SEATTLE - One year ago, Microsoft made national headlines with its largest pledge ever, a promise to invest $500 million in affordable housing.
On Wednesday, the tech giant put a potential $250 million on top of that.
Like most of its previous tranche of funding, though, the new money isn't for free - it's a line of credit for a state agency that administers tax-exempt bonds, a kind of low-cost financing for affordable-housing projects.
Unlike the previous round of funding, though, which targeted King County and, specifically, the county's Eastside, the $250 million will be available for affordable-housing development statewide.
The company has had difficulty spurring affordable housing around its Redmond campus, where it's three years into a multibillion-dollar redevelopment project. High prices for land and a lack of incentives to build other-than-market-rate housing have hamstrung affordable developments on the Eastside.
"There is capital coming in for sure, and there is interest, there is activity in affordable housing - but the pace of change in our region, the growing jobs, the growing economy, the number of people that want to live here and work here is significant," said Jane Broom, senior director of Microsoft Philanthropies.
In 2019, Microsoft's market value topped $1 trillion as share prices ballooned more than 50%, the company's biggest share gains in a decade. Competitor Apple, meanwhile, promised in November to pitch in $2.5 billion to tackle affordable housing.
Broom said Microsoft is willing to continue upping its investment in affordable housing, "if opportunities come our way where it makes sense."
"We're proud of what we've done," she said.
The $250 million boosts the financing the Washington State Housing Finance Commission (WSHFC) can make immediately available to developers building affordable-housing projects.
But at least for the next few years, as the program ramps up, the agency expects developers to only use about $150 million of the full line of credit. Microsoft says the financing tool will add an estimated 3,000 housing units in the state over the next five years.
It's a unique agreement in America, according to Lisa Vatske, director of multifamily housing for the WSHFC, and something that states like California are interested in replicating, she said.
Other state housing-finance agencies have set up similar lines of credit to help developers secure short-term capital while they're waiting for more permanent financing. But those arrangements have been with conventional lenders, whose high fees and interest rates are passed on to developers. Not so with Microsoft: the arrangement doesn't cost the state anything.
Microsoft expects returns of close to 1.7% on whatever's loaned to developers. That rate is far less than a private lender would usually demand.