Amazon Invests Additional $1.4 Billion in Affordable Housing Near Major Offices

Key Takeaway

• Amazon is investing an additional $1.4 billion in affordable housing, adding to its previous $2.2 billion investment, targeting 14,000 more homes.
• The fund focuses on regions with major corporate offices: Puget Sound (WA), Arlington (VA), and Nashville (TN), aiming to support low-to-moderate income earners.
• Despite significant investments, experts argue that federal government support is crucial for substantial impact on the affordable housing crisis.

Amazon's $1.4 Billion Housing Boost

Amazon is making headlines with its announcement of an additional $1.4 billion investment into its Housing Equity Fund, a move that underscores the company's commitment to addressing affordable housing shortages in key regions where it has major corporate offices. This new funding, which supplements the $2.2 billion already invested, aims to create or preserve 14,000 affordable housing units in the Puget Sound area, Arlington, Virginia, and Nashville, Tennessee. This initiative, launched in January 2021, initially targeted the creation of 20,000 units over five years, but with the new infusion, Amazon is set to exceed its original goal.

Expanding Affordable Housing Efforts

The additional $1.4 billion will be directed towards grants and below-market-rate loans to both non-profit and for-profit developers. This approach allows Amazon to generate revenue through interest payments while also leveraging government funding, which has supported 80% of the units so far. The focus remains on individuals with low-to-moderate incomes, specifically those earning 30% to 80% of the area median income. This demographic, often referred to as the "missing middle," includes professionals like nursing assistants and teachers who struggle to afford housing but do not qualify for government subsidies.

Addressing Market Dynamics and Criticisms

Amazon's initiative comes in response to long-standing criticisms that tech companies have exacerbated housing shortages and driven up costs in regions where they operate. By investing in affordable housing, Amazon aims to mitigate these effects and support community stability. However, the company has faced criticism for not doing enough for the lowest-income residents, who require more substantial government subsidies. Despite these challenges, Amazon has maintained a "mixed portfolio" approach, with most supported units serving households earning less than 60% of the area median income.

Broader Implications for Affordable Housing

The significance of Amazon's investment extends beyond the immediate creation of housing units. It highlights the role of corporate philanthropy in addressing systemic issues like housing affordability. While Amazon's contributions are substantial, experts like Derek Hyra from American University emphasize that corporate efforts alone cannot solve the housing crisis without significant federal investment. The cost of building affordable housing, particularly in expensive markets, can be prohibitively high, making comprehensive solutions necessary.

Amazon's Strategic and Reputational Goals

Amazon's Housing Equity Fund also serves a strategic purpose in enhancing the company's reputation. The fund, initially managed under Amazon’s government and corporate affairs division, was moved to the public relations arm, reflecting its role in corporate image-building. CEO Andy Jassy has highlighted the company's commitment to giving back to communities, a sentiment echoed in Amazon's promotional materials. This dual focus on community impact and corporate reputation underscores the multifaceted nature of Amazon's housing initiative.

Street Views

• Derek Hyra, American University (Neutral on Amazon's affordable housing efforts):

  "Projects designed for such individuals are likely to require more government subsidies and take longer to complete."

Management Quotes

• Andy Jassy, CEO of Amazon:

  "Amazon is adding $1.4 billion to a fund it established three years ago for preserving or building more affordable housing in regions where the company has major corporate offices."

• Alice Shobe, Global Director of Amazon Community Impact division:

  "We’ve made a big difference in both the amount and quality of affordable housing in these three communities."