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Microsoft increases financial commitment to affordable housing initiative

“This is more than a home, it’s a community. And there needs to be room for all of us.” That was our message to the region one year ago, announcing Microsoft’s $500 million commitment to help address one of greater Seattle’s fastest growing problems – ensuring affordable housing for everyone. The problem is straightforward: Our community isn’t building enough housing that’s affordable to low- and middle-income families, particularly in Seattle’s surrounding cities on the eastside of King County. The solution – as many of us know – is complicated.

Today we are announcing a $250 million increase to our affordable housing initiative in the form of a line of credit to the Washington State Finance Commission, bringing Microsoft’s total commitment to $750 million. We are also announcing $55 million in investments and grants towards our original $500 million commitment.

This brings our total to $380 million allocated over the past year to support the preservation or creation of over 6,500 affordable housing units in the greater Seattle area.

Below is a summary of the projects we are announcing today:

  • Washington State Housing Finance Commission (WSHFC): Through conversations with the WSHFC, Microsoft partnered on an innovative opportunity to deploy capital to extend the State’s limited tax-exempt bond status. Microsoft has provided a no-cost $250 million line of credit to the WSHFC to enable it to preserve and recycle the state’s limited tax-exempt private activity bond volume cap. The line of credit will enable the WSHFC to finance approximately 3,000 additional units of much-needed affordable housing
  • Evergreen Impact Housing Fund (EIHF): a newly launched partnership between Seattle Foundation and the Washington State Housing Finance Commission with support from JPMorgan Chase & Co. It is a first-of-its-kind structure that leverages the Low-Income Tax Credit program by offering last dollar investment to efficiently develop affordable housing that wouldn’t otherwise be built. Microsoft will contribute $50 million to this fund to promote the development of approximately 1,250 low-income housing units on the eastside of King County
  • HomeSight’s Othello Square Project: a $2.5 million philanthropic grant to support the project that includes 192 units of affordable housing, early learning education, small business incubation, cultural celebration and preservation, and financial services in Seattle’s most diverse neighborhood. It is a creative, community-driven response to the pressures of extraordinary growth in Seattle, and is adjacent to the Othello Light Rail Station
  • Rise Together: a $2.5 million philanthropic grant to Rise Together, a collaborative effort between six nonprofit organizations to preserve their communities by creating 400 new units of low-income housing in Seattle’s Central District, Capitol Hill and White Center neighborhoods. The Rise Together partners have come together to make a bigger impact on housing affordability and healthy communities than they could working individually. With a comprehensive approach to community needs, their collective work will result in the creation of housing and vital neighborhood resources that encourage opportunities for all

Today’s news comes after a year of steady progress following our January 2019 announcement:

  • We made a $60 million investment with King County Housing Authority (KCHA) to preserve 1,029 units of middle-income housing in Kirkland, Bellevue and Federal Way
  • We made a $5 million grant to Plymouth Housing to help create 800 more units of permanent supportive housing in Seattle for homeless adults
  • And, just last month, we saw great leadership from the City of Seattle, King County and the Sound Cities Association as they passed legislation to create a much-needed, long-overdue Regional Homelessness Authority to address the homelessness crisis across the region

We’re encouraged by the momentum in the region. We’ve met – in some cases multiple times – with each of the nine mayors and their administrations that were first to sign the affordable housing pledge in the area, promising their support to help address policy barriers. We’ve learned more about the specific needs and challenges within their communities and identified opportunities to pursue.

However, the initial response to our request for proposal (RFP) was less than we hoped and showed us just how difficult it is to create affordable housing where it typically doesn’t work. The good news is that we are starting to see a pipeline of new ideas and projects here on the Eastside of King County where there really wasn’t one before. And we will double down in the coming year to work together with local mayors, councils and city staff and push harder for the critical policy reforms we believe are vital in order to move forward.

We’re excited by the work that lies ahead, but we remain clear-eyed about the challenges that remain. As the data from our continued collaboration with Zillow shows, there was a gap of approximately 316,000 middle- and low-income affordable housing units in the Puget Sound area in 2019, up from a gap of 305,000 in 2018. While the supply-and-demand gap has continued to grow over the past year, we are hopeful our region may have begun to stem the tide. The year-over-year growth rate of the affordable housing gap has slowed from 10.8% in 2017 to 10.5% in 2018 and to 3.6% in 2019, according to Microsoft’s data science team. While we’re encouraged to see this growth rate fall, it’s clear that what we really need to do is see the housing gap fall, not continue to increase. To achieve this, our community needs to come together and act with greater urgency, creativity and shared accountability. It will require a spectrum of new financial, technical and societal approaches that are created in partnership with people who share a collective vision.

