The Cost of an Amazon Housing Loan | City Limits


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

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

Around that time, MDHA had hit an impasse in a years-long effort to overhaul its public housing footprint. Jim Harbison had just stepped down after leading the agency through four mayors, from 2013 to 2020. His work focused mostly on converting MDHA housing from federally owned to city-owned properties to prepare for Envision. The plan aimed to deconcentrate poverty and bring 7,500 new units online, most of them workforce and market-rate, flipping Nashville’s public housing into mixed-income communities. Workforce housing refers to households making between 60 percent and 120 percent of area median income, recently estimated around $62,515 in Nashville.

Former Mayor David Briley promised to fund Envision with Under One Roof, a $35 million annual commitment that MDHA could leverage into a few billion over 10 years. Public-facing info was thin on numbers and dropped like a campaign press release. The eye-popping bottom line rolled together MDHA’s $35 million over 10 years, $15 million in Barnes Fund dollars, and $250 million in money that hadn’t been secured yet (called a “challenge to the private sector”). John Cooper ran against the plan in the summer of 2019, spinning it as an MDHA bailout.

After winning the mayoral election, Cooper left Under One Roof to rot on the vine. The agency functions independently of Metro’s operating budget but has a mayor-controlled board. 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. 

Groundbreaking progress on Envision Nashville has been mostly confined to Envision Cayce, where six mixed-income developments have broken ground in five years. Envision Edgehill and Envision Napier and Sudekum were launched six years ago and remain in the planning phase.

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

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

Matt Wiltshire, MDHA chief strategy and intergovernmental affairs officer, met with Amazon in February 2021 to coordinate Nashville’s slice of Amazon’s $2 billion commitment. (Wiltshire lobbied to bring Amazon to Nashville while working in Mayor Megan Barry’s office of economic development.) After pitching Amazon, MDHA kicked the deal to the mayor’s office for approval a week later, where it stayed until Amazon opened an official application process six months after that. Amazon approved the Cherry Oak deal after another nine months.

According to Dr. Troy White, current MDHA executive director, Amazon’s lending will help MDHA accomplish its goals.

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

Amazon’s loan is attractive: $7.1 million at 2.5 percent interest and interest-only payments, terms favorable to the borrower. But it’s a stretch to call its lending selfless. Amazon is making money on the loan, though perhaps not as much as it could make elsewhere. It will own MDHA debt and can advertise its community relations. 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 deployed a new corporate presence in Arlington, Va., and a 5,000-person logistics command center at Nashville Yards. Queens, N.Y., the other chosen land for Amazon’s HQ2, embarrassed city and state economic development offices by uninviting the tech giant four months after Amazon announced its intentions to set up shop in the rapidly gentrifying borough.

While $7.1 million is a sizable chunk of financing for MDHA, the seven-digits figure is pocket change for Amazon, which raked in $33.6 billion last year in profit and operated with $445 billion in expenses — about 10 times the budget of the state of Tennessee. Amazon is one of five corporations valued at more than a trillion dollars. It avoided $5.2 billion in federal income taxes in 2021 and spent millions to suppress unionization efforts at distribution centers, where its workers face production quotas.

Critics have focused on the real costs cities pay for Amazon, beyond the billions in outright incentives and tax breaks. Seattle, Amazon’s home base, has one of the most expensive housing markets in the country. The 18th-most-populous metro area in America, Seattle has one of the largest populations of unhoused people in the country for a city its size. Each tech hub has some 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 quick influx of tech salaries distorts local housing markets, sending prices into the stratosphere. In a companywide memo on April 28, Airbnb CEO Brian Chesky allowed employees to work fully remote and explicitly named Nashville as an alternative to San Francisco. The city functions like shorthand among the tech industry for “higher quality of life at a lower cost, but with familiar amenities and accessible cultural experiences,” a bargain compared to tier-one tech hubs like the Bay Area and New York.

Amazon’s shift to benevolent commercial lender is a savvy public relations move against this backdrop. The company is no stranger to pivots — it started out as an online bookseller and now owns a third of the internet — and is already involved in politics at the local and state levels. A public commitment to affordable housing might help its reputation withstand blowback. MDHA’s business model relies on pieces, and this was a good one, 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.

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