The ubiquitous online retailer and public cloud giant, Amazon, really needs no introduction at this point. The company has a vast footprint, with corporate offices, warehouses and other facilities across the world. Amazon has been a massive boon to communities, bringing jobs and growth with it. However, this comes at the risk of pushing out moderate-to-low income families who can no longer afford to live in these resource-rich, rapidly developing areas (FUD that ultimately tanked Amazon’s proposed New York headquarters in Queens). To make matters even worse, these families in danger of being priced out are the ones who the pandemic has hit the hardest, financially.
Amazon is now stepping up its efforts to improve housing equity, with the establishment of a $2 billion Housing Equity Fund to support affordable housing in three of the communities in which it operates—the Puget Sound region of WA, Arlington, VA and Nashville, TN. Before we go further, I should say that this is not Amazon’s first rodeo in the affordable housing arena. The company’s Puget Sound headquarters is home to a Mary’s Place shelter, which provides refuge and support for over 200 women and children, every night, who are experiencing homelessness every night.
Today, though, we’re talking about the new Housing Equity Fund, which represents a significant expansion of Amazon’s efforts.
Where’s the money going?
According to Amazon, the fund will go towards the preservation of existing affordable housing developments, along with the development of new affordable housing projects. To achieve this, it provides housing partners, minority-led organizations and public agencies with below-market loans, lines of credit and grants. All said and told, Amazon expects this $2 billion fund to preserve and create more than 20,000 affordable units across the three metro areas, all of which have (or expect to have) at least 5,000 employees in the next several years.
Amazon’s target demographic for assistance are households making between 30-80% of the area’s median income, translating to a four person-household income of less than $79,600 in the DC metro area and less than $95,250 a year in the Puget Sound region (which includes Seattle, Tacoma and Bellevue). Amazon did not share Nashville’s financial threshold, but the other numbers give you a ballpark figure.
In addition to the $2 billion in below-market capital, the fund will devote an additional $125 million worth of cash grants to minority-led organizations, businesses and nonprofits to create a more inclusive fix to the affordable housing crisis. This is crucial since the lack of affordable housing disproportionately harms communities of color. Notably, many organizations eligible for the fund’s grants typically don’t have a seat at the affordable housing table— public agencies such as metro transit agencies and school districts.
I think it’s also valuable to recognize that many residents who depend on affordable housing are also the ones putting themselves in harm’s way daily to keep the wheels on track while the pandemic rages: healthcare workers, transit workers and teachers. It’s a cruel irony that those keeping us safe right now, in many cases, are the ones who are feeling the financial squeeze.
Amazon also shared information on two of the fund’s first partnerships. The first is with the Washington Housing Conservancy’s Crystal House, in Arlington, VA. The nonprofit organization, also known as WHC, works to preserve affordable homes for moderate to low-income residents in the area. The Housing Equity Fund extended a $339.9 million below-market loan and grants worth $42 million to WHC. The organization leveraged these funds to purchase an affordable development called Crystal House, on a much faster timeline than typical commercial real estate deals. The fund also provided the WHC with an additional $2 million for its social impact work.
The second commitment comes as a part of the company’s ongoing partnership with Washington state’s King County Housing Authority (KCHA). Over the last ten years, King County has reportedly lost over 112,000 (40%) of its affordable housing units while adding 67,000 market-rate rental units. Amazon’s initial commitment consists of a $161.5 million below-market loan and $24 million in grants to preserve the affordability of 1,000 apartment homes in the county, which will join the KCHA’s current portfolio of 7,000 units.
This announcement is yet another example of how the tech industry, and Amazon specifically, has been stepping up to provide essential aid and services to the struggling nation (and no, I’m not just talking about its value as an online retailer during various stages of brick-and-mortar lockdowns). I wrote a while back on the ways AWS’s commercial applications, such as Amazon Connect, Chime and Amazon WorkSpaces DaaS, were enabling the rapid, mandatory digital transformation many businesses were facing down last spring. Follow the link above to learn more, if interested.
And before you say it—while there is a popular assertion that Amazon is profitinghandsomely from the online shopping bonanza that was 2020, the company’s Q1 FY2020 results indicated a more complicated story. While net sales certainly did skyrocket to 75.5 billion in Q1 (a 26% increase over the previous year), Amazon’s net income decreased during this time from $4.4 billion to $4 billion. For that matter, the company committed that $4 billion towards battling Covid-19.
In conclusion, while the affordable housing crisis will certainly not disappear once the pandemic is under control, this fund should help lighten the load for many struggling families in the neighborhoods Amazon calls home. If every large corporation in America followed Amazon’s lead, there’s no telling what kind of progress we could make.
Note: Moor Insights & Strategy writers and editors may have contributed to this article.