WA has a housing crunch. Microsoft President Brad Smith has thoughts

Microsoft is recommending several policies to local lawmakers in an effort to help speed up housing development in Washington state.

In a playbook the company released Thursday are four proposals that Microsoft says are concrete, evidence-based actions that state and local leaders” can take to close the housing gap.

* Unlock land: Microsoft urges policymakers to adopt a statewide rezoning framework for commercial corridors. Strips of land devoted to office parks, big-box retail stores and parking lots would be rezoned for mixed-use housing along transit routes.

* Fix permitting: Permitting is a hobby horse of Microsoft’s policy team. The company would like to streamline processes that currently average 6.5 months statewide, and stretch to more than 18 months in some cities.

* Lower costs: Aside from driving down per-unit costs through materials and construction methods, Microsoft recommends incentives for developers to build more housing including tax exemptions and preservation programs.

* Public-private partnerships: Aside from using the tech industry’s cash to build homes, Microsoft recommends leveraging private resources to use technical assistance. One example Microsoft points to is using artificial intelligence, technology that Microsoft sells, to speed up permitting.

Microsoft President Brad Smith said in an interview with The Seattle Times that the proposals stem from the lessons learned by the company over the past six years as it and other tech firms, including Amazon, have tried to help solve the housing crisis with their cash.

When Microsoft pledged $500 million in 2019 to develop affordable housing across the Puget Sound region, Smith hoped the money would fund 50,000 housing units.

“It did not,” Smith said. “There’s no way that an injection of money alone can fill that gap.”

The gap Smith refers to is the need to build 1.1 million new housing units in Washington over the next 20 years to keep up with population and job growth, according to Microsoft. That’s about 55,000 units built per year.

About 33,600 housing units were built in Washington last year, the lowest level since the Great Recession, according to Microsoft.

“That’s discouraging and what it should do is inspire us to come together and act with urgency,” Smith said.

Since making its 2019 pledge, Microsoft’s total commitment has bumped up to $750 million. According to the company, the funds have helped create or preserve 16,000 affordable homes in King, Pierce and Snohomish counties.

Aside from Microsoft’s desire to eliminate permitting delays and regulatory layers, the company’s big push is for public incentives to entice the private sector.

Smith warns that delays and permitting uncertainty dissuade developers from building here. If a developer can build anywhere in the country, they’ll dig their shovels into areas where they won’t incur delay-fueled costs.

“We are competing every day for developer investment and banking investment,” he said. “And we’ve got to make it more attractive for people to invest here.”

Private sector money moves more nimbly than public funding, said Jane Broom, Microsoft’s senior director of philanthropies. She pointed to the $250 million — part of the $750 million Microsoft has committed to affordable housing — that funded a line of credit with the Washington state Housing Finance Commission in 2020.

That credit line allowed quick access to capital for projects that were slowed because of regulation, land problems or other hiccups, giving developers a cushion.

“That’s the kind of thing the private sector can offer and where public money can’t be spent,” Broom said.

Morgan Shook, a director at consultant firm ECOnorthwest, said Microsoft’s proposals are pretty standard thinking. But housing policy is littered with ideas that are easy to come to, but politically challenging.

Shook did find Microsoft’s stance on more public-private partnerships with clear accountability and transparent outcomes an interesting overture.

“My sense is that folks on the nongovernmental side want to see clearer results from the initiatives that have already been put forward,” he said.

But on several points, Shooks expects there will be resistance.

Microsoft’s proposal to use land that’s perceived to be useless — mostly empty office parks, strip malls and parking lots — isn’t easy to pull off, though rezoning could help. It takes years to redevelop certain properties, and some earn just enough income to discourage change, Shook said.

It can be done.

Certain commercial properties on the fringes of urban and suburban areas are perfect for redevelopment and some have been. A former Verizon office in suburban Bellevue sold last year and the new owner plans to raze the building and develop townhomes. Microsoft sold buildings last year as well that are now planned apartment units.

“These are low hanging fruit,” Shook said. “But we have to turn up the heat on making it easier for these sites to build housing.