Amazon’s Housing Equity Fund has launched an effort for affordable homeownership

Amazon announced Wednesday it will spend millions to help low- and moderate-income families buy their first homes in the D.C. region, expanding its multibillion-dollar affordable housing effort into a development strategy that has traditionally seen little public or corporate investment.

The pledge is part of a $40 million initiative that executives said is It aims to help promote homeownership among “underserved groups” in the D.C., Seattle and Nashville areas. The tech giant maintains significant footprints in these three increasingly expensive areas, and activists and government officials worry that the influx of well-paid tech employees will exacerbate the housing shortage — to the point that it could drive out longtime residents.

(Amazon founder Jeff Bezos owns The Washington Post, the interim newspaper CEO Patty Stonecipher is a member of Amazon’s board of directors.)

The company said it is working with the non-profit National Housing Trust (NHT). You will give housing developers or local organizations grants to come up with this Strategies on how to create “affordable homeownership” opportunities. The Housing Fund and Amazon will then provide those organizations with loans to build or preserve housing units for low- and moderate-income families.

“What this does – and what it doesn’t really do – is provide the initial resources to develop permanent, affordable homeownership,” said Priya Jayachandran, chief executive of the Housing Trust. “We really see that gap.”

Jayachandran added that there have historically been fewer government subsidies to help people buy homes than for rental housing. But in a system where most people’s equity is built through real estate, boosting home ownership is one tool to help close wealth disparities. This is especially true in urban areas such as the capital, where high costs create high barriers to entry.

The homeownership effort is the latest tranche of the company’s $2 billion housing equity fund, which largely provides loans to build or maintain apartments for low- and moderate-income renters.

The company launched the fund amid criticism that its Seattle headquarters led to higher housing prices and rents There are concerns that the second campus, in Arlington, may do the same to Northern Virginia.

(Amazon is expected to receive up to $750 million in taxpayer subsidies from local and state officials for the Virginia project, dubbed “HQ2.”) Amazon is scheduled to receive a check for about $153 million from the state in the fall of 2026 If the company maintains current employment levels at their current levels (new offices.)

“This new initiative will allow us to explore ways to help middle-income families realize their dreams of homeownership, thereby helping build wealth that can be passed on to the next generation,” Senthil Sankaran, managing director of the fund, said in a statement. generation.”

The first pool of funds in the homeownership effort will take the form of grants to support affordable housing developers and community organizations looking to help grow affordable homeownership programs. A total of $16.5 million will be divided equally among each of the three metro areas participating in the program.

In the Capital Region, recipients will include the Douglas Community Land Trust, an organization based in the city’s Anacostia neighborhood that has sought protection from gentrification in that area.

Some of the financing will support the group’s “down payment” program, under which the organization buys homes at below market price and then resells them to low- or moderate-income families.

When these families eventually resell it, they must do so at another below-market price — specifically, a price that makes the home affordable to a family of the same income level as the owners had when they first purchased the property.

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Since there are so few very small organizations like Douglass Community Land Trust working in the affordable homeownership space, a necessary first step is to help them expand. “It’s a two-punch solution,” she said. “In order to achieve greater development of affordable homeownership, you are going to have to build capacity on the ground.”

The other pool of Amazon money, $20 million, will be distributed through the National Housing Trust Fund to help these local organizations build new homes and apartments for families to buy or convert existing homes into these opportunities.

The remaining $3.75 million in the fund will go toward helping loan recipients provide down payment assistance to families purchasing those homes and toward loans that can help those builders launch new projects.

In all, Amazon’s $40 million effort is expected to create 800 units across all three metro areas. Since no loans have been made in or around the capital yet, it is unclear how many of these units will eventually be in the area surrounding the second headquarters.

The money could eventually fund a variety of strategies, including a “pay it forward” model, deeds restricting sales prices and community land trusts, Jayachandran said. These funds purchase land and lease it to a developer or… The individual who owns the actual building at a lower price.

these The models have caused a sensation in cities with high house prices. Unlike traditional affordable housing projects, which often revert to market rates after a set period has elapsed, they generally… Don’t lose affordability. But there are few federal or state programs to support the construction of these units and few banks willing to finance them with loans.

While the new initiative should help address this shortfall in funds, Jayachandran cautioned that it may not necessarily address some of the criticisms of the Universal Housing Equity Fund.

About $1.7 billion has been allocated from the fund since its launch in January 2021. When the fund debuted, Amazon said it would look to help renter households making between 30 and 80 percent of the area median income (AMI) — or $45,210 to $120,560. $. For a family of four in the DC area. Critics have pointed out that the vast majority of units are intended for families on the higher end of this income spectrum.

Amazon’s $2 billion housing push mostly ignores the D.C. region’s poorest residents

Families who take advantage of the homeownership program will likely fall between 60 and 120 percent of the median living income — which in the D.C. area translates to a range of $90,420 to $180,840 for a family of four, Jayachandran said. As a lender, the National Housing Fund generally finances projects targeting households earning 80 percent of AMI.

There is promise to help local affordable housing organizations grow in size, said Cristina Rosales, director of housing and land justice at the advocacy group PowerSwitch Action. But she stressed that metro areas like the capital are most lacking in affordable housing for their poorest residents.

“It’s important to look at the need, and the need was for affordable housing for very low-income families,” she said.

She also cautioned against relying on private funds from a company like Amazon without including broad input from community members. In Seattle, where Rosales lives, city lawmakers imposed a worker tax on a company that directly funds some affordable housing projects — without relying on any of the company’s goodwill.

Jayachandran admitted Even tens of millions of dollars may not result in the construction of many units. Since developers ultimately have to secure the homeowner, a condo intended for someone to own can be much more expensive than a rental building.

But that doesn’t mean it’s not worth trying. “Would that be the answer? No,” she said. “But if you want to close the racial wealth gap, you’re going to have to have innovative solutions.”

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