In January Microsoft announced a massive $500 million investment over the next three years to tackle the affordable housing crisis in Puget Sound area. Over the past few years, the price of houses in Puget Sound region has gone up significantly and it has pushed out people with lower and even middle incomes. In fact, Puget Sound has become the sixth most expensive region in the country.
Now Microsoft has taken the first step by supporting the King County Housing Authority with a below-market interest loan to the tune of $60 million to help the service provide low-cost protected housing to Seattle residents. Future rent increases can be driven by the cost to operate the property rather than by market pricing, and over time rents are expected to be well below rents in the surrounding market.
The effort will result in 1,029 units of affordable rental housing throughout King County, giving a home to nearly 3000 residents. It would be remiss to not note that high salaries by technology companies such as Microsoft and Amazon were the main drivers for this increase.
Microsoft will be underwriting a 15-year, $60 million loan, and in addition, King County will secure a further $20 million in low-interest debt and additional credit enhancements provided by King County, and $140 million in bonds issued by KCHA.
Local studies estimate King County has lost at least 36,000 affordable rental units in the last decade as rents increased by 43%.
“Across the Puget Sound region, people with lower and even middle incomes have been forced to move due to rising housing costs,” said KCHA Executive Director Stephen Norman. “This partnership preserves unsubsidized middle-market housing for moderate- and lower-wage earners. We believe this investment, which requires a good corporate partner to make the numbers work, will ultimately help stabilize rents and safeguard more than 3,000 existing tenants from being priced out of their homes.”
“We are committed to maintaining and bolstering strong, vibrant communities here in the greater Puget Sound region,” said Jane Broom, senior director of Microsoft Philanthropies. “Thriving communities include safe, reliable and affordable housing options for people at all income levels. To do this, we all need to come together to not only build more housing options, but also to preserve what already exists.”
Microsoft promised a $500 million commitment to the cause included $225 million in loans at below-market-rate returns — such as KCHA has received — to inject capital to catalyze the preservation and construction of middle-income housing in the eastside of King County. The commitment also afforded an additional $250 million in loans at market-rate returns to support low-income housing across the entire Puget Sound region, and $25 million in philanthropic grants to address homelessness throughout the greater Seattle region.
Read more at Microsoft here.