Category: Taxes

City Council, housing, Taxes

City Plans Major Overhaul of Affordable Housing Tax-Break Program
An MFTE building, Mad Flats, on Capitol Hill

By Erica C. Barnett

The city is getting ready to overhaul a program that provides tax breaks to developers who agree to keep 25 percent of their apartments affordable for 12 years (or 20 percent if 8 percent of the units are two-bedroom), known as the Multifamily Tax Exemption program (MFTE). It’s the city’s main program for providing housing affordable to moderate-income people; as of November 2024, according to a University of Washington evaluation of the program, there were nearly 7,000 income-restricted units in Seattle as a direct result of MFTE tax breaks

The MFTE program has been overhauled several times in its 27-year existence; the current program, known as “Program 6,” has been in place since 2019. In that update, the City Council imposed a cap on rent increases of 4.5 percent a year and reduced the maximum income for eligibility, opening up the program for lower-income renters.

While those changes made more people eligible for MFTE units, they also made developers less likely to participate in the voluntary program. As construction costs ballooned starting in 2019, market rents in Seattle softened, making MFTE units less competitive with the market–and the program less appealing to developers who might otherwise participate in it.

According to the UW study, “The City of Seattle has a difficult responsibility to calibrate the relationship between the costs of the program (benefit to developers) and the public benefits it delivers (more affordable housing). As the City pushes for greater public benefits, the program becomes less attractive to developers. This is the central tension.”

The proposed update, known as “Revised Program 7” to distinguish it from an earlier proposal that came out of the city’s Office of Housing, would set new (generally higher) rent and income limits for most of the affordable units created under the MFTE program, adjusting eligibility standards so that the program would be geared toward people earning between 40 percent of Seattle’s median income for the smallest units to 90 percent—about $113,000 for a two-person household—for two-bedrooms.

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Updating the tax-break program has been fairly uncontroversial so far—somewhat surprisingly so, given some council members’ recent opposition to other proposals that would encourage new housing, such as density increases in the comprehensive plan, on the grounds that they aren’t tailored to very low-income people.

It may help that the council’s most vocal opponent of such measures, Cathy Moore, is off the council and no longer chairs the Housing and Human Services Committee, which discussed the legislation last week. During public comment at last week’s housing and human services committee, just one speaker vociferously opposed the proposed changes to the program: Longtime Phinney Ridge neighborhood activist Irene Wall, who argued that MFTE was “a failed program” that served too few people for the amount it costs homeowners like herself in additional taxes.

“The Office of Housing spent months trying to figure out what to do with this program,” Wall said. “They asked tenants if they like their rent reductions in their new buildings, but there was no outreach to any of the taxpayers who are funding this graft. Why are the taxpayers not considered equal stakeholders in this scheme?”

Overall, a median homeowner in Seattle spends $145 a year in property taxes to offset the taxes developers who participate in the program don’t pay in exchange for providing affordable housing.

Council President Sara Nelson, who has frequently beat the drum for more “workforce” housing, called MFTE “a program that’s extremely important because it it makes it easier to build housing across the board.”

The proposal would also replace a 4.5 percent annual cap on rent increases with the statewide rent cap (which doesn’t currently apply to MFTE buildings) of 7 percent plus inflation or 10 percent, whichever is smaller. Separate from the legislation, Office of Housing director Maiko Winkler-Chin told the council that OH is simplifying the income verification process for renters, which can require prospective tenants to fill out a lengthy, complex application for each MFTE unit they apply to rent.

“The city doesn’t have any program that supports workforce housing besides MFTE, really, for rental units,” Nelson said. “And that, I would say, is the greatest need because of the sheer numbers of people that fall within the category.”

The council, which is currently on its annual two-week summer recess, has until September 3 to propose amendments—for example, adjusting the maximum income levels so that higher-income renters are ineligible for the program—in advance of the next meeting to discuss the program on September 10.

City Council, Elections, housing, podcasts, Taxes

This Week on PubliCola: August 10, 2025
The crowd begins to gather at Mayor Bruce Harrell’s party early on Election Night

A huge election upset led this packed week, which included two podcasts (plus two-thirds of Seattle Nice on KUOW!)

By Erica C. Barnett

Monday, August 4

New Forecast Reduces City’s Projected Revenue Shortfall to $150 Million

Seattle’s latest revenue forecast, which will form the basis of the 2026-2027 biennial budget, reduced the. city’s projected two-year budget shortfall from around $240 million to about $150 million. The city’s revenue forecasters used a more optimistic model than the April forecast.

