Three years after launching an affordable housing initiative, Microsoft estimates 9,200 affordable housing units are being preserved or produced.
In the same update report, the Redmond-based company said it would increase investments in land acquisition, utilize a new financing approach to acquire existing housing for conversion to middle-income housing, and provide cash grants and loans to support the regional homelessness response.
Microsoft is focusing on rentals, saying they are currently not addressing the challenges for people trying to buy homes. They also noted the COVID-19 pandemic “has exacerbated an already serious crisis of homelessness and income inequality.”
Since launching its housing initiative in January 2019, Microsoft has upped its investment from $500 million to $750 million, with around $583 already disbursed. That figure includes $73 million in affordable housing investments and grants.
Addressing housing security is another part of its philanthropy. Its support of United Way King County has meant some 19,000 households have been able to avoid eviction, thanks in part to rental assistance. (United Way’s research indicates 175,000 to 200,000 households in Washington are behind on rent and at risk of homelessness because of COVID-19.)
The company noted it has also joined with other employers in lobbying for housing-related policies to facilitate more construction. According to Microsoft’s data science team, for the period 2011 to 2020, the number of jobs grew 30% while housing’s growth was only 19%.
“Improving the housing outlook for all Washingtonians will require a comprehensive statewide strategy of strategic investments and innovative public policies to dramatically increase the number of housing units available at all levels of affordability,” stated Irene Plenefisch, Microsoft’s government affairs director, in a company blog.
In its update, Microsoft detailed how the $583 million of expenditures to date have been allocated among three areas of focus: homeless, low-income, and middle-income.
“To make a difference at the scale our region requires, we need more innovative financing tools that encourage market investment in the type of housing in greatest demand – and then pairing these resources with bold policy changes at the state and municipal levels that help to address our region’s growing population,” the company stated.
In an effort to address the gap in funding for middle-income housing, Microsoft announced it was pioneering what it calls the Middle-Income Tax-Exempt Mezzanine program (MIT-E-Mezz), designed to help create and preserve existing middle-income housing. It is based on attracting new private investment and no public funding or capital investment from non-profit organizations or housing authorities.
“We hope the strategy will attract both traditional and new investors looking for steady investment returns with lower risk and positive community impact,” noted Jane Broom, senior director of Microsoft Philanthropies.
The need for housing across income levels is not only growing, it is also becoming harder to solve, Broom stated, citing the region’s fiercely competitive markets for acquiring land and real estate as a big challenge.
To illustrate the need, Microsoft developed interactive research based on housing costs and the gap in income for teachers, nurses, and first responders. A middle school teacher earning $76,000 falls well short of the estimated $131,000 needed to buy a home.
“If you don’t provide housing further up the housing ladder, you’re not going to be able to solve the issue of homelessness,” said James Young, director of the Washington Center for Real Estate Research at the UW. Working on the supply side “is definitely the way to go,” he believes.
Along with innovative financing and public policies that encourage affordability and housing development, Microsoft said the complex issue of homelessness must be addressed. It believes people living unsheltered is a humanitarian crisis for the Puget Sound region. A coordinated, regional approach to homelessness is essential, the company emphasized.
“The challenges ahead are significant,” Broom acknowledged, adding, the “combination of strategic investment and well-designed public policy will provide benefits to Washingtonians today and for years to come.”