Don Ryan/AP Photo
In the D.C. area and elsewhere, tech companies like Amazon are putting money into affordable housing. But advocates say their dollars don't go far enough.
Don Ryan/AP Photo
Industry giants like Google, Amazon and Apple have been blamed for driving up housing costs in technology hubs across the country. Recently they've begun investing billions of dollars into initiatives that are meant to help reverse that trend.
But the question is: Will it make a difference?
Take Amazon, which is hiring for a new corporate campus in Northern Virginia. The e-commerce giant has been linked to widespread gentrification and deepening poverty in its hometown of Seattle, as highly paid tech workers crowd out lower-income residents. The company appeared to take preventive measures against that here, recently agreeing to contribute $20 million to affordable housing in Arlington.
Government officials applauded Amazon for pitching in. "This opens up a lot of opportunities for us," former Arlington County Board Chair Christian Dorsey told the Washington Post. He called the sum "an extremely significant amount."
Housing advocates have mostly shrugged. The money doesn't go far enough, they say, and tech companies that invest in housing are getting something in return: ample positive press, plus interest income from loans the companies provide governments.
"What we have are these one-off public-relations proposals that are in the news for a few weeks, then fade away with very little impact," says Matt Schwartz, president and CEO of the nonprofit California Housing Partnership.
But tech companies are in a unique bind. The housing shortage has become so severe in places like San Francisco that even highly paid tech workers are starting to feel the pain. And the Washington region isn't far behind, as housing costs have begun to sting the middle class.
"I think a tipping point has been passed, and tech companies are realizing it," Schwartz says.
Now, he says, these firms are responding to pressure created by years of government inaction on housing, while better solutions — particularly from the public sector — remain untapped.
A Closer Look At Amazon's Housing Dollars
The headlines about Amazon's $20 million payment into Arlington's Affordable Housing Investment Fund didn't tell the whole story: The cash infusion was part of a land-use deal that ultimately benefits Amazon.
The company sought a change that would allow it to build denser office buildings than current zoning allowed. The county agreed to grant the adjustment, as long as Amazon ponied up a community benefits package that included $20 million for housing.
The contribution sounds sizable, but advocates say it's unlikely to generate a critical mass of housing in Northern Virginia — one of the most expensive real estate markets in the country. According to county estimates, $20 million could help finance about 235 housing units — less than 1% of what the region needs to build over the next decade, according to the Metropolitan Washington Council of Governments.
"Twenty million dollars is a drop in the bucket," says Leslie Steen, senior advisor to the Alexandria-based nonprofit Wesley Housing Development Corporation.
It's also far less valuable than the tax incentives Virginia and Arlington approved for the company. The state approved up to $750 million, followed by $23 million from the county, to attract the corporation and the economic development it's expected to bring.
"Why are we paying these massive incentives to attract business, for them to turn around and give some of the money back to us?" Steen says.
Amazon did not return multiple requests for comment for this story.
Huge Investments, Questionable Benefits
After years of mounting pressure to address the housing crisis on the West Coast, tech firms responded last year with enormous sums of money. Microsoft spent $500 million on housing in the Seattle area. Google and Facebook both pledged $1 billion. Apple's $2.5 billion offer to the state of California, announced in November, was the tech industry's largest single contribution to affordable housing yet.
But read the fine print, says Schwartz, and it's clear these deals are structured to the companies' benefit. For example, most of Google's investment is actually land, which could be turned over to housing — for Google employees. The majority of Apple's money — $2 billion — comes in the form of short-term loans that California would have to pay back to the company with interest.
"There are longer-term investment horizons that they've avoided like the plague, because it's real money. They'd have to give something up, and that's where we need them," Schwartz says. "Very little [of this money] is going to directly subsidize reducing prices or rents for any sustainable period."
Jumping Into The Void
In an ideal world, Schwartz says, governments would have the funds and political will to ensure an adequate housing supply. But the costs of building housing — both financially and politically — have become untenable, he says, as land values soar, development costs rise and homeowners mobilize against new construction.
Tech companies are under "incredible pressure" to mitigate displacement and help bring down prices, Schwartz says — even though "it is a policy failure on the part of California's government that there hasn't been more construction of affordable housing."
Parts of this apply to the D.C. area, too, where policymakers have taken mostly incremental steps to address the region's housing shortage, though elected officials in Virginia and Maryland are pushing bolder solutions. Meanwhile, home prices in Arlington rose after Amazon announced its new corporate campus there. Prices have since leveled off, and they're still not as high as they are in tech hubs like San Francisco and Santa Clara County, where median single-family home prices exceed $1 million.
Nevertheless, concerns remain. Progressive organization New Virginia Majority projects that Amazon will cause "mass displacement" of working class Latinos from Northern Virginia, and activists have called on the company to invest millions more in community benefits.
Those calls have largely been ignored. To date, Amazon has reportedly pledged $38 million to various housing initiatives in Washington state and the D.C. region, not including money it spent building a homeless shelter in Seattle.
Leslie Steen, who's spent more than 30 years in the housing sector, says employers have a responsibility to invest in their communities. But local governments have avoided the housing problem for so long, she says, it's now a private-sector problem — and communities are willing to accept imperfect solutions from companies in the absence of assertive government action.
"Northern Virginia has not had adequate funds for affordable housing for my whole career," Steen says. "So the corporations are going to jump into the void."