Seattle Nice: Seattle Sues Trump, Camping Ban Proposed, Business Tax Hike Heads to Ballot

On the first of two Seattle Nice episodes this week, we discussed the broader implications of a proposed ballot initiative that would make it illegal to fall asleep outdoors in unincorporated King County, a Seattle ballot measure to raise business and occupation taxes to pay for housing stability and human services, and a lawsuit filed by City Attorney Ann Davison, a Republican who’s struggling to retain support, over a seven-month-old Trump executive.

Tuesday, August 5

Business Tax Will Be on November Ballot, Despite Council Objections Over Spending “Buckets”

The city council approved the business and occupation tax proposal for the November ballot, overcoming objections from some councilmembers that it shouldn’t be dedicated to any specific purpose, but instead should go toward any current or future general-fund purpose elected officials decide they want to fund. In general, voters approve taxes for specific purposes, and there is no recent precedent for sending a blank-check tax measure to the ballot.

In Anti-Incumbent Rout, Progressive Candidates Lead In All Local Races

This week’s local elections represented a massive rebuke of the people elected in the wake of COVID and the 2020 protests against police brutality. Across the board in Seattle, progressive candidates were leading big, from Katie Wilson (running against Mayor Bruce Harrell) to Erika Evans (headed for victory against Davison).

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Thursday, August 7

Council Amendments to Comprehensive Plan Reveal Competing Priorities

City councilmembers have proposed more than 100 amendments to Mayor Bruce Harrell’s much-delayed Comprehensive Plan update, which only deals with neighborhood residential (former single-family) zoning. Some amendments would further shrink the size of neighborhood centers—small nodes of potential future density—while others would expand them and create new incentives for housing.

Seattle Nice: Election Results Emergency Edition!

On this week’s second edition of the podcast, we debated what’s behind the shift toward progressive candidates this year. I argued that it’s a combination of people’s desire to have people in office who’ll fight Trump policies that impact Seattle and a rejection of politicians who’ve prioritized cracking down on minor crimes over solving the affordability crisis; Sandeep says voters are reflexively “lurching to the left” because of Trump, not any specific local issues.

Friday, August 8

Another Tree Petition, Another Council Staff Departure, and Another Round of Election Results

A petition to “save the trees” is more blatantly misleading than usual, as the trees in question aren’t threatened by the development people are protesting. Maritza Rivera can’t seem to keep staff for more than six months. And the latest election results put Katie Wilson at 50.2 percent to Harrell’s 41.7, while Ann Davison and City Council President Sara Nelson lost ground too: The two incumbents have 33.8 percent and 35.8 percent of the vote, respectively.

City Council, Taxes

Business Tax Will Be on November Ballot, Despite Council Objections Over Spending “Buckets”

By Erica C. Barnett

Over objections from some council members that the proposal was “rushed” or that it funds the wrong things, the Seattle City Council voted to place a tax increase for the city’s highest-grossing businesses on the November ballot. If it passes, the “Seattle Shield” proposal would direct new revenues toward housing, homelessness, food security, and other spending areas that are typically vulnerable during budget deficits and at risk of losing federal funding under the Trump Administration.

The proposal, which Counclmember Alexis Mercedes Rinck and Mayor Bruce Harrell rolled out in June, would raise the business and occupation tax exemption from $100,000 to $2 million in gross revenues, exempting most Seattle businesses from the tax, while increasing the tax rate for revenues above $2 million, netting about $90 million a year.

Amendments passed last week, including two from Councilmember Maritza Rivera exempting Children’s Hospital and Fred Hutchinson Cancer Center from the tax, reduced that total to about $81 million a year. Other amendments expanded the potential uses of the new tax to include substance use treatment, business workforce development and storefront repair, and—the broadest spending category—”transportation.”

An amendment from Bob Kettle would make the tax exemption up to $2 million a year permanent (otherwise, the exemption would revert back to $100,000) and reduce the higher tax on large businesses to make it revenue neutral, meaning it would only pay for the tax break for smaller businesses. The city estimates that in 2026, the tax breaks will cost around $61 million.

Councilmember Bob Kettle, who ultimately joined the unanimous vote to move the proposal to the November ballot, said he would much prefer that the council not stipulate how the increased tax revenues would be spent, instead sending a ballot measure to voters that asked them to approve an all-purpose tax that could be used for any need the mayor or council identifies in the future.

