Amazon’s $2B affordable housing fund is ‘not snap your fingers and problem solved’
In the past few years, there’s been increasing attention on the charitable function of Amazon, and that of founder Jeff Bezos. The company has received a lot of criticism over the course of time about Bezos and his donations to charity, as well as Amazon’s place in the community and how much they give back. It now looks like maybe that’s turning a bit of a corner with the announcement of a $2 billion fund for affordable housing initiatives in Seattle, Nashville, Tenn., and Arlington, Va.
“It’s going to be a combination of below market rate loans and grants,” said Todd Bishop, co-founder of GeekWire. “Now, this is very similar, on a larger scale, but very similar to what Microsoft started doing last year on the Eastside in some of the communities around their headquarters. And so basically, the idea is that Amazon is enabling different public agencies, nonprofits, housing authorities to purchase and preserve affordable housing and, in some cases, very much low-income housing.”
“This is basically a way to use non-market forces to create housing that can be afforded by people who are making less than median income,” Bishop explained on KIRO Nights.
Amazon, by all appearances, will be giving the money to the agencies that will then spend it. The King County Housing Authority is one of the initial recipients of the fund set to get about $185.5 million in loans and grants, Bishop said, which will allow them to preserve 1,000 affordable housing units in Bellevue.
“So Amazon will be granting the money to these agencies to then use them for a specific purpose,” he said.
“It’s, I think, different from the kind of philanthropic grant making and giving that the Gates Foundation does in that it’s real estate,” he added. “It’s not the kind of thing where you’re looking for experimental outcomes and case studies for global health. So I think it’s the kind of thing that Amazon, through its philanthropic unit, can manage itself. But what is that philanthropic unit, and how does it work? Mike, I think sometimes we get the greatest story ideas just from talking to you, whether it’s here or someplace else. And I think you just gave us one.”
Host Mike Lewis asked if this fund could be, in any way, an attempt for Amazon to inoculate itself against any new payroll tax or the so-called head tax.
“Yes,” Bishop replied. “I think there’s also a little bit of a twist to it, based on some of the language in the announcement.”
“First off, it’s notable, I think, that at least the first investment in the Seattle region is not in Seattle proper,” Bishop continued. “It’s in Bellevue, and in addition, Amazon referred to its Washington state headquarters as “Puget Sound,” which, as folks who live here and talk with others in other parts of the country and world know, nobody outside of Seattle knows what Puget Sound is. They’re more likely to pronounce it like Pug-it Sound or something, right? I’ve never — and maybe I could be wrong, but I do not recall seeing Amazon ever refer to its headquarters as the Puget Sound region versus Seattle, so I read a little bit into that.”
Bishop says he knows from speaking with people at the company that Bezos is pretty involved in the language and is “keyed into the power of words and messages.” Because of that, he does not think it’s an accident in terms of phrasing.
“So to answer your question, yes, I think this does inoculate them writ large to those concerns, or at least help to inoculate them about all of the economic disparity that they’re contributing to and they play a role in,” Bishop said. “And at the same time, they’re able to take a little bit of a swipe at the city of Seattle at least subtlety.”
The fund will contribute to about 20,000 units across the three metropolitan areas — in Seattle, in Nashville where Amazon has a distribution, engineering facility, and in Arlington where HQ2 will be.
“You figure three persons to a unit, three people to a unit on average, maybe, so 60,000 people,” Bishop said. “And you get a sense for, you know, these are regions with, in some cases, millions of people across the region, it feels like a drop in the bucket.”
“It certainly is just a small step along the way,” he added. “This is not snap your fingers and problem solved by any means.”
While it’s not clear if this is just a first step or initial effort from Amazon, Bishop says he would not be surprised if the fund were to be increased in the future.
“They also had a $2 billion climate pledge fund,” he said. “So my hunch is that you could see more in the future, and you’ve seen more from Microsoft, for example. Microsoft started with $500 million and then went to $750 million. They were not explicit either way, Mike. I would not be surprised, though, if you saw this go up incrementally in the future, especially if it’s successful in these initial projects.”
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