Seattle’s Housing Levy, On the Ballot Next Year, Could Rise to $840 Million or More

By Erica C. Barnett

Next year, Seattle voters will be asked to approve a renewal of the city’s seven-year housing levy—a property tax that, since 1981, has constituted the city’s main source of funds for affordable housing. Although the Office of Housing is still hammering out the details, the proposal is certain to dwarf the current levy, more than doubling the size of the tax and almost tripling amount it will raise, from $290 million to $840 million a year. Under the latest draft, the owner of a median Seattle house would pay about $342 a year if the most recent version of the levy passed, compared to $114 today, an increase in real terms from 14 cents per $1,000 of assessed home value to 34 cents per $1,000.

What will Seattle voters get for all that money? The biggest-ticket item, at $640 million: About 2,600 new apartments, or about 200 more than the 2016 levy. Most of those units will be studios and one-bedrooms, although the final number, and mix of apartment sizes, could still change; an earlier version of the plan would have built fewer than 2,200 new homes.

Seattle’s Office of Housing is aware that number seems underwhelming, but says they have little choice but to ask voters to do less with more.

“Seattle’s affordable housing developers are contending with the same increased development costs as market-rate developers,” said OH spokeswoman Stephanie Velasco. “Simply put… it’s expensive to do any new development right now, due to inflation, high cost of land, and high cost of materials.”

Merely “meeting today’s need,” Councilmember Teresa Mosqueda said, would “mean we wouldn’t be planning for and building the housing needed for our growing population and the projected influx of residents in the near future.”

The revised levy proposal—an expansion of OH’s original, $758 million plan—would also maintain or expand funding for housing acquisition (buying up existing buildings, which both the city and King County did a lot more of during the pandemic), homeownership assistance, eviction prevention, and operations and maintenance (maintaining new buildings and providing supportive services and rent assistance to residents who need them).

“The Operating, Maintenance, and Services (OMS) program keeps the water running, the lights on, addresses regular repairs, provides maintenance and janitorial work, and supports operating and services personnel in Housing Levy-funded buildings,” Velasco said. “We have heard many times from affordable housing providers over the past year, particularly those providing permanent supportive housing, that these funds are critical to keeping their buildings running.”

One thing that has changed since the last levy renewal is that Seattle now has the JumpStart payroll tax, a tax on the wages of the highest earners at Seattle’s largest companies that passed in 2020. According to projections from OH, JumpStart is likely to produce between 1,600 and 2,200 new apartments over the life of the levy—a fact that could end up being a liability or an asset.

For those who reflexively oppose higher taxes—like, say, the Seattle Times editorial board—the existence of JumpStart could provide an argument against expanding the levy. “Say no to huge tax increase for housing,” the headline might read. “Time to go back to drawing board on bloated housing levy.”

City Councilmember Teresa Mosqueda, who proposed the JumpStart tax in 2020 and has defended it during two lean budget cycles, said the city “cannot look to JumpStart to supplant what the levy should pay for. [The tax] is intended to be additive to the housing levy base, which must still grow. [Merely] meeting today’s need,” Mosqueda added, would “mean we wouldn’t be planning for and building the housing needed for our growing population and the projected influx of residents in the near future.” Seattle continued to grow during the pandemic, and city planners anticipate our population will swell to 1 million in the next 20 years.

Mosqueda’s colleague, Councilmember Andrew Lewis, argues that the JumpStart tax could  actually help the levy pass, by showing voters that the city has a plan to build enough housing to alleviate Seattle’s affordability crisis.

“For the first time ever, when you look at all these [housing] resources”—including the city’s Multifamily Housing Affordability (MHA) program and the state Housing Trust Fund, among others—“I think we’re pretty well positioned to be the jurisdiction on the West Coast that makes a real systematic impact on homelessness,” Lewis said. “What I would want to really look at is what role does the housing levy fill in the context of all of our funding streams that are going into housing, and how can we use the levy as tool to close gaps?”

“I take the rapid public shift to a stronger levy proposal as a hopeful sign the [Harrell] administration understands this is a legacy issue, and a great issue to embrace and champion.”—Alison Eisinger, Seattle/King County Coalition on Homelessness

Velasco, from OH, notes that while proceeds from the housing levy are basically steady—unless home values decline sharply, it will keep bringing in reliable revenues year after year—the JumpStart tax is more variable: Payroll tax revenues fluctuate based on the number of high-paying jobs in Seattle, and that number will ebb and flow over time as big employers like Amazon shed and gain staff.  “Because of this, we consider the Housing Levy to be foundational to Seattle’s entire affordable housing ecosystem,” Velasco said. OH’s model shows the impact of JumpStart revenues ranging from $1.1 billion (the current 2023 projection) to $557 million (a 50 percent dropoff).