Comparing the ballot measure to the council-approved JumpStart payroll tax, which was originally earmarked for housing, Green New Deal priorities, and small business assistance, Kettle said the council only fixed that “problem” last year, when it formally eliminated all spending restrictions on the tax.

“I’m generally opposed to the use of categories or buckets, as some may say. I believe they were a mistake in the payroll expense tax, since over the years, conditions change, but the legislation remains the same,” Kettle said. “I also believe that categories, or buckets, in this B&O legislation was a mistake, in the sense that buckets begets buckets”—a reference to the expansion of the spending categories. “You know, our focus should be on the deficit. … And I think our focus should be for a clean bill to ensure that we are fiscally responsible, that meets the needs of our city.”

It is, of course, unknown whether voters would support a so-called “clean bill” that did not specify any purpose for a tax increase they were being asked to approve. But in general, every local ballot measure calling for a tax increase has had some purpose, whether it’s the transportation levy, the housing levy, the preschool and Seattle Promise levy, the tax we pay to fund emergency medical services, or any other voter-approved tax increase in local taxes.

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A levy “to fix the general fund deficit” would not only be a hard sell to many voters (who wouldn’t know whether new taxes would fund police hiring bonuses or food banks), it would incorporate the assumption that the city will continue going into each budget year with a deficit for the duration of the levy—not exactly “fiscally responsible” financial planning.

Rivera, too, appeared generally dissatisfied with the proposal, saying the six-week process to approve it was “rushed” and that she would also have preferred to send it to voters as a general tax increase to address the current deficit.

“Rather than single out items, this money should have just gone to the general fund and then when the mayor was putting together the budget that he sends us, he could have then considered this funding along with all the other funding,” Rivera said. “That would have been the good governance way to do this. But that is not how this moved forward.”

As I reported last month, Rivera was the first council member to publicly propose asking voters to approve a tax increase for undefined “general fund” purposes, arguing that the city can’t predict what needs will emerge in the future. Rivera has also suggested the city could take dedicated funds from the city’s housing levy and using them to backfill the general fund in the short term, paying back the loaned dollars later and foregoing some potential housing. Editor’s note: This story originally said Bob Kettle backed Rivera’s idea of using housing levy dollars to backfill the general fund; his office said this isn’t the case, so we’ve corrected the story to reflect that.

City Council, Courts, Elections, Mayor Harrell, podcasts, Taxes

Seattle Nice: Seattle Sues Trump, Camping Ban Proposed, Business Tax Hike Heads to Ballot

By Erica C. Barnett

On this week’s episode, we discussed the broader implications of a proposed ballot initiative that would make it illegal to fall asleep outdoors anywhere in unincorporated King County. If enacted—proponents are still gathering signatures to put it on the ballot—the measure would make it a misdemeanor to sleep outdoors.

The proposal does stipulate that the sheriff’s office should only enforce the sleeping ban if shelter is available, but includes a carveout for situations where an officer believes someone poses a risk to himself or others, which is mechanically similar to Seattle rules allowing no-notice sweeps if someone is causing an “obstruction” in any public space, an exemption the city has interpreted quite liberally.

Whether the proposal ends up passing or not, it’s part of a broader growing intolerance for people who are visibly homeless in public spaces—one that goes hand in hand with anti-Housing First efforts to force people into treatment while they’re still homeless or unstably housed.

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We also discussed the proposed Seattle ballot measure that would raise business and occupation taxes on high-grossing businesses, using the proceeds to support housing stability, food security, shelter, substance use disorder treatment, and transportation. (The bill was originally more limited, but councilmembers piled on new spending categories and exemptions last week). After amendments to exempt Fred Hutchinson Cancer Care Center and Children’s Hospital from the tax, it will—if it passes—bring in about $90 million a year.

The three of us debated whether the tax proposal was, as Sandeep suggested, “rushed” forward to give Mayor Bruce Harrell a last-minute boost before the primary election (mail in your ballots or drop them off at an official ballot drop box before Tuesday night at 8pm!)

Harrell has certainly jumped on more than one progressive bandwagon in recent weeks to bolster his lefty bona fides in his race against progressive labor and transit activist Katie Wilson. In addition to coming out for the B&O tax, which Rinck was reportedly working on long before Harrell got wind of it, the mayor just endorsed a lawsuit against the Trump Administration filed by City Attorney Ann Davison—another local official who appears to be in for a tough reelection battle and could benefit from being able to say she proactively sued the Trump Administration, even if it took her until the week before Election Day.

