
Microsoft pledges $500M for affordable housing in Seattle area - pgodzin
https://www.nytimes.com/2019/01/16/technology/microsoft-affordable-housing-seattle.html
======
techsupporter
Frankly, good. If the Eastside cities can't or won't step up with building
more affordable housing and public services, then I'm glad Microsoft is
willing to kick in its money. It's a shame that the counties and cities in the
region, by and large, aren't willing to acknowledge that this is a regional
problem but Microsoft putting up the money at least removes the "but we can't
afford the taxes or find the money elsewhere" excuse.

This isn't the first time Microsoft has put its money where its mouth is for
its community. They've done a lot for transit in the region, too.

I don't mind so much that they are studiously avoiding the region's most
populated city. Not all of the affordable housing and public services needs to
be concentrated solely in Seattle. The rest of the region should have these
things, from mental health services to public health facilities to shelters to
affordable housing. Concentrating them in Pioneer Square around the Union
Gospel Ministry isn't the way to go.

~~~
opportune
I know this will sound very NIMBY, but while I believe Eastside cities should
contribute municipal funds to alleviate the affordable housing shortage that
is truly a regional problem, I don't know why they need to build those in the
Eastside area. The Eastside has, to my knowledge, basically never been a cheap
place to live. It was a middle class suburban area that transformed into a
very wealthy suburban area with denser parts that are also very wealthy. Maybe
some small pockets of people were gentrified out, but what you're talking
about seems to basically be just moving the people gentrified out of Seattle
into an even wealthier area for some reason. It's also very car centric and
spread out, which isn't so great for poor people that don't own cars. Sure the
Eastside rail is getting built but that will only cover a limited part of the
region.

But of course, like I said, they should still help solve the problem
monetarily.

~~~
techsupporter
One thing I didn't see you address is where you think affordable housing
should be built. Do you have any thoughts in this regard?

~~~
opportune
By areas with high density and good transit. So, mostly Seattle and the
Western/Central part of Renton, also Downtown Bellevue and Downtown Redmond.
Last time I drove around Georgetown I noticed lots of unused space, maybe
there's a reason a lot of affordable housing hasn't been built there, but it
seems underutilized if it's not actively being developed for affordable
housing

I'm not in principle against low income people living on the Eastside. In
fact, I think most of Bellevue, Kirkland, and the area surrounding the Bel-Red
corridor should be upzoned and get more infrastructure - then low income
people could actually live there

~~~
Jach
I don't think we'll see them in downtown Bellevue anytime soon. Too many
"Homeless Shelter Yes, Eastside No" signs next to the roads on the way in. I'm
just a transplant and won't be here forever (10 years so far though), so I
have little stake in the matter, but it seems clear most people on the
Eastside want it to keep being "nice" even if that unfairly prices people out.
I like things "nice" too and appreciate the car culture here. Of course I
might be mistaken and the Seattlefication will continue. I have a friend who
thinks Bellevue's about 10 years behind Seattle in things, Redmond another 10
years behind Bellevue, maybe we'll see Issaquah become the new Redmond.

~~~
cbHXBY1D
There are homeless in downtown Bellevue. Yes, nothing compared to Seattle but
I see dozens of homeless each day. I've gotten to know some and they take the
550 to get away from the camps in Seattle.

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throwawaysea
They really should use the money to instead build more remote offices, where
housing is already affordable, develop the technologies/processes to support
that distributed culture, invest in making those other cities more livable,
and thereby bring economic opportunity to a more diverse set of
cities/cultures.

I am personally not in favor of more density here because my lifestyle, and
those of many I know, is better suited to the lower density we have on the
east side. The balance we have now is one of the main reasons many of us
choose to live here, in the PNW. It feels to me like this growth will be good
for new transplants at the cost of those who have made a life here already.

~~~
pishpash
I'm guessing you're a transplant too. Native Seattlites don't want you here
either and would prefer the PNW to be a lumber, fishing, and shipyard town. /s

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resalisbury
Here's how the money is being used (somewhat vague).

"Microsoft plans to lend $225 million at subsidized rates to preserve and
build middle-income housing in six cities near its Redmond headquarters. It
will put an additional $250 million into low-income housing across the
region...the remaining $25 million will be grants to local organizations that
work with the homeless, including legal aid for people fighting eviction."

