Category: Taxes

Affordability, City Council, Development, Elections, homelessness, housing, land use, Morning Crank, Taxes

Morning Crank: Public Land for the Public Good

1. City Council member Teresa Mosqueda will introduce affordable-housing legislation that could have major implications for one of the largest land holders in the city, Seattle City Light. Mosqueda’s bill would allow City Light to sell its surplus land to affordable-housing developers for less than market value—all the way down to the amount the city originally paid for the land—and would require City Light to do so if the agency committed to build housing making 60 percent or less of the Seattle median income. (That latter part may be up for negotiation.) For example, if City Light bought a piece of property in South Lake Union 60 years ago for a few thousand dollars, and the land is now worth millions, a nonprofit that agreed to build deeply affordable housing could buy it for the original, decades-old price.

The proposal, if it passes, will mark a significant change in the city’s policy for disposing of excess City Light land, and could invite a court challenge. Currently, the city requires property owned by its electric utility to be sold at fair-market value, thanks to a 2003 ruling striking down a fee City Light imposed to install and maintain streetlights. That ruling found that City Light could not charge ratepayers for any purpose other than providing utilities, and forced the agency to return $24 million to Seattle residents. Mosqueda’s legislation would change this disposition policy. However, Mosqueda’s office maintains that a separate ruling in 2013, in which the state supreme court disagreed with Bellevue developer Kemper Freeman’s claim that it was illegal to build light rail over I-90 because the bridge was built with gas taxes, which are supposed to be spent only on road purposes, establishes a precedent for City Light to sell its property at below-market value once that property is paid off and declared surplus to the city’s purposes.

Separately, Mosqueda’s office says she will introduce legislation that would encourage all city agencies that own surplus land to  give away or sell this excess property for below-market values to public agencies or nonprofit housing providers that agree to use the land to build affordable housing. The legislation comes in response to a new state law, House Bill 2382, passed by the state legislature last year allowing state and local agencies to transfer land to affordable housing developers at little or no cost.  Mosqueda’s proposal would also allow agencies, including nonprofits to exercise this right even if they don’t have all the money in hand or haven’t secured a development partner.

“Through smart management of public land, and using surplus and underutilized public land for the best public good, we can reduce the cost of building the affordable housing our communities need,” Mosqueda says. “This will also help us realize more community-led affordable housing and small-business development” by giving housing providers more time to pull together funding and development plans for properties that become available.

According to the latest city land inventory, there are about 35 pieces of city-owned land larger than 15,000 square feet that are surplus, “excess,” or underutilized, although some are outside Seattle and not all are suitable for housing development.

2. As I noted on Twitter last week, the anti-head tax campaign formed on May 18 and achieved its goal of repealing the tax on June 12. In the course of their brief effort, they spent nearly half a million dollars, according to their latest filing at the city’s Ethics and Elections Commission—more than most of last year’s city council candidates spent in a year-long campaign.

A large amount of that money went to  out-of-town consulting firms, including Scottsdale, Arizona-based firm Morning In America, which was paid $350,000 to gather signatures for the effort to repeal the head tax. Signature gatherers were reportedly paid as much as $6 a signature, belying any notion that the movement to quash a tax that would have impacted nearly 500 high-grossing businesses was primarily a “grassroots” effort. Morning In America, as its name indicates, is a firm closely linked to Republicans; in 2016, the Trump campaign paid Morning In America $256,000 for “ballot access consulting.”
The campaign also paid Swarthmore, PA-based Awareness Analytics Partners $10,000 to target Seattleites with anti-head tax ads on Facebook and Twitter. The firm is also linked to Republicans and right-wing political activism, through its work for individual candidates and national conservative groups such as the D.C.-based Right Way Super PAC. One of the group’s partners, Matthew Elliott, was the head of Vote Leave, the pro-Brexit campaign in England. The campaign was also generous to local burger scion Saul Spady, a political consultant and grandson of Dick Spady, who started Dick’s Burgers. Spady’s consulting firm, Cre8tive Empowerment, received $31,000 for its work on the monthlong campaign to kill the head tax.
3. The state has issued a $24,055 judgment against the King County Democrats for failing to disclose tens of thousands of campaign expenditures and contributions in a timely fashion in 2016, with half of the total suspended if the group doesn’t commit any more violations for the next four years. The judgment, which also includes $12,742 in costs and attorney’s fees, resulted from a series of complaints filed by conservative activist Glen Morgan, who files complaints against Democratic candidates and organizations for violating campaign-disclosure rules—some minor, others significant—in the hope that they will result in significant fines.
As I reported earlier this year, the King County Democrats knew the judgment was coming, but did not know specifically how much they would owe the state. The group was thrown into turmoil earlier this year when its chairman, Bailey Stober, refused to step down after multiple investigations found that he had committed workplace and financial misconduct, including profligate spending on rent, office equipment, and cable service as well as entertainment and travel for himself and his friends. When Stober finally stepped down, after a 13-hour trial in which Stober’s allies turned tables on the woman who accused him of sexual harassment and abusive behavior, insinuating that she was a drug addict who was making up stories to get back at her former boss for firing her, the group had just $3,200 in the bank, with thousands of dollars in outstanding debts.
The group hasn’t filed its latest expenditure reports, so it’s hard to know precisely how much cash they have on hand; at the end of May, they reported raising $3,703 and spending $6,265,  a balance of $13,560, with $3,703 in contributions for the month. Between June 4 and July 6, the group has filed contribution reports totaling just over $1,450. They reportedly plan to pay the judgment in installments.
Affordability, Business, City Council, Density, Development, homelessness, housing, human services, Taxes, Urbanism, zoning

Looking for Common Ground Between Anti-Tax and Pro-Housing Advocates

During the overheated debate about the head tax—a tax on high-grossing businesses that would have funded housing and services for Seattle’s homeless population—it was easy to see the overlap between neighborhood groups that opposed the head tax and neighborhood groups that oppose zoning changes on the grounds that density will ruin the “character” of their exclusive single-family neighborhoods. Anxiety about visible homelessness and anxiety about visible renters often takes a similar tone: Spending on homelessness will encourage more of “those” people to come to Seattle, and allowing triplexes or apartment buildings in single-family areas will allow more of “those” people to live in “our” neighborhood. As SEIU 775 president David Rolf told the Seattle Times , the companies that funded the head tax repeal campaign “targeted conservative voters, residents who miss old Seattle and people upset over street camping, among others. ‘They figured out how to knit those groups together[.]'”