City Council, Elections, Mayor Harrell, Police, Taxes, Trump

This Week on PubliCola: August 2, 2025
The city is already expanding its police camera surveillance program to three new areas, including a large swath of the Central District.

This week’s roundup, featuring a proposed camping ban, tons of election updates, and news about the city council, SPD, and the impact of Trump’s executive orders on Seattle.

By Erica C. Barnett

Monday, July 28

Council Appoints Juarez to Serve Out Cathy Moore’s Term, Accusations Fly Over Democracy Voucher Collection

Two stories in Monday’s Afternoon Fizz: Former elected councilmember Debora Juarez, whose appointment to her old position was never truly in doubt, will serve out the term of Cathy Moore, who quit the council after just 18 months. And two candidates for the District 2 council seat accuse a third of illegally farming democracy voucher contributions.

Seattle Nice: Is Trump’s Executive Order the End of Housing First?

On the podcast this week, we spoke to Purpose Dignity Action co-director Lisa Daugaard about a Trump executive order slamming harm reduction and housing first. Unlike many advocates, Daugaard said the executive order will probably still allow most housing-first programs to continue, and doesn’t mandate arrests or involuntary commitment, despite its pugnacious language.

Tuesday, July 29

Initiative Would Criminalize Sleeping Outdoors in King County

A proposal from head tax opponent Saul Spady, whose grandfather founded Dick’s Burgers, would make it a misdemeanor to sleep outdoors in unincorporated King County. In addition to the “camping” ban, Spady’s group wants to impose mandatory minimum sentences for fentanyl and meth dealing, force people who overdose or get caught using drugs three times into mandatory six-month rehab, and open 3,000 shelter beds.

Council Finally Seats Renters Commission, New Council Rules Allow Longer Public Comments

Tuesday’s Afternoon Fizz features two stories: After Councilmembers Rob Saka and Sara Nelson shut down a committee meeting to consider appointments to the city’s long-unfilled Renters Commission, possibly at the behest of ex-councilmember Moore, the council seated the full commission this week without comment or dissent. And: New city council rules, proposed by Councilmember Dan Strauss, set parameters around public comment so council members can’t cut people off quite so arbitrarily.

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Wednesday, July 30

Business Tax Plan Moves Forward, Larded With New Exemptions and Spending Categories

A proposal to increase business and occupation taxes on the city’s highest-grossing businesses moved forward, now loaded up with tax exemptions that will cut annual revenues from the tax by more than $10 million and additional spending areas that could dilute the impact of the tax, which is supposed to go to housing and human services.

Thursday, July 31

Police Roll Out Expansion Plans for Surveillance Cameras

The council is preparing to approve an expansion of police surveillance cameras into three new areas, just two months after SPD installed dozens of CCTV cameras in three Seattle neighborhoods. The city has no data yet to justify the expansion of the new program, which supporters pitched as a solution to human trafficking and gun violence.

Friday, August 1

Who Is Common Purple Collective, Ann Davison’s Campaign Consultant?

It’s pretty unusual for a brand-new consultant to arrive on the scene in local Seattle politics. It’s even more unusual for that consultant to conceal their identity using an out-of-state LLC, proxy registrar, untraceable private mailbox, and a weird corporate name that yields exactly one search result. Whoever’s working for Ann Davison, Seattle’s Republican city attorney, doesn’t want to be known.

Ex-SPD Chief Drops Lawsuit Against Harrell, City Files Pre-Election Trump Lawsuit, Councilmembers Oppose Progressive Colleague’s Reelection

Three stories to round out the week: Former police chief Adrian Diaz mysteriously dropped Mayor Harrell from his lawsuit against the city, which relied heavily on claims that Harrell defamed Diaz and fired him unfairly. Harrell, who’s running for reelection, stood alongside Davison as they announced they’re suing the Trump Administration over two seven-month-old executive orders, less than a week before Election Day. And two councilmembers send a message to their colleague Alexis Mercedes Rinck: In case you were wondering, we don’t like you.

City Council, Elections, human services, Taxes

Business Tax Plan Moves Forward, Larded With New Exemptions and Spending Categories

By Erica C. Barnett

The Seattle City Council moved a heavily amended proposal to raise business and occupation taxes on larger companies one step closer to the ballot on Wednesday, approving the measure in the budget committee while leaving open the possibility that it could be amended further next week, when it goes to a full council vote.

The proposal would exempt all gross business revenue up to $2 million from local B&O tax, raising taxes on the highest-grossing businesses to offset the small-business tax relief and pay for programs that might otherwise be cut due to a projected $241 million budget deficit.

