By Erica C. Barnett

House Our Neighbors, the group that in 2023 passed an initiative setting up a new development authority to create permanently affordable, mixed-income housing, filed a Seattle initiative on Tuesday—I-136—that would impose an “excess compensation” tax on employers with workers who make more than $1 million a year. HON’s goal is to put the measure on the ballot in November 2024.

HON will need to collect more than 26,000 valid signatures from Seattle residents to get the initiative on the ballot.

The proposal, if adopted by voters, would impose a 5 percent tax on individual compensation above $1 million, including stock options, bonuses, and deferred compensation; the tax would be paid by businesses, not employees. The proposal is modeled on the city’s JumpStart payroll tax, with at least two significant differences: It would only kick in after the first $1 million in compensation (JumpStart currently applies to companies whose workers make over $182,000), and it would apply to grocery stores and health care companies, both currently exempt from the JumpStart tax.

Also, unlike JumpStart, the social housing tax could not be raided by the mayor and city council to fill budget holes unrelated to its purpose.

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HON estimates that the tax could bring in about $50 million a year and create around 2,000 new units of housing over 10 years, through acquisition of existing buildings and the construction of apartments, including two- and three-bedroom “family-size” units.

At a press briefing outside City Hall on Tuesday, HON director Tiffani McCoy noted that an earlier version of the proposal would have involved building or buying 2,500 units, but those would be all studios and one-bedroom apartments—not the two-and three-bedroom units for which there is much greater untapped demand.

McCoy called social housing a way to provide permanently affordable housing outside the existing affordable housing market, which relies on complex funding streams and can be sold off if a nonprofit housing provider is short on funding. While “we have tremendous affordable housing partners” in the city, McCoy said, “there is no level of government that has a plan to address our housing crisis at scale. There isn’t a plan from the private sector. And the affordable housing sector is constrained by what the Housing and Urban Development Department decides year to year.”

Unlike traditional affordable housing, social housing would be funded, in part, by rents from tenants at higher income levels; the buildings would be open to people making up to 120 percent of the Seattle area median income, who would pay rents closer to market rates than lower-income tenants.

Additionally, “social housing will not be vying for the limited funds of the housing levy or JumpStart,” said Ben Maritz, the affordable-housing developer who drafted HON’s high-level business plan. Tomorrow, the city’s Office of Housing will announce which Seattle projects will get funding through the latest annual Notice of Funding Availability (NOFA) process; this most recent round of awards, which amount to just over $50 million, represent a fraction of the $147 million the city handed out last year.