Seattle crowdfunds housing to plug gap linked to tech boom
US non-profit developers determined to deliver affordable homes
SEATTLE has struggled to respond to an affordable housing crisis fuelled by its booming tech scene. Now it's turning to techies to help solve the problem.
On Tuesday evening, the city's largest non-profit affordable housing provider, Bellwether Housing, is hosting an event inside the spheres at Amazon's headquarters to kick off a $4.5m (€4m) fundraising campaign. The organisation expects a sizable chunk of that to come from tech workers contributing no more than a few thousand dollars each.
The money will help Bellwether build 750 new apartments with below-market rents at four sites in the city and a nearby suburb over the next three years that it will own and operate.
About a third will be aimed at families, with two to four bedrooms, and all will be near public transit for easier access to jobs.
Crowdfunding affordable housing is the latest twist in a long-simmering debate about what tech companies and their employees should do about a problem that they're often blamed for in the nation's booming tech hubs. And it shows the innovative strategies developers are having to try in the face of inadequate government help.
The idea for the campaign began about a year and a half ago when an advocacy organisation called Tech 4 Housing approached Bellwether. The non-profit had raised funding before from accredited "impact" investors to supplement money it got from government and philanthropy. But a change in securities rules meant it was now possible to raise cash from contributors of lesser means.
"It seemed like such a partial solution in my mind to say only very wealthy people" can invest in this cause, said Ethan Goodman, the founder and executive director of Tech 4 Housing, and a former Facebook employee. "When crowdfunding became a legal form of investment a few years ago, it seemed like a really good fit."
Investors in Bellwether's new fund will get a modest 2pc return annually. The vehicle is designed to last for 15 years, with opt-outs every five. That will provide the non-profit with a stable, low-cost source of capital it can use to accelerate its work at a time when demand for units is far outstripping supply.
"The public resources just weren't keeping up" with the need, said Susan Boyd, Bellwether's chief executive officer, citing a decades-long retreat of the US federal government from housing assistance and a recent decrease in the value of tax credits organisations like hers use to fund projects.
Everyone who works on the issue is "trying to figure out ways to move faster, so we have a bigger impact". A study by McKinsey & Co last year showed Seattle needed to double its outlay to as much as $410m (€366m) to plug a 14,000-unit housing gap needed to shelter all the city's homeless. But even more resources would be needed to build housing affordable to teachers, nurses, police officers and other middle-income residents, whose pocketbooks are increasingly being strained by sky-high rents.
The median value of a single-family home in Seattle soared 63pc over the past five years, according to Zillow data. Median rents were up 27pc to $2,519 (€2,837) a month over the same time period. Both Goodman and Boyd are quick to say crowdfunding is no substitute for broader public investment in affordable housing. But they see their effort as a way to draw a wealthy constituency into the issue and get people to tune into a growing civic crisis.
"I see it as a community-building tool as well as a financial tool," said Goodman.
For Spencer Visick, a software developer at Redfin Corp, investing in the fund was an easy sell. He moved to the Seattle area in 2006 and worked for several years at Amazon, benefiting from stock compensation as the tech giant's shares climbed.
In recent years, he's been troubled by how soaring rents have made it harder for some of his neighbours to afford living in the city. So, he's decided to contribute $10,000 to Bellwether's fund.
"Investing in this is a thing I can believe in, even if it doesn't have the same return as Amazon" stock, he said. "It feels a lot better than when I open up the paper and read about Amazon selling facial-recognition technology to law enforcement."
The crowdfunding effort is just one approach to a problem being addressed on several fronts in the Seattle area. In January, Microsoft, which has its headquarters in a Seattle suburb, pledged $500m (€446m) to the issue. Washington state recently boosted its allocation to a housing trust fund, which is used to preserve and create affordable units.
Meanwhile, Amazon and other area businesses have stepped up their philanthropy on the issue after beating back a tax last year that would have raised money from large employers to fund homeless services. As part of its most-recent pledge, Amazon will match up to $5m (€4.46m) in employee contributions to 20 area nonprofits that work on housing and homelessness, including Bellwether.
In a way, the crowdfunding effort harks back to the roots of affordable housing, said Matthew Gordon Lasner, an associate professor of urban studies and planning at Hunter College in New York. In the 19th century, he said, robber barons and other wealthy individuals financed non-profits that built housing for low-income people in Britain, New York and elsewhere in exchange for below-market returns.
"Here we are in the new Gilded Age," back to leaning on private citizens and companies to do the job of government, Lasner said. "I wouldn't be surprised to see more of this happening nationally." (Bloomberg)