We appreciate the collaboration, feedback and support we’ve received about this initiative from so many throughout the community over the past year. We continue to encourage others to get involved and do what they can to help. As we said one year ago, Microsoft feels a tremendous sense of gratitude for the support we’ve had from this community. We are committed to ensuring our success supports the community in return.

For more information about Microsoft’s affordable housing commitment, please visit news.microsoft.com/affordable-housing.

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$60 million Microsoft investment boosts King County’s efforts to preserve affordable housing in greater Seattle region

Microsoft’s investment is part of the company’s $500 million commitment to combat the Puget Sound affordable housing crisis

REDMOND, Wash. — Sept. 26, 2019 — Microsoft Corp., King County Housing Authority (KCHA) and King County on Thursday announced a combined $245 million investment to protect 1,029 units of affordable rental housing throughout King County.

The partnership comes in the form of a 15-year, $60 million loan from Microsoft to KCHA at below-market interest rates, combined with $20 million in low-interest debt and additional credit enhancements provided by King County, and $140 million in bonds issued by KCHA. This investment marks a significant milestone for Microsoft’s $500 million commitment announced in January 2019 to advance affordable housing solutions in the Puget Sound region.

Microsoft’s investment will help finance KCHA’s acquisition of five residential apartment complexes in Kirkland, Bellevue and Federal Way, ensuring rents will remain affordable long term and allowing over 3,000 low- and middle-income people to remain in their communities. Because of their location, these affordable properties were at high risk of experiencing rapidly escalating rents or redevelopment as higher-cost housing.

“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.”

The investment provides the key piece of financing that allows KCHA to acquire the five properties and stabilize rents. 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. It is estimated that over a 30-year period the cumulative rents charged at these 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.

“We have extraordinary partners in Microsoft and King County Housing Authority as we collaborate to secure housing opportunities for more than 1,000 low-to-moderate-income individuals and families in East and South King County,” said King County Executive Dow Constantine. “Our combined investment makes this housing affordable not just now, but for generations to come.”

This partnership 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.

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.”

Ensuring a healthy community: The need for affordable housing

Puget Sound is the sixth most expensive region in the country, and despite a 21% increase in jobs since 2011, the increase in housing units rose by only 13%. This problem is even more pronounced in the smaller cities surrounding Seattle than it is in Seattle itself.

To help address this affordable housing crisis, Microsoft’s $500 million commitment 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. In June 2019, Plymouth Housing, a nonprofit that operates permanent supportive residences for individuals struggling with homelessness, received a $5 million donation from Microsoft, the second grant awarded.

About KCHA

KCHA, an independent municipal corporation established under state law, assists more than 20,000 households in the Seattle metropolitan region on a daily basis. The Authority administers rental housing assistance, 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. KCHA is also a national leader in the preservation of affordable workforce housing.

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, rrt@we-worldwide.com

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com. Web links, telephone numbers and titles were correct at time of publication but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://news.microsoft.com/microsoft-public-relations-contacts.

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The stories behind Microsoft’s affordable housing initiative

The Puget Sound region has been home to Microsoft for more than 30 years. As the company has grown, the area has changed. New industries have brought more jobs, fresh opportunities and greater prosperity. 

But new housing has not kept up with job growth, and the Greater Seattle area has become the sixth most expensive place to live in the United States.  

That means many of the workers who make a community function – such as nurses, police officers, teachers and firefighters – can no longer afford to live in the cities or suburbs where they work. 

Chart showing Job growth compared to housing growth

The problem is particularly acute in the suburban cities around Seattle. Low- and middle-income workers often face long commutes.

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Microsoft is committed to helping kick-start solutions to this crisis, and is  investing $500 million to advance affordable housing solutions. Microsoft is also advocating for changes in public policy at city and state levels to address the long-term factors affecting housing affordability.

This commitment is about more than housing. It is about the people who make our communities places we all want to live in.

For more on Microsoft’s initiatives in the Puget Sound region follow @MSFTIssues on Twitter.