At the same time, I noticed a surprising counter-trend among some head tax opponents: While they expressed many of the same reasons as traditional neighborhood activists for opposing the tax (bad for business, the city needs to show progress before we give it more money, and so forth), they also argued that the city should open up its restrictive zoning codes to allow more housing in all parts of the city—an idea that’s anathema to most traditional neighborhood groups. (The first time I heard this argument, as it happened, was during an over-the-top vitriolic town hall meeting in Ballard, from a guy who kept screaming directly in my ear, “NO HEAD TAX! CHANGE THE ZONING!”) This is an argument you hear all the time from urbanists and YIMBYs—who, generally speaking, support policies that encourage more housing at every income level—but I’d never heard it coming to someone who opposed a tax that would have paid for housing. I wondered: Could this be a rare area of common ground between anti-tax and pro-housing advocates?

So I put a call out on Twitter, asking people to contact me if they opposed the head tax and supported reducing restrictions on where housing could be built in Seattle. Quite a few people got back to me, and I had a number of interesting offline conversations from people who didn’t want to be quoted, but who gave me some hope that even in the absence of new revenues to address our current crisis (revenues, I should add, that I still think are desperately needed), progress is still possible.  This isn’t data—the people who responded, all men, represent a tiny, self-selected slice of the larger group of Seattle residents who oppose the head tax and support density—but it is an interesting look at why at least some people who opposed this specific tax are open to other solutions, and why increased density might be an area where people on both sides of the head tax issue can agree.

“Deliberately Divisive”

Mark (not his real name) is a thirtysomething tech worker and longtime Seattle resident who lives on Capitol Hill. He considers himself socially liberal and fiscally conservative—the kind of person who votes for taxes if he thinks they will make an actual, measurable dent in solving the problem they’re supposed to solve. Mark says he opposed the head tax because the spending plan for the tax failed to identify how it would address different homeless populations with different needs (people in active addiction or with debilitating mental illness will need different approaches than, say, someone who has just lost their job and is living in their car); because the city isn’t acknowledging or addressing the problems created by tent encampments; and because he doesn’t trust the city council, particularly Mike O’Brien and Kshama Sawant, to spend the money well.

“In my time as a Seattleite, I’ve never seen council members as deliberately divisive as those two, and they’ve fractured the council into a group of individuals who can’t actually accomplish anything. I miss folks like Tim Burgess and Nick Licata (and on the KCC side, Dow Constantine). I often disagreed with their opinions, but they were truly interested in talking with everyone and doing what was best for the city,” Mark says. He believes that O’Brien and Sawant “would rather fund an  ineffective solution than release information that reveals it’s ineffective, and continue to willfully ignore encampments as long as homelessness or even affordable housing hasn’t been solved.”

Mark says he would “love to see …  a significant city-wide upzone.” He believes 2015’s Housing Affordability and Livability Agenda, which recommended upzoning a tiny sliver of Seattle’s single-family areas, is “laughably inadequate” and that the “grand bargain,” in which developers agreed to pay into an affordable housing fund (or build affordable housing on site) in exchange for higher density, has failed. “The HALA Committee proposal left too much of the city untouched, and what was passed was a notch above nothing.” While it’s reasonable to debate the maximum height of buildings in different areas, he says, “What isn’t reasonable is the city acting like it’s still 1995 (and yes, I lived here then), nor using its own policies to protect certain groups at the expense of others. Just like it would be insane for the city to say ‘You can’t build a single family house here,’ it’s insane to say ‘You can’t build a multifamily building here.'”

“At some level, we need to acknowledge that not everyone who wants to live in Seattle is going to be able to afford it, let alone be able to afford a place they want to live in. I’d love for that threshold to be as low as we can practically make it; IMO, re-zoning is the single biggest impact we can make on that, followed by allowing smaller units (pods), and incredibly, both of those are free to do.”

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“There Is No Plan”

Neil, who owns a duplex and four-unit apartment building on Beacon Hill (and lives, with his wife, in one of the apartments), has worn a lot of hats in his life: Business owner, CPA, landlord—he even ran a “distressed fishing lodge” in Alaska for a number of years. An independent who mostly votes for Democrats, he says he has supported most of Seattle’s recurring tax levies, but voted against the most recent Sound Transit ballot measure “because of my frustration with recent governance in Seattle, and [because] the $50 billion price tag was too big to decipher.”

Neil says the main reason he opposed the head tax was because it was “too small,” because it applied only to a narrow group of businesses (those with gross receipts above $20 million a year), and because he did not have confidence that the city council and the progressive revenue task force that recommended the tax were starting with the right goals or had the right expertise for the job. “The annual tax raised by the original [head tax] proposal [during last year’s budget discussions] was $24 million, then it was $75 million but really needed to be $150 million but they settled with $47 million.  My observation: The council concentrates more on how much money they can generate rather than what is needed and how it will be used.  Whether real or perceived, it feeds the narrative of ‘there is no plan,'” he says. Additionally, he says, council members and advocates who campaigned for the head tax by vilifying Amazon were being “cynical and destructive to the well being of Seattle. … Good policy should stand on its own, at least in principle.”

