Seattle Foundation launches a new fund to boost affordable housing in our region.
by Kris Hermanns, Chief Impact Officer, Seattle Foundation
There is no denying that we are facing a growing affordable housing crisis in the Puget Sound region. The depth of this crisis is threatening the fundamental health of our community, and the lives and livelihoods of so many of our neighbors.
We know it will require much more effective collaboration to tackle this crisis. We continue to challenge the philanthropic, private, and public sectors to come together and address the root causes of the inequities our community faces.
Today represents another step towards our vision of reimagining community philanthropy to foster a thriving region of shared prosperity and belonging. We believe affordable, permanent housing is the cornerstone of a vibrant community. All families should be able to call our region home – living and working here for generations to come.
We are proud to share that Microsoft is announcing its commitment to invest $50 million in the Evergreen Impact Housing Fund (EIHF) housed at Seattle Foundation.
This investment will support the construction of approximately 1,250 apartments in Bellevue, Kirkland, Redmond, and other Eastside communities. This extraordinary commitment is part of Microsoft’s broader initiative to boost affordable housing in our region. Microsoft’s official announcement about this investment can be found here.
The Evergreen Impact Housing Fund (EIHF) is a newly launched partnership between Seattle Foundation and the Washington State Housing Finance Commission with generous development support from JPMorgan Chase & Co. Microsoft’s investment represents a third of the total Fund capital to be invested. EIHF aims to raise $150 million over five years with the goal of creating at least 3,750 rental units for working-class households.
We are honored to partner with Microsoft and appreciate their early endorsement of the Fund’s innovative approach. “Microsoft is thrilled to make this investment in affordable housing for Puget Sound. EIHF will leverage our investment to fill critical funding gaps and build more affordable housing now. Our dollars will go further and faster in partnership with EIHF,” said Jane Broom, senior director, Microsoft Philanthropies.
Microsoft’s investment will support affordable housing developments in nine east King County cities where the company has its largest footprint. With this critical investment, Microsoft is inviting other regional employers, private investors, and philanthropists to join them in making housing affordability possible across our community.
This is our reality: In the past decade, housing costs have risen two times faster than incomes. Working-class families are often forced to leave our region because they simply cannot afford housing. It is also prohibitively difficult to build more affordable housing in Seattle and the surrounding areas. Land and construction costs are high, which leaves affordable housing developments with significant financing gaps. To make projects financially feasible, developers push them farther away from where we need them most – near family-wage jobs and accessible transit.
The Evergreen Impact Housing Fund will launch this spring thanks to an initial pilot investment from six local credit unions. We are grateful to all who have jointly committed to invest up to $11 million in the proof-of-concept round, including Verity Credit Union, BECU, Sound Credit Union, Seattle Credit Union, Salal Credit Union, and Washington State Employees Credit Union.
EIHF is taking a unique approach to solving this entrenched, regional challenge. The Fund infuses new patient private capital into financing to get more affordable housing built now, without further demands on public funds. Through this new investment vehicle, we will provide the last-dollar investment needed to efficiently develop projects that are already utilizing affordable housing financing structures.
The Fund’s model works by making long-term subordinate loans to housing developments that are financed with tax-exempt bonds and the Federal Low Income Housing Tax Credit program as the sole public funder. The funded projects will be larger-scale housing developments (200 apartments or more) that deliver significant new housing with economic efficiency. Rents will be affordable to people earning 50 to 60 percent of King County Area Median Income (AMI)—currently topping out at about $46,500 for a single person or $60,000 for a family of three. The Fund targets investments to areas often experiencing the highest rent inflation and rent displacement. Beginning in 2020, EIHF will fund a few developments each year, aiming to provide housing for between approximately 5,250 and 7,000 modest-income renters over the next five years.
A crisis this severe requires coordinated cross-sector engagement. The Evergreen Impact Housing Fund was created with the understanding that no one entity could go it alone. Seattle Foundation is thankful to so many supporters who have made this partnership possible, starting with the expert oversight by our advisory committee, co-chaired by Faith Li Pettis, Partner of Pacifica Law Group, and Gregory K. Johnson, Chief Executive Officer of Wright Runstad & Company. In addition, research and development of EIHF was generously underwritten by JPMorgan Chase & Co. The Tableau Foundation has also provided much needed funds to build and launch the Fund.
“Leveraging the JPMorgan Chase model of impact to seed innovative solutions, encouraging diverse stakeholders to join forces around a common goal, is a demonstration of our value proposition and unique role as philanthropists in the Seattle region,” said JPMorgan Chase Chairman of the Pacific Northwest, Phyllis Campbell. “By providing initial funding for research and development of the Evergreen Impact Housing Fund, Seattle Foundation and other key partners are developing a sustainable financing model to scale private financing and build crucial affordable housing. By joining together as a community, we can unlock additional resources and encourage large-scale investments toward key drivers of inclusive growth.”
Evergreen Impact Housing Fund is a mechanism for both businesses and philanthropists to get involved in one of the most pressing issues facing our region. The Fund demonstrates the power and potential we can create by strategically investing our resources together. Seattle Foundation is excited about Microsoft’s endorsement of our model and hope that other corporations will follow their lead.
We look forward to bringing you more news about EIHF in the coming months. If you want to get involved, please contact Kris Hermanns.
Media inquiries regarding this announcement can be directed to Michele Frix, Seattle Foundation chief of staff at 206.617.7281.