Seattle's Affordable Housing Provides Lesson for Cities Coveting Amazon's HQ2

The race is on for Amazon's second global headquarters, dubbed "HQ2," as civic leaders salivate at the thought of how landing the online retailer and cloud computing giant can burnish their legacy. Even Fresno has made a bid for HQ2, one its mayor describes as "counterintuitive" because the city is not offering generous tax breaks or financial incentives.

Several of the bids smack of desperation: Kansas City's mayor bought and reviewed 1,000 items on Amazon; Tuscon sent a 21-foot saguaro cactus, which Amazon promptly re-gifted; and a town in Georgia said it would parcel out 345 acres and rename this new town "Amazon."

But as these cities scramble to attract what could be as many as 50,000 high-paying jobs in the quest to become the latest and greatest "smart city," they need to be reminded of the flip side in what could happen in scoring Amazon as its newest corporate resident. One only needs to take a look at the home of Amazon's HQ1, Seattle, to see that along with the buzz and excitement of having the company within its center core, an affordable housing crisis has also festered - and unless drastic policy changes occur, these problems will not be solved at any point soon.

Seattle exemplifies how more companies are returning to cities after spurning them for decades. Amazon's campus in the city's South Lake Union district has transformed a part of town that was known as an area to avoid only 15 years ago. Across the U.S., similar changes have occurred. Downtown Detroit will continue to boom, due to Dan Gilbert's continued drive for investment. Other corporate shifts from suburbs to cities, such as the relocation of McDonald's to downtown Chicago and General Electric to Boston, have become the norm as employers realize their workers do not want to venture far to live, work and play. And judging by appearances, the results look fantastic, as these revamped neighborhoods are now crammed with young workers, food trucks, transit hubs, new retail store fronts (yes, even where Amazon is located) and of course, new apartment towers.

It's the latter that poses the biggest problem for cities, and should give civic leaders pause as they imagine Amazon arriving on the scene - high housing costs and rising homelessness have been ongoing struggles across Seattle in recent years.

In fairness, this is hardly a problem unique to Seattle. Cities struggle with this problem largely because housing starts nationwide have cratered since the 2008-2009 fiscal crisis and have not recovered to the pre-2008 annual figures of 1.6 million new homes a year. Many economists argue that is the case largely because of zoning laws that aim to preserve cities' local character, but also have restricted the supply of housing.

That has created a nightmare scenario in Seattle, now the fastest-growing large city in the U.S. and also the country's hottest housing market. The median price of a house in Seattle is now $729,000 and is even higher in more coveted neighborhoods. And while Seattle keeps building apartments at a rapid pace - in fact, the city is a U.S. leader in new apartment construction -  these homes cannot be built fast enough, and many are not affordable for middle- and working-class families. Housing activists in Seattle say Amazon is a huge part the problem, as Amazon's growth - not to mention the companies doing business with the company - contributes to the scarcity of housing and skyrocketing prices.

The short answer to fix America's housing crisis is high-density housing. The problem is that NIMBYism, long the bane of the California housing market, often gets in the way of affordable housing. Zoning laws also need to change. Chipping away at renting practices, such as those that favor tech workers (or any demographic) would also help reverse America's housing struggles. But the problem is that a company the size of Amazon can make even the best urban planning scheme go awry. Amazon and its peers need to step up and ensure that they are willing to work with the cities in which boost their presence. That means working together on fair housing and public transportation challenges - not defining its relationship with a city based on how many billions in tax breaks they can score.

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