Here's the projected impact (also somewhat vague).

"The Seattle Times reported Wednesday that if the $500 million were put into
one project, it would create only about 1,000 units, so instead Microsoft will
most likely put smaller amounts in many projects to help build “tens of
thousands of units.”

Here's the need: "Seattle region needs 156,000 more affordable housing units
[today].and will need 88,000 more by 2040 if the region’s growth continues."

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aaronbrethorst
I'd much rather see Microsoft (and Bill, Steve, the estate of Paul Allen,
etc.) pay more in taxes to the state of Washington and have that affordable
housing built that way, but this is better than nothing. Good on MS.

~~~
sdrothrock
> pay more in taxes to the state of Washington and have that affordable
> housing built that way

I got lost in the middle here -- does more taxes being paid to the state of
Washington directly contribute to more affordable housing being built in
Seattle?

The closest thing I could find was this:
[https://www.commerce.wa.gov/building-
infrastructure/housing/...](https://www.commerce.wa.gov/building-
infrastructure/housing/housing-trust-fund/)

~~~
Jach
WA has no state income tax (corporate or personal), so I can only assume GP's
wish is for Seattle to get its way and impose its own income tax despite being
against the state constitution. While we're wishing maybe we can go a step
further and liberate/extricate Seattle as its own sovereign city-state, or at
least as something on par with full-fledged states like Wyoming that can make
decisions independent of other states if not independent of the federal
union...

~~~
aaronbrethorst
_I can only assume GP 's wish is for Seattle to get its way and impose its own
income tax despite being against the state constitution_

Nice strawman! You're a bit off, though. My wish is for the state to create an
income tax. I think it's absurd that we have such a regressive tax structure
in this state.

~~~
Jach
Thanks for clarifying. Can I convince you to change your wish to what I
originally assumed and limit it to Seattle? A lot of us transplants in the
area are here in part explicitly because of the tax incentive, I assume a lot
of natives are too since they started it that way.

~~~
aaronbrethorst
Lots of natives are worried about how they're going to continue living in
Seattle and the surrounding areas given that one of the few mechanisms that
local governments have for raising revenue is through regressive tax schemes
and property taxes.

That doesn't encourage anyone to put down roots. That's not healthy for the
area. If taxation really is your primary concern, then I hope you choose to
leave and move to Wyoming at some point.

~~~
briandear
Texas does just fine without an income tax. The idea that natives are
“worried” is nonsense. I live in California now where plenty of natives are
worried because of how high taxes are. It seems bizarre that Seattle “natives”
are actually worried because there aren’t enough taxes. That’s a strange
crowd. Here is a spoiler: with an income tax, property taxes don’t get
lowered, New Jersey has incredibly high property taxes and an income tax. Left
leaning governments never, ever met a tax they didn’t like and want to expand.
The idea that a Washington income tax would lower property taxes is just a
fantasy. An additional tax just inspires politicians to spend more.

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opportune
Is it a good or a bad thing when multinational corporations step in and take
the place of government?

~~~
NeonVice
It depends. Do you believe that it is the role of government to build new
housing or is it their role to create an environment that encourages new
building supply? Is new housing not being built because of government
regulation that deters new building or certain types of buildings?

~~~
remarkEon
Both?

I think in places like SF or Seattle it’s a combination of government
regulation and zoning rules, and idle capital. But at the same time I don’t
see why government itself can’t invest in building things like transportation
infrastructure to support the increased density (assuming density is something
we want - I’m not entirely convinced it is).

Over the last few decades the default state appears to have been “build up”
rather than “build up where needed, and out where you can”. Cities from
previous iterations of civilization appear to have done the latter, while we
mostly just do the former here in the states (over recent decades). LA could
maybe be considered an exception, however it’s zoning rules are draconian and
density seems to be the way forward less some major overhaul.

~~~
icebraining
While the rate has decreased, "sprawl continues to be pervasive and continues
to increase" in the majority of US metropolitan areas, and "2010 represents
the first time that more people lived in lower density than higher density
tracts in metropolitan America":
[http://digitalcommons.lmu.edu/cgi/viewcontent.cgi?article=11...](http://digitalcommons.lmu.edu/cgi/viewcontent.cgi?article=1131&context=cate)

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randomacct3847
At least in SF, I don’t think financing is the issue. The city blocks projects
that developers are begging to develop for years and create additional
loopholes that allow NIMBYs to stall projects. At some point projects are
stalled for so long that the cost to build increases so much where the project
is not a good investment anymore and the project is abandoned.