Neil, unlike Mark, doesn’t support major citywide upzones; he thinks that allowing more attached and detached accessory dwelling units (backyard and basement apartments) in single-family areas, and implementing the HALA recommendations throughout the city, will do a lot to address the current housing shortage. “Personally, I am fine living in and amongst apartments,” he says.  “But my situation is unique and we are not surrounded by five-story buildings.  ADU[s and] DADU[s] seem to be low-impact personal housing alternatives. [They] also promote investment and vitality at a neighborhood level.”

“We Need WAY More Density”

Jeff, a software engineer who has lived in Seattle twice, for a total of about 15 years, owns a house in the Green Lake/Roosevelt area, on a block where two single-family homes are being torn down and replaced with larger single-family houses. He says that although he has consistently voted to raise taxes for housing, education, and transportation, he opposed the head tax because he “disliked the ‘stick it to the rich’ sentiments behind” it, and believes it punishes high-grossing, low-margin businesses, like grocery stores and restaurants. (Saul Spady, the grandson of Dick’s hamburger chain Dick Spady, made this argument in his PR campaign against the tax, for which his consulting firm was  paid at least $20,000).

Jeff believes that, had the head tax passed, companies might choose to locate in the suburbs, rather than in the city proper, working “against the trend towards a higher density city, which is the direction I think we should be moving in. ”

“I think we need WAY more density,” Jeff says. “Traffic sucks, but high density should make transit more viable and also means there are enough people within walking distances to support local businesses without driving.” In particular, he says he would support removing “almost all” restrictions on basement and backyard apartments in single-family areas, allowing row houses and triplexes in those areas, getting rid of parking mandates for new developments, and reducing restrictions on efficiency apartments and rooming houses, which “traditionally have provided housing for low-income people.”

“For those currently on the street, even building complexes of semi-permanent buildings with sanitary facilities and availability to drug treatment would be a step up,” Jeff says. “I don’t know the costs and also there are some that wouldn’t want to go there, but people setting up camp in the parks and on highway medians isn’t acceptable for them or for everyone else.” Locking people up when they refuse to go into shelter or treatment is too expensive, doesn’t work, and leads to a lifetime of misery, Jeff says. “We can offer people something pretty good for much less than the cost of prison.”

“Upzone Like Crazy”

Andrew is a longtime Seattle resident who lives in a townhouse in South Seattle and works in finance for a telecomm company in Factoria. He says he’s “definitely on the liberal end of the spectrum—he voted for Cary Moon in the primary and general elections last year—but he “tend[s[ not to support the kinds of solutions provided by Kshama Sawant or Nikkita Oliver that engage in class warfare at the expense of good, progressive policy.”

Andrew’s concern about the head tax stemmed from the fact that it “appeared largely to demonize Amazon despite its broad impact on large headcount businesses that don’t necessarily share Amazon’s profit structure. … It is not, generally speaking, the fault of business that the city has not absorbed its growing population or kept housing in check,” he says. Another problem with the head tax, he says, was that its spending plan would have gone all-in on building new housing (which can cost more than $300,000 a unit) instead of spending more on less-expensive solutions like services, diversion, treatment, and rent subsidies until housing supply can catch up with demand.

To that end, Andrew says, “the city needs to upzone like crazy. … I honestly see no reason why all of the single-family zones in the city shouldn’t be upzoned to” low-rise 2 or low-rise 3, which would allow townhouses and two- or three-story apartment buildings. “My townhome has earned as much money in appreciation as I have at my six-figure job in the two years we’ve lived here” thanks in no small part to Seattle’s housing shortage, he says. “This is ridiculous rent-seeking and I don’t need it, nor does any other homeowner who bought in the good old days”. I would rather see housing prices decline to 2010 levels in the city if it meant that everyone had a place to live.”

“In my ideal world, people would be prohibited from living on the street because we had ample shelter, services, care, and support to provide to them through official channels. Only then do we have the right to chase them from view.”

“A More Collaborative Process”

Ian, a city employee who lives in a four-bedroom house in North Seattle with his wife, two children, elderly in-laws, and a roommate, has always voted for every housing, education, and transportation levy, but says he has started considering such measures more carefully in recent years, given the rising cost of living in Seattle. He opposed the head tax because of its potential to cause what he calls “collateral damage”—impacts on companies other than Amazon and “Big Tech” firms that could have easily absorbed the cost of the $275-per-employee tax.

For example, Ian says, “I have a friend who’s a longtime Nucor employee; apparently his management told them point blank that if the tax had passed in its original ($500) form, the plant would close. That mill’s been here for over a century and is not part of the reason why housing and living costs have skyrocketed, so why ‘punish’ them and their employees? How many other businesses like that would meet a similar fate?” Ian says he was also concerned that grocery chains would have increased prices to offset the tax, which would have disproportionately impacted homeless and rent-burdened people. (This was a point hammered home by head tax opponents, who frequently argued that the cost of groceries would go up if the tax passed. Before the head tax was repealed, a phone survey asked Seattle residents whether they would be more or less likely to support the tax if they knew it would raise their grocery prices.)

Ian, like  Neil, believes the progressive revenue task force was the wrong approach; if the city wanted to come up with a tax that would enjoy wide support, he suggests, they should have created  “a more collaborative process, like what happened for the minimum wage increase. I thought it was weird that the Council didn’t pursue a similar strategy for the head tax, and cagey that the Council seemed to avoid talking about which specific business would actually be affected outside of the tech industry.” As I noted after Amazon and other big businesses launched their formal campaign to kill the head tax, former mayor Ed Murray took a much different approach to passing the $15 minimum wage, bringing reluctant businesses, labor groups, and activists to the table to hammer out a compromise everyone was willing to sign off on before rolling it out in a press conference that featured some of the same players who gave thousands of dollars to the anti-head tax campaign.

