Early January, Microsoft publicly pledged $500 million to address homelessness and the growing gap of affordability among the Puget Sound region. This after the announcement of plans for a massive expansion of its Redmond headquarters sparked talks with Challenge Seattle.
The company plans to add 2.5 million square feet of new construction, and 6.7 million square feet in renovations. Microsoft is estimating an additional 8000 employees after the project is complete.
The pledge is the largest in the history of Microsofts 44 year run. It is also the largest pledge to public housing by any private organization thus far! Microsoft President, Brad Smith, explained how the pledge will benefit workers who “teach our kids in schools, and put out the fires in our houses and keep us alive in the hospital”.
Microsoft is seeing great support from Challenge Seattle, an organization committed to "ensuring the greater Seattle area continues to thrive as one of the most vibrant, innovative, and globally competitive regions in the world". The organization is an alliance made up of 17 CEO's from our regions largest employers led by former Governor, Christine Gregoire.
The sizable contribution calls on other tech giants to step up! Calling on their leadership, and abundantly "unique resources" to enhance the quality of life of not only their employees, but those affected by such population growth as we have experienced in our region.
However, more support will be needed to fully address the need. Vice president, M.A. Leonard, at Enterprise Community Partners, a national nonprofit affordable-housing developer says, "it’s hard to know exactly how many new units Microsoft’s fund can create". Using King County data, they have determined there is a need of 305,000 units. Land acquisition will be another factor affecting the amount of produced units.
Furthermore, the application of funds will require cooperation from east side cities to integrate into their "Master Plans" for development. The group has received pledges from some of the counties largest cities' mayors to cooperate in an effort to break down barriers using collaborative incentives to see their plan through. Below are some of the current mayors on board:
More specifically, the pledge will aim to address affordable housing throughout our Puget Sound region for low to middle income groups through a combination of housing and services.
Funds to be Split Three Ways
The company plans to split funds in three ways: combination of donation to services for low income and homeless population, below market rate loans, and at market rate loans to developers.
Microsoft plans to loan $225 million to developers at below market rates. This is expected to help buffer the high costs of development; which is a main factor in most new construction which is aimed at luxury renters. These funds are aimed to support middle-income populations making $62,0000-$124,0000 (family of four) with "workforce housing".
Next, the company plans to loan $250 million at market rate to developers. This is aimed toward housing for low-income households making up to $48,150-$62,000 (family of four). Microsoft plans to donate the remaining $25 million to services for low-income and homeless groups such as the King County Bar Association Legal Clinic; where individuals receive support in landlord-tenant laws, etc.
The company also plans to reinvest any profits into the fund. It will be interesting to see how the funds will be appropriately used.