More than 3,000 low- and middle-income people will be able to stay in their communities thanks in part to a generous investment to protect affordable rental housing through King County. The investment has an immediate impact by ensuring rents at 1,029 units will remain affordable long term.
Late last month Microsoft earmarked $60 million in the form of a below-market interest rate loan to the King County Housing Authority (KCHA), an independent municipal corporation. That money will be combined with $140 million in bonds issued by KCHA and $20 million in low-interest debt and other credit enhancements provided by King County. The funds will enable KCHA to acquire five residential apartment complexes in Kirkland, Bellevue and Federal Way and to stabilize rents at below-market rates.
Because of their location, these apartments were at high risk of experiencing rapidly escalating rents or redevelopment as higher-cost housing. Officials estimated that over a 30-year period the cumulative rents charged at the five complexes will save renters over $450 million in housing costs compared with what would have been charged if these properties had remained in for-profit ownership and priced at market rents.
Puget Sound is reportedly the sixth most expensive region in the country. Despite a 21% increase in jobs since 2011, the increase in housing units lagged, rising only 13%.
The Microsoft investment was part of a $500 million commitment announced in January to advance affordable housing solutions in the Puget Sound region. In June 2019, Microsoft made a $5 million donation from its pledge to Plymouth Housing, a nonprofit that operates permanent supportive residences for individuals struggling with homelessness.
In announcing the investment, Microsoft representatives said the partnership with KCHA and King County is an example of how the public and private sectors can work together to help address community issues. “This initiative effectively partners corporate financing with efforts to preserve an adequate supply of affordable housing. The impact of this investment is immediate, with value added in the form of increasing affordability over time,” the Redmond-based company stated in a new release.
“Housing is really the number one issue that is just going to require a lot more community engagement and more business community engagement,” said Microsoft president Brad Smith in an interview with a Puget Sound Business Journal reporter. Replenishing and expanding the region’s housing stock involves some challenging conversations, he added.
Smith also said job growth must spread geographically over the next decade in order to ease pressure on housing and infrastructure in Seattle and the Eastside. “You can’t reduce the lengthy commute times for lower- and middle-income employees unless we can build more places for people to live close by,” Smith said. “We can’t build more places for people to live close by unless we increase density in some places. These are not typically easy conversations.”
“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.”
Over the next few years, Microsoft will invest $165 million more in below-market rate loans and $250 million in loans at market rate to provide capital for affordable housing projects across King County. The company also expects to donate $15 million on top of the $10 million it already has awarded to address homelessness.
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.”
KCHA, a national leader in the preservation of affordable workforce housing, provides rental housing and rental assistance to 19,000 low-income households in 33 cities – not including Seattle and Renton – as well as in unincorporated areas of King County. In addition to administering rental housing assistance, the Authority develops and manages affordable housing, and works closely with community stakeholders to address local priorities such as ending homelessness, improving educational outcomes for the region’s low-income youth, and assuring that disabled and elderly households can live with dignity.
Through partnerships with communities and nonprofits, KCHA’s housing and supportive services combine to reach 55,000 people who earn less than the county median income. Its combination of housing and services put self-sufficiency within most families’ reach, usually within six years.