Ian supports “eliminating single family residential zoning in its current form” altogether, but adds, “I don’t think that the market will solve affordability by itself; having worked in private sector construction management, I know for a fact that it won’t. Developers primarily want to build more expensive housing for incoming tech workers and that’s not going to change any time soon. But zoning changes could still have a significant effect on availability and pricing.” This is the argument made by many urbanists, who point out that if developers can’t or don’t provide huge amounts of housing at the high end to accommodate the thousands of new workers who move to Seattle every year, they will be forced to compete for existing mid-range housing, driving up prices all the way down the line. And today’s high-end housing is tomorrow’s mid-range housing. Ian also supports “open[ing] up City-owned land for dedicated low-income housing development, to help more people on the edge keep from falling into homelessness.” A new law that just went into effect this month allows government agencies, including the city, to provide land to housing developers for free if it fulfills a public purpose; this could lead to more housing on public land, and will, in theory, create an incentive for the city to hang on to property it owns instead of selling it to the highest bidder for a one-time profit.

City Council, Density, Development, Elections, gentrification, homelessness, housing, human services, land use, Mayor Durkan, Morning Crank, Renters, Taxes, zoning

Morning Crank: Slipping and Sliding

1. With the loss of an estimated $47.5 million in annual revenues from the head tax, the city is in the unenviable position of not only figuring out how to pay for new housing and services that would have been funded by the tax, but funding ongoing commitments that would have been backfilled with head tax funding. In addition to about $15 million in programs that were funded during in the 201 8 budget using one-time funding sources (I’ve asked the city’s budget office for a complete list), there’s Mayor Jenny Durkan’s “bridge housing” program, which was originally supposed to have funded 500 new shelter and “tiny house” encampment slots this year. The bridge housing program, which the council’s finance committee approved on Wednesday, will be funded through 2018 by  about $5.5 million from the sale of a piece of city property in South Lake Union but will cost about $9.5 million a year starting in 2019, according to City Budget Office Director Ben Noble.

The latest version of the plan would pay for 475 shelter beds (down from 500), with 100 of those now officially “TBD,” with no provider or timeline identified.  The timeline for some of the new projects has slipped, too, from late July to November in the case of the controversial proposed “tiny house village” in South Lake Union, and from July to “TBD” in the case of the 100 shelter beds for which no provider is identified. (See below for a comparison between the mayor’s original proposal, announced May 30, and the plan as it stands this week.)

Mary’s Place, which the mayor’s office originally said would contribute 100 new beds by building out an upper floor of its North Seattle shelter, “had a change of situation because they bought a large facility in Burien that put them in a more difficult financial situation,” deputy mayor David Moseley told council members Wednesday, and has “offered us a different proposal that’s more of a diversion proposal,” one that would focus on prevention rather than shelter. “We’re working with them on that proposal,” Moseley continued. “At the same time, we’re working on backfilling those 100 shelter beds.”

HSD had previously denied that Mary’s Place was planning to substitute diversion for its 100 bed commitment. One day before Moseley told the council that Mary’s Place would no longer be able to contribute 100 of the new 500 shelter beds, I asked an HSD spokeswoman if Mary’s Place had proposed fulfilling its commitment through diversion rather than actual shelter beds, as I had heard. The spokeswoman told me that I was incorrect and that there had been no such proposal. Moseley’s comments Wednesday confirmed the existence of the proposal I had asked HSD about (and whose existence their spokeswoman denied) the previous day.

On Wednesday, I asked the spokeswoman for more details about the Mary’s Place beds and what will replace them. In response, she cut and pasted a section of Durkan’s Wednesday press release about the plan that did not include this information. I have followed up and will update this post if I get any more detailed information about how the city plans to replace those 100 beds.

Durkan has asked all city departments to come up with budget cuts of 2 to 5 percent for the 2019 budget cycle that begins this fall. Noble, the city’s budget director, told council members Wednesday that if the city wants to continue funding the new shelter beds after this year, “it will be because they are prioritized above other things, and at the moment, above existing city services. … This will be  a difficult fall with difficult decisions ahead.”

Bridge Housing plan, May 30, 2018
Bridge Housing Plan, June 13, 2018

2. A poll that apparently helped seal the fate of the head tax over the past weekend was reportedly conducted not by business interests, but by Bring Seattle Home, the SEIU-backed coalition that formed to oppose a potential referendum on the tax. The group’s latest expenditure report includes a $20,000 debt to EMC Research, a Seattle-based polling firm.

A spokesman for Bring Seattle Home didn’t return a call for comment. But the poll reportedly found that not only did voters oppose the head tax by wide margins (as previous polls had concluded), they had strong negative opinions of the city council, where the idea for the head tax originated. All seven of the council members who are elected by district are up for reelection next year, and although this poll didn’t ask respondents what they thought of their specific council representative, council members are well aware of this looming deadline. So far, none of the seven have filed their reelection paperwork with the city. Although Mayor Jenny Durkan supported and ultimately signed the “compromise” head tax bill that reduced the size of the head tax from $500 to $275 per employee for businesses with gross receipts above $20 million, poll respondents apparently blamed the council, not the mayor, for the tax, expressing much more favorable views of Durkan than council members.

3. On Thursday, with none of the angry public comments about “triplexes on every block” that often precede such decisions—even Marty Kaplan wasn’t there—the Seattle Planning Commission approved a letter endorsing key aspects of the city’s preferred plan to make it easier for single-family  homeowners to build backyard cottages and create living spaces in their basements. (This alternative is identified as option 2 in the environmental impact statement on the proposal, which the city was required to produce after Kaplan sued. The EIS confirms that backyard cottages promote equity and do not harm the environment.) The letter expresses the commission’s strong support for allowing both a basement apartment and a freestanding backyard unit (subject to the same lot coverage requirements that already exist); eliminating the requirement that homeowners add parking for their extra unit whether they will use it or not; and allowing up to 12 unrelated people to live on lots that have both a backyard cottage and a basement apartment.

