"No more finger pointing." Microsoft, former Gov. Gregoire call on community to address housing.
May BDA Breakfast Recap: Microsoft’s Commitment to Affordable Housing
The Bellevue Downtown Association hosted a crowded room of business and civic leaders at its May Breakfast to hear from the experts behind Microsoft’s incredible $500M commitment to address the housing crisis. Former Washington Governor and current Challenge Seattle CEO Christine Gregoire shared the underlining facts behind the issue and then led a fireside discussion with Jane Broom from Microsoft Philanthropies and Charlie Davis from Boston Consulting Group.
(From left) Jane Broom, Hon. Christine Gregoire, Charlie Davis, and BDA President Patrick Bannon
The Reality Check
Gov. Gregoire shared details from the comprehensive study behind Microsoft’s commitment. The primary takeaway is that the housing supply is growing significantly slower than the job market. She noted that if the Seattle data is taken out of the formula, the results would show that the disparity is even worse on the Eastside.
Another takeaway was that market forces and public initiatives have largely ignored middle-income housing. On one hand, high-end housing pencils out for developers. And on the other hand, public resources fund affordable housing. Middle income, however, has not been supported. The data shows that the dwindling supply of workforce housing has exacerbated the crisis, and that housing diversity supportive of all incomes is essential for resolving the problem. That’s why Microsoft's commitment dedicates $225M towards middle-income housing.
For perspective, Gov. Gregoire noted that the average salary of an Eastside nurse is $80,000, but the necessary individual median income for an Eastside resident is $125,000. Other vital positions priced out of the Eastside include teachers and first responders.
View the Governor’s slides here.
Ms. Broom shared that Microsoft’s housing initiative was sparked by a conversion over coffee with its President Brad Smith and the Police Chief of Redmond. It was then and there, Mr. Smith learned that officers could not afford to live in the same city they were sworn to protect. Following that meeting, Mr. Smith started an investigation into the severity of the issue, eventually producing a data-packed report confirming every assumption. Microsoft assembled a team of experts to determine next steps, and in January, it announced its $500M commitment.
Mr. Davis shared that the global housing issue has no silver bullet. Around the world, cities such as Sydney, London, and Hong Kong are struggling to resolve the problem. BCG’s expansive network could only shed minor details into this global issue. But, there was one consistent theme: housing issues could not be resolved with policies alone, the solution requires community partnerships.
Homelessness is correlated to median-housing availability, noted Mr. Davis. According to a Zillow report, when a community spends 32% of its median income on housing, incidents of homelessness increase. He went on to say, “[I]t’s this cascading effect that makes perfect sense. Middle-income households are having a hard time affording homes. Some of them may move away. Others may down-rent or buy down-market which [...] then crowds out folks on the lower end of the spectrum. And some proportion of those, from some unfortunate circumstances, may end up homeless.”
Ms. Broom revealed the Microsoft grant application criteria and that the submission period will open in the next few weeks.
The $500M is broken into three buckets:
- 40% of units must be designated for middle-income households or 80% of units must be for low-income families
- 60-minute commute radius during peak traffic hours
- Minimum 10-year commitment for new development
- Minimum of 100 units per project
When Gov. Gregoire asked for a final takeaway, Ms. Broom challenged the room to talk to people about their costs of living. She noted that leadership acknowledges that the Eastside is pricing out its workforce. Mr. Davis urged the audience to boldly support initiatives and projects, even if it comes out as a loss. He argued that the loss will be outweighed by the long-term financial reward and benefit of an economically diverse housing market.
The Governor concluded the program with an optimistic rally call:
“Failure is not an option. Head and heart – failure is not an option. We have got to come together. No finger pointing. Embrace bold new […] ideas. Take risks and succeed where everyone else has failed. We got it in us. We just got to get going and show the rest of the world what we’re all about.”
Missed the event? Want to hear it again? Listen below.