Some advocates have argued that the levy should be even larger, to build in long-term wage stability for housing provider staff, fund ongoing maintenance at buildings that already exist, and create more housing, especially larger, family-sized size units, which make up just 15 percent of the latest levy proposal.

Seattle/King County Coalition on Homelessness director Alison Eisinger said the success of the levy will depend on whether it will “stand the 2030 test. Will we look back in seven years and say: ‘Damned right! This city made the biggest housing difference possible’? … I take the rapid public shift to a stronger levy proposal as a hopeful sign the [Harrell] administration understands this is a legacy issue, and a great issue to embrace and champion.”

Source: Technical Advisory Committee presentation on Seattle Housing Levy

Housing Development Consortium director Patience Malaba—who, like Eisinger, testified in favor of a larger levy at a recent TAC meeting—said the levy still has “room to grow” before OH recommends a final proposal to Mayor Bruce Harrell. “Number one, we should invest in the buildings once we have created them. And number two, we do need to support the people who are working in those buildings” with fair wages, Malaba said. She sees $840 million as “a starting place”—one that should provide the basis for a larger levy that will build more housing and “really push the bounds of what’s possible.”

Historically, Seattle voters have approved the housing levy by increasingly wide margins—56 percent in 2022, 63 percent in 2009, and 70 percent in 2016. But the success of any tax increase depends on whether taxpayers believe the city is investing its tax dollars wisely, and the future campaign against the levy could capitalize on the widespread perception that the region continues to spend more money on homelessness and housing but the crisis isn’t getting better.

Polls, Lewis points out, have consistently showed that voters rank housing insecurity and homelessness among their top concerns—a sign, he said, that “it’s important that we have a plan to actually solve the problem. We have a tendency to get 80 percent there and then hold back a little because we’re worried about overreach. What I would like to do is create a plan and go to the people and say this is the comprehensive plan that the levy [is] a puzzle piece [in] attempting to solve.”

Velasco, from the city’s housing, declined to provide details about the latest iteration of the levy proposal, which the TAC will meet to discuss on December 16. Once OH has finalized its levy plan, it will go to Harrell’s office, and on to the city council, for approval or amendment before it heads to the ballot next year.

11 thoughts on “Seattle’s Housing Levy, On the Ballot Next Year, Could Rise to $840 Million or More”

  1. The chief problem I see with this is that it will become a massive transfer of tax dollars to speculators, whether its homeowners who saw their modest PNW rambler become a 7 figure nest egg or the professional investors who own as much as 1/5 of Seattle’s precise single family homes. And how much of that value will be siphoned out of town when the property changes hands? Just as we see so many public employees spending their locally-earned wages on rent in neighboring cities…

    Seattle’s real value is its location, not the geographic locale so much as the economic activity that takes place within it. People come here to make a living, either by getting a good job or starting a business, as well as the recreational and other activities. And location really means land. The housing affordability crisis is about land more than buildings because you need land first. If you don’t believe it, look around at the vacant lots you see or poke around Google maps and see how much land is set aside for surface parking lots downtown. Any city that has that much parking in its most densely developed area, while enduring a housing affordability crisis *and* a multi-year “homelessness emergency” is a failure. Seattle is 84 square miles in size, as it as has been since the last round of annexations…the population has expanded quite a bit since then, which simply drives up the market value of land and housing. You can’t have affordable housing without affordable land.

    The problem is rooted in the state’s tax model that doesn’t differentiate between earned and unearned income, the Uniformity clause. What we see at street level is vacant land and buildings that are cheaper to hold as speculative assets than develop as productive assets. The 1% property tax is applied to land and buildings alike so a business sited on a parcel valued at less than $200,000 is going to have a hard time making a go of it when that land triples in value (as with the carpet and flooring shop just up the street from me). Now we will get to watch it become a graffiti exhibit and general eyesore because the current zoning and assessed value make it uneconomic to redevelop. The land under the building (a $1000 teardown as far back as records go) has increased in value from $181,000 to $613,000 over the past 23 years which commensurate increases in property taxes. No other business expense has tripled in that time but if you need to see why so many small businesses move out to Lynnwood, that’s a big part of it. Any purchase price will be a multiple of that $600k assessment so any redevelopment will start with a low 7 figure price tag. And out here in Lake City, the Staten Island of Seattle, we have a lot of vacant parcels sitting idle until the owners get their price.

    What would solve this? A land value tax or ground rent, for one thing. We have already seen from the Mercer Megablock project that developers would just as soon rent land than buy it…the RFP for that project is available for review and a little time in your spreadsheet of choice with the Future Value function will reveal that Seattle was offered $1.2 billion over the 99 year lease but the city’s crack development office took a $149 million sale option. If all surplussed city land was leased rather than sold (like the old SPD HQ, an undeveloped hole in the ground across from City Hall since the mid-00s) it would get developed a lot faster: a 6 figure annual rent payment will get a project moving, because the developer needs to start making money and a lower upfront cost would attract more developers. Vacant parcels could be assessed a ground rent to recoup the unearned value created by the community: that $200k parcel in Lake City tripled in value as a result of the economic activity around it, not from the value of carpet and flooring sales.

