Amazon is injecting an additional $1.4 billion into its affordable housing fund, CEO Andy Jassy revealed on Tuesday. This move builds upon the $2.2 billion already allocated to support the creation or preservation of 21,000 affordable housing units across regions where Amazon holds significant corporate offices.
Some Amazon employees will be required to relocate due to a company policy mandating workers to be in the office three days a week. ANDREW CABALLERO-REYNOLDS/AFP via Getty Images
Amazon Boosts Affordable Housing Fund
These areas include the Puget Sound in Washington state, Arlington, Virginia, and Nashville, Tennessee. Launched in January 2021, Amazon's Housing Equity Fund initially aimed to fund 20,000 units over five years. The extra funds will be allocated to the same areas, aiming to construct or sustain an additional 14,000 residences through grants and loans below the market rate.
Until now, a majority of the financing has been provided to both non-profit and for-profit developers in the shape of loans, enabling Amazon to generate revenue from interest payments. Additionally, Amazon noted that 80% of these housing units also received support from government funding.
Following in the footsteps of other tech firms, the Associated Press reported that Amazon initiated its affordable housing fund in response to longstanding grievances about the impact of well-compensated tech employees on housing prices in areas hosting their employers' main offices.
In cities such as Seattle and San Francisco, housing advocates have consistently attributed the rising demand for housing and the displacement of longtime residents to the influx of corporate employees.
Alice Shobe, who leads Amazon's Community Impact division worldwide, stated that 59% of the housing units Amazon has aided thus far are preservation projects, focusing on existing housing.
These initiatives involve contributions and loans to nonprofits and local government bodies, enabling them to acquire properties and stabilize rents, ensuring the continuity of naturally affordable housing options.
Shobe pointed out that these projects not only maintain the existing housing supply but also prevent private developers from renovating apartments and hiking up rental prices. She emphasized the substantial impact on both the quantity and quality of affordable housing in these communities.
Addressing Housing Challenges
Amazon directs its investments towards offering housing solutions for individuals with low-to-moderate incomes, delineated as those earning between 30% to 80% of the area median income.
The company aims to cater to the "missing middle," encompassing professionals such as nursing assistants and teachers who face challenges in affording rent but do not qualify for government subsidies.
In September, Amazon allocated a $40 million investment to promote homeownership in the designated regions. However, the bulk of the funds thus far has been allocated to apartment buildings. Criticism had arisen in Northern Virginia regarding Amazon's attention to housing needs for lower-income individuals.
Shobe highlighted Amazon's commitment to maintaining a diverse housing portfolio while continuing to prioritize the "missing middle." Presently, the majority of units supported by the company cater to households earning below 60% of the area median income.
While companies like Amazon contribute to the supply of affordable housing, their financial contributions alone may not suffice to make substantial progress without substantial investments from the federal government. While they have considerable funds, they may not possess the resources necessary to fully address the housing challenge.
