Big Tech's Affordable Housing Hustle

Take what you can, give a little bit back.

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Amazon announced last week that it’s going to spend $125 million on loans and grants to developers to build affordable housing near mass transit stations around its “HQ2” in Northern Virginia. It also announced similar programs in Nashville, Tennessee and its original home of Washington State. These payouts are part of a larger $2 billion “Housing Equity Fund” that Amazon’s press folks spend a lot of time touting.

What’s left unsaid in Amazon’s press materials, of course, is that $125 million — of which an unnamed percentage is loans that will have to be paid back — is far less than the $750 million Amazon received from Virginia’s state and local governments to build HQ2 in the first place, or that Amazon is already having an outsized negative effect on the area’s housing market.

Amazon’s actions remind me a bit of the toast from Pirates of the Caribbean (which is apparently based off a real nautical term): “Take what you can, give nothing back.”

For Amazon, it’s “Take what you can, give a pittance back to buy positive PR,” something it does over and over again.

And it’s not only Amazon that’s employed this tactic. Other big tech firms such as Google and Facebook do the same: Collect subsidies, drive up housing prices, and then donate a fraction of that largesse back to ameliorate a fraction of the harm caused.

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It’s a hustle that has several deleterious effects for communities, who see their public dollars go to private firms and then come back out in much smaller numbers to pad press campaigns, not actually change the makeup of housing markets.

Amazon’s new facility in Virginia, as I’ve reported, is expected to displace about 10,000 low-income residents; people who live in nearby apartment buildings are already reporting increased eviction activity, as property managers ready to flip units into the hands of future Amazon employees. Housing prices in the area have been rising steadily ever since HQ2 was announced, in an area where prices were already putting buying a home or renting a unit with sufficient space out of reach for working- and middle-class families.

In the face of that, Amazon’s loans and grants won’t help much, especially when factoring in that households making up to $103,200 could be beneficiaries of the units built under the program. Some Amazon employees may even be eligible, despite the corporation getting lots of local credit for supposedly high wages. And overall, as The Washington Post put it, “the goal of 1,000 new units sought by Amazon is probably a small fraction of the homes needed to keep working-class residents in a region that is pricing them out.”

Ditto with Nashville, where Amazon’s funds also won’t make a meaningful difference in housing access.

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The same thing occurred in California’s Bay Area, where Google and Facebook have focused much of their housing philanthropy. Tax breaks helped their wild growth, alongside most of the other major tech firms which now dominate the economy. This pushed up housing prices, causing a crunch that, as my former colleague s.e. smith explained, Big Tech’s philanthropic spending will not materially change.

Those dollars will accomplish two things for Amazon and the other tech titans, however. First, positive press: Each time a corporation rolls out one of these donations, every local news outlet in the area runs a headline looking something like “Corporation X Donates Y Amount to Create Z Affordable Housing Units.” Devoid of context, the corporations come out looking very good. (On that note, kudos to DCist for noting the HQ2 incentive package high up in its story on Amazon’s housing donations.)

Second, that positive press is something elected officials can point to the next time a corporation comes asking for tax breaks or other favors. Anything portraying the firms as partners in the community that are giving something back rather than purely extractive entities greases the skids for the next round of handouts. “They built affordable housing, so of course we want them to remain here as partners, and this subsidy is necessary to achieve that,” is the refrain one hears over and over.

Again, left unsaid is the fact that these outlays don’t come close to a dollar-for-dollar swap with the money going from the public coffers into these private corporations. In all these instances, it’s almost surely far more cost effective for the state or local government to tax the corporations at the full amount, deny them subsidies, or even (gasp!) raise their tax rates, and then use the funds for local needs, including affordable housing.

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I fear a couple of things from this affordable housing hustle that Big Tech has built. First is the simple fact that it perpetuates the cycle of giveaways that’s beneficial to corporations and pols, but no one else. Campaign contributions are aligned with higher corporate incentives for specific firms; I wouldn’t be shocked to see a similar correlation between these public-private “community benefits” deals and future incentives too.

Second is that it makes too many folks think the proper way to address an affordable housing crisis is to ask corporations to solve it, at least in part. But even if they were cajoled into coughing up far more money than they do currently, these firms are still spending it within the confines of a system that’s failing to create enough housing in general or enforce making anywhere near enough of it actually affordable to current residents.

The way to cause real change is through the political system, not asking a corporate actor to plow a bit more money into an already failing setup — money which the corporation often took from the public with the other hand already.

Look closely enough and its probably you’ll see some version of this hustle in your own community. The good news is, we don’t have to buy what’s being sold.

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ONE MORE THING: Colorado audited its film tax credit program, and as the Denver Business Journal explained, found that it “has given money to ineligible projects, promised money that the state didn’t have to give, and agreed to pay producers without the proper submission of paperwork.”

It’s like I keep saying: Film/TV tax credit programs are a big scam.


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— Pat Garofalo