The letter also urges the city not to force homeowners building a second additional unit to pay into the city’s mandatory housing affordability fund, a requirement supported by some opponents of backyard cottages, because the additional cost “could suppress production of these units and be counterproductive to the intent of the proposed legislation.” (The point of requiring developers to provide affordable housing is, in part, to offset the impacts of displacement and gentrification that can be side effects of large new developments in previously affordable neighborhoods; the planning commission’s point is that treating individual homeowners like massive developers discourages them from providing housing. It also implies that adding units for renters in single-family areas somehow contributes to gentrification and displacement, when it does the opposite.) The planning commission also recommended setting size limits for new houses to prevent the development of McMansions, and reducing development charges for accessory units, such as sewer hookup fees, and creating a sliding scale for some fees so that lower-income people could afford to build second units on their properties.

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City Council, homelessness, housing, human services, King County, Mayor Durkan, Taxes

Scratching Your Head Over Today’s Head Tax Defeat? Here Are Some Answers.

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After a raucous, nearly two-and-a-half-hour special council meeting that concluded in a 7-2 vote to repeal a $275-per-employee tax on high-grossing businesses (read my live blow-by-blow here), both proponents and opponents of the head tax were asking: What’s next?

Mayor Jenny Durkan and all nine members of the city council approved the head tax, which was supposed to be a “compromise” between the city and Amazon (the company that would be most impacted by the measure), without coming up with a Plan B, either failing to anticipate or underestimating business and public opposition to the proposal. Not only does the city have to go back to the drawing board, the drawing board is pretty much a blank slate: After meeting for five months, a task force appointed to come up with progressive tax options landed on the head tax as the only viable alternative to regressive taxes like sales and property taxes. Seattle leaders point to the need for “regional solutions” to homelessness, but the only regional solution that has been put forward so far is a countywide sales tax, which went nowhere after King County Executive Dow Constantine proposed it last year. Meanwhile, a countywide task force called One Table, which was supposed to recommend investments in regional homelessness solutions this spring, hasn’t met since April and has not scheduled another meeting after canceling the one planned for May.

So where does this leave Seattle? And what lessons should Seattleites take from the swift, overwhelming defeat of the head tax? Here are some opinionated FAQs about what just happened, who’s responsible, and what happens next.

Why did the council overturn the head tax by such an overwhelming margin after approving it unanimously just a few weeks ago?

Council members who have supported the head tax from the beginning, yet voted to repeal it today, gave a variety of reasons for switching their votes. Lisa Herbold, who co-chaired the progressive revenue task force and issued a blistering statement yesterday denouncing the Seattle Chamber of Commerce for its role in defeating the tax , said she is convinced that “the vast majority of Seattleites now believe that increased human suffering in our city is a result of government inefficiency.” Council member Rob Johnson told me yesterday that he was concerned that a referendum on the head tax could doom the Families, Education, Preschool, and Promise levy that is up for renewal in November. And council member Mike O’Brien echoed Herbold’s comments, saying he didn’t see a path forward “where, six months from now, eight months from now, we will have the revenue we need” because the head tax appears likely to lose if it goes to a vote in November.

Polling by head tax opponents, whose efforts were funded by Amazon, Starbucks, Vulcan, and represents of the hotel and grocery industries, has consistently shown that most Seattle residents currently oppose the head tax, but that isn’t the whole story. As several speakers (and council member Kshama Sawant) pointed out today, proponents could have put together a counter-campaign to make the case for the tax between now and a November vote on the referendum. (As someone shouted in council chambers, “That’s what campaigns are for!”) The problem was, no one wanted to. Council members have sounded increasingly resigned, in recent weeks, to the futility of trying to pass local funding for homelessness in the face of virulent neighborhood opposition on the one hand and energetic, well-funded business opposition on the other. As those two groups have coalesced in recent weeks (today, head tax opponents claimed to have gathered 45,000 signatures purely through “grassroots” efforts, a claim belied by the $276,000 the “No Tax On Jobs” campaign paid a Trump-affiliated signature-gathering firm called Morning In America last month), council members have increasingly expressed the view that most of the city is against them. Yesterday, O’Brien told me that it had become “increasingly clear” to him “that the public seems to be aligned with the business community, specifically the Chamber,” against the head tax. O’Brien, who has received dozens of harassing emails and was singled out for extra invective at a recent town hall in Ballard that devolved into a one-sided screaming match last month, said he currently plans to run again, but noted when we spoke yesterday that he has not yet filed his paperwork to do so.

Is this really all about Amazon? 

No, but you’d be forgiven for thinking it was. Council member Kshama Sawant, who exhorted her supporters to “Pack City Hall!” in a mass email yesterday, has consistently characterized the head tax as a “tax on Amazon” and Jeff Bezos, whom she described earlier today as “the enemy.” Demonizing individual corporations is rarely a path to building broad community coalitions, and that’s especially true when that corporation is Amazon, whose name many Seattleites (rightly or wrongly) consider synonymous with “jobs.” This is one reason head tax opponents were able to so easily spin the head tax as a “tax on jobs,” and to get ordinary citizens to gather signatures against a tax that would really only impact the city’s largest corporations.

But as council member Teresa Mosqueda, who voted with Sawant against repealing the tax, noted pointedly this afternoon, Amazon is only the most visible opponent (and target) of the tax, which would impact nearly 600 high-grossing companies in Seattle. Amazon’s estimated $20 million annual head tax payment may be budget dust to a multi-billion-dollar corporation, but other companies with slimmer profit margins, like Uwajimaya (which opposed the tax), would also be impacted, and tax proponents made a critical mistake in failing to address or at least consider their concerns.

