Microsoft recently announced an unprecedented three-year, $500 million investment to spur housing development across the Puget Sound region. Since 2011, strong economic growth in the Seattle metro area has boosted overall jobs by 21 percent, but the housing stock has expanded only 13 percent, leading to a massive increase in rental and home prices. It’s a problem reaching crisis levels in all West Coast tech cities.
Microsoft plans to devote half the investment—$250 million—to pay for market-rate loans to support low-income housing. Another $225 million will go to preservation and construction of middle-income housing in the cities surrounding the company’s Redmond campus, and $25 million will go toward addressing homelessness. Overall, Microsoft hopes to leverage these funds to create “tens of thousands” of new units and reinvest the returns into new projects.
As part of the announcement, nine surrounding cities—including tech-sector favorites like Bellevue, Redmond, and Kirkland—released a “Statement of Mayors” outlining a commitment to relaxing zoning and land-use regulations, reducing taxes on developers, easing the permitting process, and updating building codes to encourage private-sector housing growth. The mayors hope to “break down barriers and provide incentives to substantially increase the supply of quality housing for all households in our community.”
One locality is conspicuously missing from the announcement, though: Seattle itself. Microsoft’s plan does not include Seattle, and Seattle mayor Jenny Durkan was not a signatory to the mayoral statement. Durkan’s office did not respond to my inquiries about whether Microsoft had invited Seattle to participate in the initiative. “Microsoft has nothing further to share,” a spokeswoman for the computer giant said.
Seattle officials face tremendous opposition to private development from activists, urbanists, and neighborhood groups. Over the past three years, the city council has pursued a “grand bargain” that opens neighborhoods up to more commercial use, taxes developers, and builds more public housing units, but no legislation has been passed. Some local socialist organizations want the city to construct “public housing for all.”
The city’s hard-to-miss absence from the Microsoft project seems like another illustration of the growing divide between anti-growth, anti-development Seattle and its pro-growth, pro-development suburbs. Cities like Bellevue, Redmond, and Kirkland are pursuing a cooperative strategy with the region’s largest firms, while Seattle has taken a more adversarial approach, including the failed “Amazon tax” last year—which would have charged a head tax on employees—and proposed tax hikes on private developers.
Time will tell which model prevails and how housing policy evolves in elite tech enclaves like San Francisco, Seattle, San Jose, and Bellevue—and now, with Amazon’s announcement of its new headquarters, in New York, too. So far, none have been able to reverse stratospheric housing costs. If Microsoft’s new housing plan delivers results, cities—or their suburbs, at least—will have a fresh lesson in what works.
Originally Published at City Journal.