    There is a lot of conjecture and debate around these issues but the King County property tax database in open to all…anyone can look up properties and see how little it costs to hold a vacant lot hostage while people sleep in adjacent doorways or under freeway overpasses. The argument that Seattle has to choose between housing and transit doesn’t pencil out when you see how much value Seattle loses due to the state’s outdated ideas about wealth and economic activity. If every acre of Downtown Seattle paid what was offered for the Mercer Megablock project, we could have the city of the future that Century 21 (circa 1962) promised.

  2. I’d love to see a levy include technical/grant assistance to homeowners who want to convert part of their residence to housing in exchange for below market rent. Communities often view low income housing as something done *to* them and for the financial benefit of developers. Let’s help skeptics be part of the solution.

  3. Here’s the problem in a nutshell. This is another flat tax that will let the mansions with lakeviews skate, while taxing the middle to support the poor. The gated community lakeviews can shrug off the trivial by income tax, the middle that stretched over the past 10 years and are house poor to get in get soaked. If that was the only thing, cest la vie.

    But it’s happening everywhere in the system. these same folks stretched to get by good schools. Which SPS is presently defunding on their 1-4 tier system (which they aren’t even meeting that funding) and killing all advanced learning under the shiny Harrison Bergeron Equity System. So they have to burn their own $ on the side to make up for it. Other taxes and bills keep Nickle and diming up as we lard in more costs for more programs. And all those dimes add up for the house poor.

    At the same time, sites like this weep and advocate for effectively blackmailing us into paying up anyway by fighting against sweeps and park patrols. So our kids can get hassles from whacked out homeless folks enjoying their meth, etc…in the local encampment. It was a lot of fun when the creeper walked straight from an alley at our little girl doing his scary rendition of “Little Bo Peep” with a leer. Great stuff. Just another “unhoused neighbor”!

    Until all the advocates look holistically at the aggregate of all they brilliant and idealistic dreams on the folks who are paying (and it ain’t “the rich” in WA), you will continue to be stunned and shocked at the backlash.

    1. But realistic tax reform isn’t on the menu. Nor will it ever be, even though the Democrats control the entire State government. My heart breaks for all the 20-30-40 year old “Lefties” who read this blog and yet own no real estate in Seattle. Even if rent never went up again, (and it will) I can’t see a renter ever saving enough in a 401k to retire in Seattle. This latest housing levy really hurts folks on the bubble of middle class. Right now, between the high cost or living, civil disorder and political malfunction, Seattle is tough place to live. Will the new housing levy do any good? No, because it only helps a few and burdens many.

    2. Graduated/progressive taxation is difficult to enact in this state due to how our Constitution is written, according to our State Supreme Court for a good century now.

      1. I have to say to both of these similar comments, “your point?”. I mean, you’re basically saying that soaking the middle class is just how it is, so it’s okay. Which is exactly the attitude that will fire off a continued backlash, and ultimately end up with the middle class pushed out as well, and the death of the public school system and any other public systems. The very wealthy and the poor. The wealthy won’t need sweeps because they’ll just gate off and block folks out.

  4. It’s about time the city may ask for something closer to what is needed to reduce homelessness in Seattle!

  5. There’s tons of affordable housing currently in various stages of planning and build in Seattle – not to mention millions or billions to help homeless and low income people. Rents are decreasing too. This isn’t needed and I’m all tapped out.

    1. As somewho is low income, I can assure you this is untrue. 0-30% AMI housing, the bracket that is most desperately needed, is not growing much at all. SHA and KCHA lotteries for it are still roughly every 2 years, with a roughly 1 in 10 chance to get onto a 5+ year long waiting list. Even if all the low income housing being built today was finished tomorrow, it still wouldn’t be nearly enough.

  6. I think the problem is the sins of past are always still with us in the present as far as public housing goes. I can’t blame folks who are 25 living with a problem that folks in their 50s and 60s created with decades of under investment and mismanagement. Taking inflation and the rising building costs into account, the new levy would need be something like 4 billion to even come close to fixing the problem. The 8% set aside for OMS (operation, maintenance, service) seems impossibly low looking at the population served and state of many of the older units. Too bad Seattle got “train on the brain” with the whole Sound Transit boondoggle…. the City could have used that money for housing and an enhanced bus system. And yes, it’s always going to transit vs. housing because the world isn’t made of money. Anybody on the Left have the courage to blow up Sound Transit?

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