third of their income on rent, according to Zillow. The New York, Boston, Los Angeles, San Francisco and Seattle regions—the country's largest tech hubs—have already passed this threshold.

"The idea that you can live in your bubble and put your fingers in your ears doesn't work anymore," says Steve Schwartz, head of public relations at Seattle-based Tableau Software.

In recent years, Amazon has been working closely with Mary's Place, a shelter for homeless women and children in Seattle, and is introducing a shelter for 65 families in one of its new buildings. Amazon paid tens of millions of dollars to the urban affordable housing trust fund as a payment for its own construction in downtown Seattle.

Google supported the City of Mountain View plan for building 10 000 housing units in a developing area, with 20% intended for low-income residents. And Facebook planned to build 1500 apartments close to the headquarters of Menlo Park, of which 15% will be affordable.

Microsoft began an overhaul of its main campus in Redmond, allocating billions of dollars to work and connecting it to the light rail station under construction. The company helped fund a project for voters to approve more property taxes to pay for transportation costs. New housing investments push commitments even further.

“This is where Microsoft plans to stay and the region needs to work,” said Claudia Balducci, a member of the King County Council and co-leader of the Regional Affordable Housing Task Force. “I don’t think it’s all about altruism.”

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