~~~
raldi
In SF, they just make affordable housing illegal to build in most of the city.
In fact, they just ban all new apartments:
[https://sfzoning.deapthoughts.com/](https://sfzoning.deapthoughts.com/)

No apartments, no affordable housing.

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hamilyon2
Can pouring money to buy housing possibly lower prices on housing? I want to
understand, because it seems to me that supply and demand works some other
way.

Perhaps increasing supply by developing tech or fighting regulations will be
better way to spend money

~~~
onion2k
From the article;

 _It will fund construction for homes affordable not only to the company’s own
non-tech workers, but also for teachers, firefighters and other middle- and
low-income residents._

Microsoft are increasing the supply of affordable housing by literally paying
to build affordable housing. That increase in supply might lower prices, or it
might just attract more people to the area and raise demand as well. Either
way it makes the area better for Microsoft and its employees.

~~~
acct1771
This will create affordable housing for the same reason Bill Gates
philanthropic initiatives create a cheap labor force for Microsoft.

------
umeshunni
from the Seattle Times version of the article: $475M for loans to housing
developers over three years and $25M for resident services

~~~
tfehring
Link for reference: [https://www.seattletimes.com/seattle-
news/homeless/microsoft...](https://www.seattletimes.com/seattle-
news/homeless/microsoft-pledges-500-million-to-help-develop-affordable-
housing-in-seattle-and-on-eastside/)

From that article:

\- $225M of the $475M will be loans below market interest rates, directed at
middle-income housing.

\- The remaining $250M of the $475M will be loans at market interest rates,
directed at low-income housing.

Other than optics, I'm not sure what the point of the $250M in market-rate
loans is. I'd think that the main constraint on the development of low-income
housing is that it's unprofitable, not that it's difficult to secure
financing.

~~~
wbl
Financing is a pain to put together.

------
Analemma_
As great as it is to see this kind of corporate responsibility and
acknowledgement of the downsides of local growth, it's not clear to me how
Microsoft is supposed to help here. High housing costs are a nasty example of
a particular social problem where throwing money at it just doesn't work,
_even if_ you're willing to completely take a loss on your investment. To my
naïve analysis, if Microsoft just pledges money to build a bunch of housing
units, then that throws a wrench in supply/demand, other people pull back on
construction to match, and we end up right back where we started. I'm sure
there are higher-order effects and the reality is more complicated than this,
but I also don't think it changes the fundamental picture much. How is
Microsoft supposed to help make more housing available without other
developers just canning their own projects and leaving zero net change?

~~~
tfehring
Nearly all of the regional variation in construction costs is attributable to
differences in labor costs. This can create a self-reinforcing upward spiral
in home prices [0]:

> _Inasmuch as it means that those working in the construction trades are
> better off, construction wage growth in the expensive coastal cities is a
> welcome development, which ought to be celebrated._

> _However, construction wage growth could also be part of a dangerous, self-
> reinforcing cycle. Rising construction costs tend to reduce the supply of
> new housing because they shift marginally-worthwhile residential development
> into the red.8 This helps raise housing costs, which in turn feeds back into
> construction wage growth for at least three reasons:_

> _\- When housing prices rise, workers require greater compensation to
> subsist._

> _-When housing prices rise and the supply of homes is smaller than it would
> be otherwise, it is harder for people to find suitable homes for sale (and
> to afford them). This creates a greater incentive for renovation, which
> exerts upward pressure on labor costs as suggested earlier._

> _-When housing prices rise, the pool of potential home buyers becomes more
> financially select, which likely corresponds to higher expectations with
> respect to homes’ level of finish.9 Once again, this means that more
> renovation is bound to take place (including home-flipping), exerting even
> more upward pressure on labor costs._

A one-off influx of affordable housing could potentially break that cycle by
enabling tradespeople to move to the area. I'm not sure that Microsoft's
investment is significant enough to have that effect given the existing
deficit in affordable housing in the Seattle area, but the theory's there.

[0] [https://www.buildzoom.com/blog/whats-up-with-construction-
co...](https://www.buildzoom.com/blog/whats-up-with-construction-costs)

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ggm
Are they going to be the landlord, or even arms-length invested in the
landlord? Or, are they agreeing to fund metro and county housing initiatives
which have public boards?

I'm not in favour of the former, I prefer the latter, but I could believe its
a conversation about "how" and "what works"

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skookumchuck
It'll be interesting to see how this turns out.

Housing is so short and expensive anywhere near Microsoft HQ that it's a
significant factor in hiring. I'm a bit surprised that such corporations don't
build dormitories near their campuses suitable for interns and singles.

