Amazon's Housing Equity Fund Is An Investment In The Future
"Amazon got into housing because the company started to have enough of a presence in the community that called for being a good neighbor and helping solve some of the issues that the families in the community were facing," says Alice Shobe, Amazon's first Director of Amazon in the Community. The company first got into housing when Amazon's real estate VP John Schoettler acquired some new property in Seattle to build the new headquarters. Schoettler offered nonprofit organization Mary's Place the use of two motels on the new property parcels as homeless shelters for a year while waiting to be demolished and replaced with a high-rise. When the new headquarters took shape, Amazon ended up including a state-of-the-art and the state's largest homeless shelter right in one of the buildings. Since March 2020, Mary’s Place welcomes 200 families members each night.
As Amazon began contemplating expanding the effort and reach, the company approached community impact like any other business initiative, which is rooted in leveraging the company's unique assets. "Cash is always something that we can provide, it's not very unique, though, frankly. It is a piece of the puzzle and an important piece, but we want to think of our logistics assets, our relationships with local organizations and our employee base," says Shobe.
On January 6, 2021, Amazon announced the Amazon's Housing Equity Fund, a $2 billion commitment to preserve and create over 20,000 affordable housing units in Washington State's Puget Sound region, Arlington, Virginia and Nashville, Tennessee. These are areas where the company is expecting to have at least 5,000 employees in the coming years. Amazon is targeting households making between 30% to 80% of the area's median income (AMI) and providing below-market loans, grants and lines of credit. The Fund will provide an additional 125 Million in Grants to Minority-Led Organizations and Public Agencies to help address a housing crisis that disproportionally impacts communities of Color. To maximize impact, the Fund will also give grants to government partners not traditionally involved in affordable housing issues, such as transit agencies and school districts, to provide them with resources to advance and create equitable and affordable housing initiatives.
There is no question that affordable housing availability profoundly affects communities impacting employment opportunities in the private and public sectors. Looking at some numbers in the State of the Nation's Housing 2020 report authored by Harvard University, it is clear that housing unaffordability is a persistent issue in America and it disproportionally impacts People of Color. In 2019, the gap between households of Color and white households passed 30%, the largest it's been since 1983. While white household homeownership increased slightly to 73.3% in 2019, the Black household homeownership rate remained virtually flat at 42.8%. The homeownership rate for Hispanic households was 46.3% and for Asian households, 57.3%.
Covid-19 only accelerated this divide. According to data highlighted from the Census Bureau's Household Pulse Survey in late September, 36% of all homeowners lost employment income between March and the end of September. Income loss was most common for homeowners earning less than $25,000 (44%), Hispanic homeowners (49%) and Black homeowners (41%). As of late September, 18% of Hispanic homeowners, 17% of Black homeowners and 12% of Asian homeowners were behind on mortgage payments, compared to 7% of white homeowners. Similarly, 23% of Black, 20% of Hispanic and 19% of Asian renters were late on their rents compared to 10% of white renters as of late September.
In my conversation with Alice Shobe, I was interested in gaining a broader understanding of the unique approach Amazon adopted for the Housing Fund to drive a deeper and long-standing impact.
Shobe arrived at Amazon after an extensive career in the nonprofit world, where she focused on homelessness and equitable community development. "I was hired four years ago to launch Amazon's global corporate community engagement program. The company had a lot of community work that was happening but wanted to take it to the next level by building community impact programs that had more of a global narrative and where Amazon could really leverage its strengths and make a difference." Amazon identified three areas that would make the most impact and were also connected when thinking about the opportunity they could create for future generations. The three areas are computer science education with the Amazon Future Engineer initiative, hunger and housing-related issues and lastly, disaster relief.
When it comes to the Housing Fund, there are three areas that Shobe highlights as unique in approach.
First is the speed at which Amazon moves once a decision has been made to get involved in something. Moving fast to enable the nonprofit partners to bid on a property and go in and compete against the private bidders who would be purchasing a building and likely raise rents is critical. With Amazon's flexible capital, the Washington Housing Conservancy was able to execute the purchase of Crystal House in under two months, an expedited timeline for commercial real estate transactions.
Second is the scale that Amazon is able and willing to operate at. Because of the investment size, Amazon can reach under 3% loan rates compared to a market average that could go up to 15%. Amazon is also choosing to invest larger amounts in fewer projects to minimize the complexity of multiple-funding sources for their nonprofit partners.
Third is the support Amazon can provide to the organizations they are working with. These organizations really understand what the community needs and have great ideas on making an impact, but they might require legal or accountant experts aside from financial backing. Supporting those partners rather than moving in and working alone, set the project up for success.
Shobe is very passionate about driving equity. In the early years of her career, she posed as a renter to test discrimination in the Boston area. For the past thirty years, she has been focused on making a difference by being more creative in addressing these issues. This includes working with the government slightly differently by collaborating with school districts and other agencies that are not necessarily in the housing domain but could create further opportunities that will ultimately benefit housing affordability and the attractiveness and quality of life of the occupants. "Who is at the table always matters, whether you are evaluating the needs of the community or brainstorming the possible solutions," Shobe tells me.
Having global responsibility for Amazon in the Community seems like a daunting task, given how different the needs can be. Yet, Shobe explains that while there are geographical differences, Amazon's focus remains consistent: the investment in the future generation no matter where they are. "Amazon's customer obsession comes into play here as it does in everything else we do. My customer is the underdog young person who has been facing harder barriers to overcome, either due to personal or social circumstances. My job is to see the promise and provide an opportunity for them."
This article was originally published on Forbes
Disclosure: The Heart of Tech is a research and consultancy firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this column. The author does not hold any equity positions with any company mentioned in this column