The cost of an Amazon home loan | city ​​limits

The Metro Development and Housing Agency’s latest funding plan hinges on a $7.1 million loan from Amazon. The government agency, which oversees government-subsidized housing in Nashville, has struggled to advance Envision Cayce, its flagship redevelopment program, since the Briley administration.

In January 2021, the company announced it would commit $2 billion to housing-related projects in Seattle, the District of Columbia, and Nashville, the three cities with Amazon corporate campuses. Desperate for funding and capital, MDHA turned to the new Amazon Housing Equity Fund a month later.

By this time, the MDHA had hit a stalemate in a years-long effort to overhaul its public housing footprint. Jim Harbison had just resigned after leading the agency through four mayors, from 2013 to 2020. His work focused primarily on converting federally owned MDHA housing to city-owned properties to prepare at Envision. The plan aimed to deconcentrate poverty and bring 6,700 new units online, most of them at market rate and labor, transforming Nashville’s public housing into mixed-income communities. Labor housing refers to households earning between 80% and 120% of the region’s median income, recently estimated at around $62,515 in Nashville.

Former Mayor David Briley pledged to fund Envision with Under One Roof, a $35 million annual commitment that MDHA could raise into a few billion over 10 years. Information for the public was thin in number and dropped like a campaign press release. The stunning net result brought together the MDHA’s $35 million over 10 years, $15 million in Barnes Fund dollars and $250 million in cash that had not yet been secured (called the “private sector challenge”) . John Cooper opposed the plan in the summer of 2019, turning it into an MDHA bailout.

After winning the mayoral election, Cooper left Under One Roof to rot on the vine. The agency operates independently of Metro’s operating budget but has a board of directors controlled by the mayor. Cooper appointed former mayor Bill Purcell to chair the board, Harbison left, and after an interim stint from Saul Solomon, Purcell brought in Troy White to head the agency last summer.

Envision Nashville’s groundbreaking progress has been mostly limited to Envision Cayce, where six mixed-income developments have launched in five years. Envision Edgehill and Envision Napier and Sudekum were launched six years ago and remain in the planning phase.

MDHA funds Envision on a project-by-project basis. For Cherry Oak Apartments, MDHA combined low-income tax credits with its own equity, market-rate borrowing from the Bank of Tennessee, and Amazon’s below-market loan.

Cooper’s administration sent Cayce $15 million in U.S. bailout money last year, a one-time injection from the federal government to update the neighborhood’s infrastructure. Rather than funding the MDHA directly, Cooper’s housing strategy focused on market incentives. Last week, he announced incentives for private developers aimed at producing more units for Nashvillians earning between $31,000 and $43,000 a year. Cooper’s Affordable Housing Task Force reported last summer that Nashville was 14,000 units short for households earning less than $20,000 a year. An effective affordable housing response depends on closing this gap, and MDHA is one of the only developers building these units. Even so, the entire Envision plan would only bring a few hundred such units online. Cherry Oak will add eight.

Matt Wiltshire, MDHA’s director of strategy and intergovernmental affairs, met with Amazon in February 2021 to coordinate the Nashville tranche of Amazon’s $2 billion commitment. (Wiltshire lobbied to bring Amazon to Nashville while working in Mayor Megan Barry’s economic development office.) After pitching Amazon, MDHA tossed the deal to the mayor’s office for approval a week later, where he remained until Amazon opened a six-month formal application process. after that. Amazon approved the Cherry Oak deal after nine more months.

According to Dr. Troy White, current executive director of the MDHA, loans from Amazon will help the MDHA achieve its goals.

“MDHA is committed to preserving and expanding affordable housing in Nashville, and partnerships with nonprofit and for-profit entities, like Amazon, are key to moving the needle and providing more affordable opportunities for people. Nashvillians in need,” White said in a statement to the Stage.

Amazon’s loan is attractive: $7.1 million at 2.5% interest and interest only, terms favorable to the borrower. But it’s a stretch to call his loans disinterested. Amazon makes money on the loan, but maybe not as much as it could make elsewhere. It will hold the MDHA debt and can advertise its relationship with the community. Affordability crises seem to follow the tech sector, and a housing-focused partnership with Nashville makes a lot of sense. Amazon’s $2 billion announcement came as it rolled out a new corporate presence in Arlington, Va., and a 5,000-person logistics command center in Nashville Yards. Queens, NY, the other land chosen for Amazon’s headquarters, has embarrassed city and state economic development offices by opting out of the tech giant four months after Amazon announced plans to settle in the district in full gentrification.

While $7.1 million is a significant chunk of MDHA funding, the seven-figure figure represents small change for Amazon, which raked in $33.6 billion in profit last year and operated with 445 billion dollars in spending, or about 10 times the Tennessee state budget. . Amazon is one of five companies valued at over $1 trillion. He avoided $5.2 billion in federal income taxes in 2021 and spent millions to suppress union organizing efforts at distribution centers, where his workers face production quotas.

Critics have focused on the real costs cities are paying for Amazon, beyond the billions in direct incentives and tax breaks. Seattle, Amazon’s home base, has one of the most expensive real estate markets in the country. The 18th most populous metropolitan area in America, Seattle has one of the largest homeless populations in the country for a city of its size. Each tech hub has a version of two cities – one rich and one poor – living side by side.

Amazon’s six-figure workforce is a big log on a blazing fire. A rapid influx of tech salaries is distorting local housing markets, sending prices into the stratosphere. In an April 28 company-wide memo, Airbnb CEO Brian Chesky authorized employees to work entirely remotely and explicitly named Nashville as an alternative to San Francisco. The city operates as a shortcut in the tech industry for “a better quality of life at a lower cost, but with familiar conveniences and accessible cultural experiences,” a boon to top tech hubs like the Bay Area and New York.

Amazon’s move to a benevolent commercial lender is a savvy public relations move in this context. The company is no stranger to kingpins — it started as an online bookseller and now owns a third of the internet — and is already involved in politics at local and state levels. A public commitment to affordable housing could help its reputation withstand setbacks. MDHA’s business model is coin-based, and this one was good, far preferable to the alternatives. The loan is the latest link in Nashville’s evolving public-private relationship with one of the world’s corporate giants.

A previous version of this article stated that the Envision plan would create 7,500 new units instead of 6,700. It also described labor housing as households earning 60-120% of the region’s median income rather than 80 to 120%. We regret the error.

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