~~~
lkb2k
they would love to. zoning.

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tmp092
I won't claim to know what incentivizes developers to build, but below market
interest rates for construction seems like a tiny factor in whether a private
developer would choose to build affordable housing vs market rate housing.
Does anyone know if this difference in interest rate would actually make it
more worthwhile for a developer to build low cost housing vs market rate?

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netcan
How does this work?

Buy/build houses and sell to eligible buyers for less than market? Rent at
less than market? How does eligibility work?

Is arbitrage a problem?

~~~
yason
My first questions exactly.

Renting out but giving a more discounted rate the poorer the tenant is
probably the only sustainable approach to keep them having a home as living
costs just keep rising. Of course, the discount should gradually dissolve as
the tenants get better paid jobs to avoid someone moving in poor and keeping
the same flat after ten years of career development. Getting raises or better
paying jobs would pay off but rent would just eat a bigger portion of the
monthly costs until they would be on par with market rates.

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onetimemanytime
Question: what is MSFT's downside? I guess very little, or close to zero.
Unless someone commits downright fraud (i.e., take the money and don't build
anything--but no one will let them do this.)

They 'funding /financing buildings, maybe at lower rates than banks, but then
MSFT has so much that a lot of it must be making close to 0%. So they solve a
problem of theirs since MSFT is there for the long term, get excellent press
with virtually no risk. If they default, MSFT might end up as building owners.
Hire someone to manage and sell them when time is right. Maybe lose some on
taxes and management fees but that is nothing, relatively speaking.

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resalisbury
Zoning is one of the big culprits for affordable housing. I'm curious if it
would be productive for companies to target zoning laws or if it would create
a counter productive backlash.

~~~
briandear
I grew up in Houston and I never heard the term “affordable housing” until I
went to New York. Houston doesn’t have zoning, nor does it have a housing
“crisis.”

~~~
Tiktaalik
Houston also sprawls into the horizon.

------
onetimemanytime
Just build dorm style apartments for most of your employees and be done with
it. Studio apts.

~~~
chrisseaton
Build an employee mess!

~~~
onetimemanytime
Better than to send the mess to the rest of the public.

Like an apartment complex can be required to build parking,

tech companies should be forced to provide at least xx% of housing for
employees. Just as they bought the land for offices, let them buy land for
apartments. Cost of doing bidness :)

------
j15e
Pay more corporate taxes instead and let elected people decide how to spend it
for public services?

~~~
ndnxhs
Bit hard for them to decide when they are all on a 1 month forced holiday.

~~~
briandear
State and local governments aren’t on a holiday and that’s where these types
of decisions ought to be handled.

------
Tsubasachan
Seems to me like a job for the government. And half a billion is a drop in the
ocean.

------
anticensor
_Door key rehash &software updates: 1 hour lock-in midday next Tuesday_

------
xtat
Meanwhile crickets in the bay

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CodeCube
more of this!

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save_ferris
This is great and all, but part of me is really cynical about corporate
philanthropy like this.

First off, all but $25 of the $500M will be loaned out to developers at below-
market interest rates and the other $25 will be donated to related services.
Good on Microsoft for committing capital that could be put to other uses, but
this isn't a donation; it's philanthropic lending. Depending on the interest
rates of these loans, they'll wind up keeping much of that principle. Yes,
people will surely benefit from this, but this looks really conservative for
such a headline.

Corporate taxation is a hot-button issue these days, but one can't help but
notice how easy it is to shun government for being wasteful in providing
housing services while private industry is being applauded to essentially buy
the process of welfare. And while there are heated debates about what major
companies should contribute (or avoid contributing) in taxes, can we even
agree that affordable housing sponsored by private money is a little
contradictory here?

