Seattle voters are showing support for a new tax on high-earning employees at technology giant Amazon and other big businesses to fund affordable housing in a city with some of the nation's highest rents and housing costs.
In early ballot results more than 57% of voters were in favor of Proposition 1A, a measure that would levy a 5% payroll tax on companies with some annual employee salaries above $1 million. About 20% of ballots had been counted as of 8 p.m. on Tuesday.
The measure would raise about $50 million a year, an amount that housing advocates said would let the city's newly created social housing development authority build 2,000 affordable units over the next 10 years.
A competing measure that would use $10 million a year from the city's existing payroll tax to fund the social housing developer for five years, called Proposition 1B, trailed Prop 1A with about 42% support as of late Tuesday. Proposition 1B was supported by the city council, the Seattle Metropolitan Chamber of Commerce and businesses such as Amazon and Microsoft.
The dueling ballot initiatives come as average asking rents have increased 33% over the past decade to over $2,000 a month in Seattle, above the nation's average of $1,741. Rents are projected to peak next year at just under $2,200 a month in the city, nearly 42% above their average of $1,547 in 2015, according to CoStar data.
Seattle, where large tech companies have been criticized for driving up housing costs, is among the first in the United States to tax companies with millionaire employees with the goal of raising funds to build affordable housing, as cities across the country work to increase the inventory of residential housing to ease cost concerns.
The new Seattle Social Housing Development Authority aims to create housing to fill the void between market-rate and low-income apartments by building mixed-income "social housing" aimed at helping working-class families stay in the city.
"Last night, Seattle voters delivered an unambiguous message: Now is the time for Seattle to take bold, innovative action to meet our housing and homelessness crises," said Tiffani McCoy, executive director of Prop 1A sponsor House Our Neighbors.
Tech giant opposition
Amazon and Microsoft each contributed $100,000 to oppose Prop. 1A and support Prop. 1B. Other businesses based in the region such as T-Mobile, timber company Weyerhaeuser and Alaska Airlines contributed between $5,000 and $20,000 to support Prop. 1B, according to data from Washington's Public Disclosure Commission.
"Rather than creating a new tax on jobs, we see value in maximizing the city’s current revenue streams to better support this effort,” an Amazon spokesperson said in an emailed statement.
The e-commerce giant is increasing affordable housing in its corporate home of Seattle and other cities where it has major operations, the spokesperson said. Amazon committed $3.6 billion to support affordable housing through its Housing Equity Fund, including more than $230 million to create and preserve 3,600 homes in Seattle and 8,600 across the Puget Sound region, the spokesperson said.
It's not the first time that housing advocates have targeted Amazon and other companies as a source of funding in the city.
In May 2018, the Seattle City Council passed an annual head tax of $275 per employee on large companies to fund services for the homeless — and repealed the measure a month later under pressure from Amazon and other businesses.
Two years later, the council passed Jumpstart Seattle, another levy aimed at Amazon and other big companies that is based on the number of highly paid employees rather than total workers. Prop. 1B would tap funds raised by the JumpStart tax, while 1A would create a separate tax to permanently fund the social housing authority, in addition to the city's current levy on businesses.
Dueling propositions
Affordable housing advocates led by House Our Neighbors gathered enough signatures to qualify Prop. 1A, previously called Initiative 137.
“Seattle faces an unrelenting affordable housing and homelessness crisis,” according to the statement in favor of approving one of the two propositions submitted by House Our Neighbors. “With a rapidly growing population and steeply increasing cost of living, many of us are being priced out of our communities. It’s clear that our current tools for creating and maintaining affordable housing are insufficient.”
The city council decided in September to put Prop 1B on the ballot to provide "safeguards that apply to Seattle’s existing affordable housing providers to ensure public dollars are spent wisely and effectively," according to its author, Councilmember Maritza Rivera.
Supporters of Prop. 1A oppose the council-sponsored measure, saying the alternative proposal takes funding away from housing providers that depend on the original payroll tax called JumpStart that was passed in 2020.
The chamber of commerce, meanwhile, called into question whether the new social housing authority can handle $50 million a year in revenue. The social housing public development authority “is not ready for prime time,” Smith, who has endorsed Prop. 1B, said during a recent Seattle Channel forum.
“They have one single staff person, a lack of transparency with the public, and 1B provides accountability. There’s absolutely no plan for the [authority] and what they would actually deliver," Smith said.