This goes not just for Sawant and the socialist activists who support her, by the way, but Durkan and the rest of the city council. By focusing their efforts on getting Amazon to sign on to the tax (in a handshake deal that apparently wasn’t very solid to begin with), the council and mayor forfeited an opportunity to bring business (and the labor unions that opposed the tax) to the table to come up with a real compromise that would actually stick, instead of dissolving less than 48 hours after a deal was supposedly struck, as the head tax “compromise” did. The folks who held up a giant “TAX AMAZON” banner at today’s meeting may find this hard to believe, but the $15 minimum wage was not won solely by a movement of uncompromising socialists; it was the product of months of hard work and tough negotiations between unions, city leaders, and businesses. Ultimately, businesses and labor presented a united front in favor of a compromise version of the $15 minimum wage proposal, which defused opposition from both the right and left.

So all the head tax opponents who insisted today that they just want better solutions to homelessness than the head tax have an alternative in mind, right?

Not really. Head tax opponents, many of many of them wearing anti-tax T-shirts and holding “No Tax on Jobs” signs (according to the latest campaign filing, Morning In America spent $3,500 on T-shirts), demanded that the council be more transparent about how money for homeless services is spent, and have suggested that the city can find enough money in its current budget simply by spending money more “efficiently.” While they certainly have a point that the city could do a better job highlighting how it spends its resources (the Human Services Department’s “addressing homelessness” webpage hasn’t been updated since last year, and the department’s “performance dashboard” is down due to “technical difficulties,” according to a spokeswoman), it’s far from clear that the activists demanding “data” and “audits” would be satisfied with any amount of information about the city’s budget for homeless services unless it coincided with reductions in funding for those services. As for efficiencies, as Mosqueda and O’Brien both pointed out today, most of the growth in the city’s budget over the past several years has gone into utilities, police, and other services, not homelessness and housing. “My analysis is we absolutely need more resources,” O’Brien said today. “There is no way” for the city to pay for additional services for the 6,300 people living on Seattle’s streets with existing resources “without devastating cuts to other programs that we all rely on,” O’Brien said.

So … is the takeaway just that Seattle is screwed? 

Well… Kinda. After today’s meeting, I talked to proponents of the head tax who seemed bruised and demoralized by today’s decision, and understandably so—apart from the 2016 housing levy, which is focused more on housing construction than on shelter beds, housing vouchers, and other services that flow through HSD, the city has failed to pass new revenue since former mayor Ed Murray declared a homelessness state of emergency in 2015.

If I was an activist who worked on the head tax, I would turn my attention away from Amazon—which will never support any tax that impacts its bottom line—and toward business and labor groups that might be more amenable to a compromise. I would also start posing some hard questions about what happens next not just to the city council—which is an easy target, given their greater accessibility—but to the leaders who have stayed largely in the background as this fight has played out, namely Mayor Durkan and King County Executive Dow Constantine. Durkan brokered the deal with Amazon and acknowledged that she didn’t have a specific backup plan if the head tax failed—what’s her plan now that it has? And Constantine has been mostly absent on homelessness since the beginning of the year, when he convened the One Table regional task force (unless you count his statements denouncing Seattle’s head tax proposal). What are the county and city doing to redress the embarrassing failure of the head tax, and how will they ensure that the next tax proposal, if there is a next tax proposal, doesn’t meet a similar fate? These are questions advocates on both side of the head tax debate should be asking as they regroup, reflect, and prepare to rejoin the debate over solutions, which certainly won’t conclude with today’s head tax repeal.

City Council, homelessness, housing, King County, Mayor Durkan, Taxes

Head Tax Heads for Repeal. What Happened, and What Happens Now?

The city council will hold a special meeting at noon tomorrow—just two days before the deadline for head tax opponents to turn in 17,000 signatures for a citywide referendum to overturn a tax on big businesses to help address Seattle’s growing homelessness crisis—to preemptively repeal the tax. The decision came just weeks after a bruising battle that resulted in the unanimous passage of a “compromise” head tax plan—$275, instead of the original $500—that was supported by all nine council members and signed by Mayor Jenny Durkan. Much like that proposal, today’s surprise repeal announcement emerged after a round of secret weekend negotiations, in which council members who supported the tax just weeks ago concluded that it was time to concede the fight. Polling on the referendum to repeal the tax reportedly spurred council members to reverse their support.

Earlier this afternoon, seven council members signed off on a statement from Mayor Jenny Durkan’s office supporting the repeal measure; only Teresa Mosqueda and Kshama Sawant, who denounced the “backroom legislation” during Monday’s full council meeting, did not signal their support for repealing the tax. The statement from the other seven council members said, in part:

“In recent months, we worked with a range of businesses, community groups, advocates, and working families to enact a bill that struck the right balance between meaningful progress on our affordability and homelessness crisis while protecting good, family-wage jobs. Over the last few weeks, these conversations and much public dialogue has continued.  It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis. These challenges can only be addressed together as a city, and as importantly, as a state and a region. 

“We heard you. This week, the City Council is moving forward with the consideration of legislation to repeal the current tax on large businesses to address the homelessness crisis.”

The $275-per-employee annual tax, which would have applied to the 585 highest-grossing businesses in Seattle,  would have funded $47 million a year in services, shelter, and housing for Seattle’s homeless population. Without the tax, hundreds of new apartments will not be built, hundreds of new shelter beds will not open up at night, and thousands of people who would have received rental assistance, case management, or mental health care through the levy proceeds will continue to go without those services.

Opposition to the tax came not just from the usual suspects in the business community—Amazon, which threatened to pull employees from the city over an earlier version of the tax, pledged tens of thousands of dollars to the repeal effort, as did Starbucks, Kroger, and representatives of the hotel and grocery industries—but from groups with names like Speak Out Seattle and Safe Seattle, whose members gathered signatures on their own time to repeal a tax on giant corporations. The tax, which was the product of five months of meetings by a 17-member task force, was chosen specifically because it would not directly impact ordinary citizens (unlike a property tax or sales tax), but enough ordinary citizens opposed it to convince at least some council members that their voices represented the majority of Seattle.

