I came across a New York Times article recently about how Microsoft is pledging $500 million towards the development of affordable housing in Seattle. This got me thinking about the tech boom in Toronto and our affordable housing issue.
Microsoft’s announcement arrives a year after Amazon made efforts to block a tax in Seattle that would have required large businesses to pay a per-employee tax to fund homeless services and the construction of affordable housing. Amazon said it would be a disincentive to create jobs.
The tech boom has hit Seattle hard. In the last eight years, home prices have doubled, according to Microsoft’s research. When large tech companies grow or move into an area, it attracts highly paid talent, and a lot of it. As these skilled workers move into the area, vacancy rates go down and homes start selling. The higher incomes and strong demand drive prices up, which hurts low- and middle-income households.
Microsoft is lending $250 million for the development of low-income housing, and $225 million to build middle-income housing. The loans will be distributed over the course of three years to private and non-profit developers, as well as government groups. When the loans are repaid, the money will be reinvested into the development of affordable housing.
The remaining $25 million will be distributed through grants to local organizations working with the homeless. The NYT article says that $500 million invested in one project would create around 1,000 affordable housing units, but distributing loans and grants this way, Microsoft can assist with the development of tens of thousands of units.
Shortly after reading this NYT story, I read about how the City of Toronto may have found a way to build more affordable housing. There are 11 parcels of surplus land that is city-owned. The plan would be to build 10,000 affordable rental units.
As Toronto looks for ways to address its lack of affordable housing, I can’t help but think that our booming tech industry could be taking a few hints from Microsoft. At the end of last year, Microsoft announced a new headquarters coming to Toronto. Amazon also announced a new office in Toronto. Shopify said it was investing half a billion dollars in Toronto as an anchor tenant at The Well community. And we can’t forget the controversial smart neighbourhood in the works on the city’s waterfront, being developed by Sidewalk Labs, which is owned by Google’s parent company, Alphabet.
Thousands of well paid employees will be moving to Toronto and the surrounding area as these tech investments take shape. It’s important to remember that there are also cafeteria workers, janitors, security staff, and other middle-income jobs required at these places of business. If they can’t afford to live near their work, they’ll be forced into longer and more expensive commutes.
I’m curious to see if Microsoft makes a similar funding announcement in Toronto or if any of the other tech giants decide it is their responsibility to support the communities in which they’re located.