Amazon To Provide $125 Million To Fund Affordable Housing On Metro Land Amazon says the money will build and preserve around 1,000 homes for local residents earning less than $103,000 per year.
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Amazon To Provide $125 Million To Fund Affordable Housing On Metro Land

As Amazon settles into its new headquarters in Crystal City, the company is committing $125 million to finance local affordable housing projects on Metro-owned lots. Tyrone Turner/WAMU/DCist hide caption

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Tyrone Turner/WAMU/DCist

Amazon will provide $125 million in financing to build or preserve an estimated 1,000 units of affordable housing on Metro-owned land in the D.C. region, the company announced Wednesday.

The online retail giant, which stands to receive up to $750 million in cash grants from Virginia if it hires at least 37,850 workers at its new corporate headquarters in Arlington, says it will commit below-market loans, lines of credit, and grants to developers who have joint development agreements with WMATA. Twenty percent of the funds will be set aside for minority-led firms.

Amazon, which is currently valued around $1.7 trillion, is funding the housing investment with its $2 billion Housing Equity Fund. That initiative finances affordable housing creation in regions that house the company's corporate offices, including the D.C. area, Nashville, and Seattle. Amazon has pledged to create 20,000 new or preserved housing units across those regions within five years.

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"Amazon is committed to creating and preserving inclusive housing developments so moderate- to low-income families can thrive and benefit from the goodness our region has to offer," said Catherine Buell, ‎Amazon's head of community development, in a statement. "Housing and transit are the first- and second-largest expenses for most households in America, and Amazon's funding will expedite affordable housing near transit reducing costs for both, while supporting families with long-term financial stability."

The funding will target households earning between 30% and 80% of the area's median income, which in the D.C. region translates to $38,700 to $103,200 for a four-person household. Dollars will support both new housing construction and preservation of existing housing. The company stands to collect interest on any loans it makes to developers.

The investment was hailed by the Metropolitan Washington Council of Governments, a group of local public officials that has set a regional goal to create 320,000 additional housing units in the D.C. area by 2030. At least 75% of those units must be affordable and located near transit or "activity centers" in order to address the region's needs, MWCOG said in a 2019 report.

The partnership between Amazon and WMATA "is exactly the type of strategic investment our DMV region needs and will help shape the more inclusive, sustainable, and vibrant communities envisioned in our... housing targets," tweeted MWCOG Executive Director Chuck Bean.

Ramon Jacobson, executive director of nonprofit housing lender LISC DC, says Amazon's investment will provide much-needed gap financing for affordable housing projects that might otherwise take longer to get off the ground.

"The kind of investing they're doing is unique," Jacobson says. "They're lenders, but they're really doing investments that banks can't do. They're more patient, they're cheaper, and their payments are not a regular mortgage payment that a bank would require. That's the novelty."

The first deal out of Amazon's Housing Equity Fund provided $380 million — mostly in loans — to the local affordable housing nonprofit Washington Housing Conservancy, which used the capital to buy Crystal House near the firm's Arlington headquarters and preserve most of its units as affordable for families earning less than $103,200 per year, in 2021 dollars. Under terms of the deal, the building is required to remain affordable for 99 years, much longer than most affordable housing deals require.

Amazon's new $125 million offer was announced amid a rough news climate for the mega-company, which was recently the subject of a New York Times investigation into its treatment of warehouse workers during the pandemic. Reporters at the Times found a remarkably high turnover rate among Amazon's hourly employees and a "churn and burn" approach to employee management. Amazon CEO Jeff Bezos was also one of multiple billionaires whose tax information was leaked to nonprofit news organization ProPublica, which went on to find that Bezos and other corporate leaders have avoided millions in federal income taxes by utilizing legal loopholes commonly used by the super-rich.

Amazon has also drawn scrutiny for its perceived impact on housing markets. Home prices in Arlington have climbed since the company announced its entrée into Northern Virginia three years ago. Activists in the D.C. region unsuccessfully fought against Virginia and Arlington County providing incentives to the firm, predicting that housing demand from the company's high-income workers would displace working class families already struggling to afford high housing costs in Arlington County.

The company's housing fund seems like an effort to combat increasingly critical press coverage, says Kasia Tarczynska, a research analyst with Good Jobs First, a watchdog organization that tracks government incentives to Amazon.

"They're responding to pressure that has been put on them from community groups from around the country," Tarczynska says. "It's starting to struggle with its image, and this is a way for it to improve [that]."

But Amazon could have an even greater impact if it paid more federal taxes, Tarczynska says. In 2020, a particularly lucrative year for Amazon, the company paid an effective federal income tax rate of 9.4%, according to the left-leaning Institute on Taxation and Economic Policy. That's less than half the country's official corporate tax rate of 21%.

"It's interesting that Amazon now wants to support affordable housing, while they don't pay their full share of taxes," Tarczynska says. "They don't contribute to financial resources that governments could have to respond to affordable housing crises, or other needs created by Amazon."

The online retailer has also received at least $4 billion in subsidies from state and local governments across the U.S., according to Good Jobs First.

"All the tax breaks — on the local, state, and federal levels — are much larger than what Amazon is now contributing," Tarczynska says. "If Amazon is so generous, why is Amazon not suspending some of those subsidies?"

But Jacobson with LISC DC says the corporation still deserves some credit for doing more for affordable housing than other wealthy firms have done.

"A company like Amazon doesn't have to do these kinds of investments," he says. "And hopefully there will be other corporations that have the ability to place some of their capital in this way, and make change happen in their communities."

This story is from DCist.com, the local news website of WAMU.

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