“I think it reflects majority sentiment,” council member Sally Bagshaw says. “I do, and I’m sad. … Everywhere I went, clearly businesses were unhappy, but half of labor was unhappy.  Neighborhoods and communities were saying, ‘We don’t see tents being moved off the street. We still see needles. We still see garbage. We’re not happy with this.'” Bagshaw did not mention polling on the head tax, nor did any of her colleagues.

Council member Rob Johnson, who was not directly involved in the weekend negotiations, says his primary concern in supporting a repeal of the head tax is the Families, Education, Preschool, and Promise (FEPP) levy, which funds pre-K through college education and is on the ballot in November. A referendum to repeal the head tax, he worried, might have put voters in an anti-tax mood and swept preschool funding away with it.

“As the person trying to get the [FEPP] levy across the finish line in November, I’m obviously excited about the opportunity to have a laser-like focus on that, as opposed to a potential referendum and the  [FEPP] levy at the same time,” Johnson says. “I signed on because I think it gives us a much clearer pathway for success in November.” The last time the families and education levy was on the ballot, in 2011, it passed by more than 63 percent.

Council member Mike O’Brien, who has been targeted with an outsized share of the criticism from activists who oppose spending more money on homelessness (including a “town hall” in Ballard that immediately devolved into a profane one-way screaming match), says it became “increasingly clear” over the past couple of months “that the public is aligned with the business community, specifically the Chamber,” which has run a well-funded campaign to reframe the employee hours tax, which would be paid by employers, as a “tax on jobs,” which would harm employees and the city as a whole.

In a statement, council member Lisa Herbold—who signed the joint statement supporting repeal—denounced the Seattle Metropolitan Chamber of Commerce, which she said “has convinced the vast majority of Seattleites 1) of the tired, old conservative trope that increased levels of human suffering we see in our city is caused by government inefficiency rather than by the Gilded Age level income inequality in Seattle and elsewhere, and 2) that leading first with a regional funding approach, reliant on higher property or sales taxes for all taxpayers, is preferable to resources from those most benefiting from income inequality in Seattle paying their fair share.” Asked why she issued such a scathing statement after signing off on the joint statement supporting repeal, Herbold said, “I’m acting based on what I’m hearing” about the lack of support for the tax, but “I don’t agree with” repealing the tax.

Had Durkan brought the Chamber into the head tax negotiations earlier this year, instead of focusing on getting Amazon to stand down, the campaign might have looked much different, or not existed in the first place. But as things played out, “don’t tax jobs” became a rallying cry for both businesses and, importantly, citizen activists, who also glommed on to the idea that the city could get by without additional revenues by auditing its homelessness programs  and “spending our existing dollars more efficiently.”

O’Brien says that with thousands of people sleeping outside and in shelters and transitional housing across Seattle and King County, “finding efficiencies” isn’t enough to make a dent in the crisis. “We absolutely need more funding for housing and  services. We would have to make devastating cuts to other programs that everyone cares about to fund what we need to do with existing resources, so that’s just not possible,” he says. With the head tax, which the task force chose after rejecting other options as impractical or open to legal challenge, off the table, “there’s nothing that stands out that’s remotely promising, and that’s discouraging.” A city income tax is locked up in court, sales and property taxes are regressive and unpopular, and other options—like a capital gains tax on wealthy individuals, or a tax on corporate profits—are prohibited by law. There really just aren’t many options that aren’t either political suicide or downright illegal.

For months, the mayor and council have talked about the need for “regional solutions” to homelessness—that is, a tax that would not be borne solely by Seattle. But the region has shown little interest, so far, in coming up with such solutions. Last year, King County Executive Dow Constantine proposed a countywide sales tax as a replacement for a Seattle-only property tax measure floated by then-mayor Ed Murray, but that proposal has not been seen or heard from since. Meanwhile, a regional task force called One Table, which was supposed to come up with recommendations for funding homelessness services earlier this year, has canceled several meetings and is reportedly stalled. Mayor Jenny Durkan opposed an earlier, larger version of the head tax and signed the council’s legislation for the “compromise” that will be repealed tomorrow, but has never come forward with an alternative proposal of her own, leaving the council in the driver’s seat on spending, for better or worse.

Mosqueda, one of the two council members who did not sign off on the statement advocating repeal, said today that the head tax the council approved was “the best idea at the time”—better, at least, than nothing, which is what the city is left with now. “I am happy to support an alternative strategy, but I need to know that there’s a proposal, so that folks have light at the end of the tunnel, so that there is housing on the horizon, so people can get off the streets and not continue to suffer and live outside.”

O’Brien expressed a sentiment that has been bubbling for weeks at city hall, on homelessness and other issues: “We need leadership from the mayor. We can’t say we’re not going to do anything. If there’s not a regional solution, we have to do something else. She’s been here six months now, and she needs to make this her top priority.” The mayor’s office did not respond to a request for further comment beyond the joint statement. But she did not present a plan to deal with the defeat of the head tax, which would have funded her proposal to add 1,000 new beds at shelters around the city, announced last week. “We’ll burn that bridge when we come to it,” Durkan joked at the time. And here we are.

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City Council, Elections, homelessness, housing, Mayor Durkan, Morning Crank, Taxes, Transportation

Morning Crank: “Dominated By Loud and Demanding Extremists”

1. According to a new analysis of the first six months of the city’s dockless bikeshare pilot program, which unleashed thousands of Starburst-colored rental bikes around the city, bikeshare users logged nearly half a million rides between July and December of last year, and roughly a third of the city used one or more of the three bikesharing services—Ofo, Lime, and Spin—at least once during those six months. Seattle bikeshare users took 3.6 rides for every 1,000 residents, a number that dwarfs the successful CityBike program in New York City (2.6 rides per 1,000 residents.) Those numbers, in fairness, are partly due to the fact that Seattle has the largest free-floating bikeshare system in the nation, by a lot: Of 44,000 bikes spread across 25 cities, nearly a quarter—10,000—are in Seattle.