~~~
ralusek
It's potentially an interesting demonstration of how keeping an area capable
of housing low-skill workers can be beneficial to keeping their own high-skill
workers' neighborhoods staffed with those low-skill jobs.

Something I always find really interesting, as a San Francisco resident, is
that people seem to think that the market is incapable of resolving the
problem of the purported loss of low-skilled workers to act as the baristas,
servers, deliveries, etc, because rising cost of living drives those people
out. But there are many obvious avenues in which this resolves itself, the
most obvious of which is that the prices of those services simply rise until
it becomes worthwhile for those people to commute further, or that they can
start to move back into the city. Now, maybe this is yet an alternative to the
more straightforward equilibrium, wherein some of the employers in the city
begin to provide lower-skilled workers with housing for the benefit of their
own workforce.

I have no idea what Microsoft's motivation for doing this is, but it would be
an interesting possibility.

~~~
vkou
> But there are many obvious avenues in which this resolves itself, the most
> obvious of which is that the prices of those services simply rise until it
> becomes worthwhile for those people to commute further, or that they can
> start to move back into the city.

In an economic fairy tale, sure.

In reality, what happens is that people working low-income jobs end up with a
two and a half hour commute from half-the-state-away, or, alternatively,
living in a slumlord's idea of a barracks. Or, sometimes, both.

It's a 'solution' much in the same way that in the Soviet Union, people would
'solve' the problem of toilet paper shortages by joining the Communist party,
which would entitle them a subscription to Pravda.

The wealthiest country in the world can, and should do better.

~~~
ralusek
It does NOT take an economic fairy tale to determine precisely how the
situation plays itself out.

For example, it's not as though the occupants of SF are going to be satisfied
living in a city without access to bars and restaurants, no matter how wealthy
they are. There are bars and restaurants in SF as it stands, are their staffs
all living in subsidized affordable housing? No. For one, they simply get paid
more than outside of the city, because things cost more. They get larger tips
because people make more money, and have larger bills to tip on. While some
might be subsidized with rent control, others live with roommates, or they
live outside of the city. There are any number of circumstances they find
themselves in, but the point is that it is _worth it_ to them to be able to
work in the city. If it was not, _they would not work here._ And if _they did
not work here, their wages would go up in order to fill the demand._ And let's
take this even further. What if their wages go up so high that the drinks and
food begin to cost a very undesirably high amount to the residents? Well then,
that begins to affect the desirability of living in the city. Suddenly less
people want to live here, because the cost of living is so high. And when less
people are competing to live here, rent starts to go down, and so do wages,
and prices. The entirety of the system is in stabilizing flux as a consequence
of this.

If we're actually arriving at situations where people are making a two and
half hour commute as a consequence of them having no alternative options
(which is not the same as them making the commute because of better
opportunities), then we agree that we're no longer dealing with a viable
model. I used to do a 1.5 hour commute each way, every day, for over a year,
because it was worth it to me to live in that particular area rather than
being closer to my work. If what you're suggesting is that their only options
are effectively capable of exploiting them due to no alternatives, you're
effectively describing an overall employment crisis. Given a system-wide lack
of employment opportunities, which is certainly not the reality we currently
find ourselves in, then we surely agree that there is an appropriate role for
the state to fulfill in mitigating the situation. But that still doesn't mean
that we agree that affordable housing is the correct mechanism for addressing
this problem, which we surely do not.

~~~
RA_Fisher
I agree with this but I think it underestimates how far the central bank's
printing of money can push us out of equilibrium. Also, the ability to create
real value is harmed by regulations like labor, zoning, and health codes.

------
wornohaulus
Does it mean they are buying 25 houses in Seattle area for the company
ownership ?? Are they going into property development now ??

------
kosei
This line made me snicker:

"And Facebook has planned to build 1,500 apartments near its Menlo Park
headquarters, with 15 percent to be affordable."

So, 85% of the housing created is too expensive to be purchased? Sounds like a
pretty poor business model. ;)

~~~
chrisseaton
‘Affordable’ in this context means ‘to someone on a median income in the
area.’ It doesn’t mean nobody could afford them otherwise.