The evaluation, which was done in collaboration with the University of Washington, also concluded that while ridership was concentrated around the University of Washington, the Burke-Gilman Trail, and downtown Seattle, the bikes are also more popular than expected in the Rainier Valley and Georgetown, two neighborhoods that weren’t included at all in the city’s original Pronto bikeshare system, which required users to return their bikes to designated parking spaces. (Unlike traditional bikeshare systems, “dockless” bikes can be left on the nearest bike rack or parking strip when a rider ends their trip.) People of color were just as likely to use the program as white users, and while just 24 percent of riders reported using helmets, the bikes did not seem to contribute to higher crash or head injury rates, adding another data point to the mounting evidence that the county’s mandatory helmet law does little to protect rider safety. While very few people (just 7 percent) used bikesharing only for recreational use, a huge percentage used the bikes to get to work or to access transit (75 percent), an indication that bikesharing may be able extend the “walkshed” for transit much further than the standard quarter-mile.

The news wasn’t all positive. The vast majority of bikeshare riders—68 percent—were male, a statistic that lines up with the skewed demographics of cycling in general. About four percent of bikes were parked in a way that fully blocked pedestrian or sidewalk access—a number that Seattle Department of Transportation bike share project manager Joel Miller noted might seem small, but “four percent of 10,000 bikes is certainly a lot of bikes and a lot of obstructions out there.” Perhaps predictably, 85 percent of the calls and emails the city has received about bikesharing have been negative, with most people complaining about bikes they believe were parked improperly, people who fail to wear helmets, and that the bikes themselves are ugly. The city can’t do much for people who are offended by the colors orange, yellow, and green, but they have set up designated bikeshare parking spots in Ballard on a pilot basis, and plan to expand that pilot project around the city.

People who consider bikes (or any form of transportation other than cars) to be “clutter” can rest easy on one count—transportation committee chair Rob Johnson said he has no interest in allowing electric scooters, which have caused  intense civic handwringing from Austin to San Francisco, on Seattle sidewalks any time soon. “I’ve started to watch a couple of the companies, particularly Lime (green) and Spin (orange), work with other cities on electric scooters, and I think that for us as a city to stay focused on bikes and make sure that this program goes from a successful pilot to a successful permanent program is the right progression for us, as opposed to something that could lead to the rollout of a scooter system,” Johnson said.

SDOT will present a new proposed permit plan for the post-pilot dockless bikeshare system to the transportation committee on June 19.

2. A new poll is testing campaign messages for and against a proposed referendum to repeal the $275-per-employee business tax that Mayor Jenny Durkan signed into law last month. Amazon, Starbucks, Kroger, and other large corporations have pledged hundreds of thousands of dollars to overturn the law, which would impact about 585 companies with revenues above $20 million a year. Much of that money is currently being spent on paid signature gatherers, who have been parked outside grocery stores across Seattle and have reportedly clashed with pro-tax organizers who are encouraging voters to “decline to sign”; those organizers, meanwhile, have accused signature gatherers of misleading voters about what the tax will do, falsely implying that it is a tax on groceries or that it will come directly out of workers’ paychecks.

The poll asks whether the following messages, among others, would make the respondent more or less likely to vote to repeal the head tax:

• What Seattle has already tried to do to fix homelessness hasn’t worked, and it seems like homelessness has been normalized. The city need to stop enabling those who refuse services, camp illegally, and dump trash like used needles and condoms in our public spaces.

• Homeless sweeps don’t work. They just shuffle people around. Most people want to come inside but there aren’t enough options. We need to have compassion and fund housing, treatment for addiction, and behavioral health services.

• The city of Seattle is wasting hard-earned tax dollars by spending tens of millions on the homeless and super expensive bike lanes. The city keeps promising big results and not delivering. Without a comprehensive plan for homelessness, we shouldn’t give them another cent.

• Complaints about government waste are a smokescreen and an attempt to distract. Homelessness is complex and will take time to fix. Big corporations are shamelessly and purposely spreading confusion to avoid paying a tax that they can afford to pay.

• City Hall is dominated by loud and demanding extremists led by demagogues like Kshama Sawant.

• The homelessness crisis isn’t going to get better without more housing and services. If big corporations don’t chip in, that means more property or sales taxes. The head tax isn’t perfect, but at least it’s not regressive.

• With rents up an average of $600 a year, low-income people can’t afford to have their jobs endangered by this tax.

• Amazon’s construction halt was a selfish attempt to hold the city hostage. We need to call Jeff Bezo’s bluff, overturn his effort to repeal the tax, and show that Seattle will make sure that megacorporations like Amazon help solve problem they’re creating.

• The city keeps asking taxpayers for money for homelessness, but they don’t have a plan. The city has spend over $60 million a year in the past five years and homelessness has only gotten worse. Our tax dollars are being wasted on things that don’t work.

• The mayor and city council and nonprofit providers are moving forward with a plan that is starting to  work. It got 8,000 families into housing last year. But the city needs an additional $410 million a year to tackle homelessness, and this tax will help.

• Low-margin, high-volume businesses will have to pass the tax on to consumers, meaning higher bills for food. We don’t need another back-door tax on food.

The poll also asks about a number of potential replacements for the head tax, including a “surcharge” on companies whose CEO makes 100 or more times what the average worker makes; a larger head tax; a tax that “only applies to employers who pay wages so low their employees qualify for public assistance”; and a business tax based on how much square footage a company occupies in the city rather than the number of people they employ.

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