The potential ballot measure, proposed by City Councilmember Alexis Mercedes Rinck and Mayor Bruce Harrell late last month, was originally supposed to raise about $90 million a year to fund programs that support food access, gender-based violence services, small business supports, emergency shelter, homelessness prevention, workers’ rights and protections, and housing stability.

Rinck has been calling the proposal the “Seattle Shield” bill, because it’s meant to shield Seattle from the worst impacts of federal cuts to critical, life-saving services.

Thanks to amendments piled on Wednesday afternoon by Rinck’s colleagues Maritza Rivera, Joy Hollingsworth, and Rob Saka (plus a potential future amendment from Dan Strauss), the proposal is on track to bring in about $11 million a year less than originally estimated. The council’s amendments also broadened the measure so it can fund programs far outside its original scope.

Introducing two amendments that will exempt Seattle Children’s Hospital and Fred Hutchinson Cancer Care from the tax, at an estimated annual revenue reduction (or cost) of more than $9 million, Rivera argued that funding for cancer treatment and pediatric care represented “the very problem this bill is claiming to address—that is, impacts to our residents, including our kids, based on federal cuts and policy changes attacking those who need these critical services.”

Rivera added that when Rinck and Harrell first proposed the tax, “it was not clear that that nonprofits pay B&O tax.” In Washington State and in Seattle, most nonprofits are taxed exactly the same as for-profits, except that some of their fundraising activities are tax exempt. “These are nonprofits, these are not businesses,” Rivera said of the two hospitals she singled out for exemptions.

Strauss plans to propose an additional tax exemption for stevedoring—companies that load and unload cargo from ships—on the grounds that maritime trade is critical to Seattle. That exemption, which Strauss said he’d introduce on Monday, would reduce the proceeds from the new tax by another $1.5 million a year. In all, the new exemptions could reduce annual revenues from the tax by almost $11 million, or around 12 percent.

The city doesn’t have precise revenue estimates because businesses—including hospitals structured as nonprofits—don’t have to report their revenues publicly.

After voting for the two exemptions, Rivera and Nelson blanched at the idea of increasing the size of the tax to make up for lost revenue, saying they hadn’t had a chance to thoroughly study the impact of such a rate increase. “It’s unfortunate that this was sort of—that this landed in our laps at the sort of the last minute,” Nelson said. “It just feels rushed to me. … It’s unfortunate that this didn’t come to us earlier in the year.”

Rinck countered that the only reason she brought up the idea of increasing the tax rate was the last-minute amendments from Rivera and Strauss; had they not introduced new tax exemptions in the last week, she wouldn’t have proposed increasing the tax to offset the losses their exemptions would cause.

“If we had known about any tax credits coming sooner than on Monday, I think we would have worked quickly to try and understand what an adjusted rate would look like,” Rinck said.

In addition to the exemptions, the council also adopted several amendments expanding how the new tax, if it passes, can be used. The changes will allow this council, and future councils, to spend the so-called Seattle Shield dollars not just on human services and homelessness programs but on “transportation projects” of all kinds, arts and culture programs, anything related to public health, business workforce development, storefront repairs, and substance use treatment, among other new spending categories.

Rinck, and others who opposed expanding the proposal so far beyond its original purpose, noted that the city already has dedicated funds that pay for arts (the admissions tax), workforce development (the Families, Education, Preschool, and Promise levy), and transportation (the recently renewed transportation levy, which is the biggest in the city’s history). Saka justified including transportation on the potential spending list because Trump has threatened to pull transportation funds from cities, like Seattle, that have low marriage and birth rates.

The impact of adding so many new spending categories to the legislation is unknown. Public commenters, including advocates for people at risk of going hungry in Seattle, expressed concern about spreading the “peanut butter” of limited funding too thin by using the tax proceeds as a slush fund for individual council members’ priorities.

The committee also approved an amendment from Councilmember Bob Kettle, who was absent, that will require the mayor’s office to come up with high-level balanced budget proposals for two years beyond the scope of the biennial budget. Last year, Harrell proposed a budget that was balanced through 2026 but fell out of balance in 2027, with a total projected deficit of $158 million between 2027 and 2028. Another Kettle amendment passed that would remove a sunset date of 2033 (with the possibility of a four-year extension) and lower the tax rate beginning that year.

The full council will take up the proposal next Monday, just before the August 5 primary election that marks the deadline to get it the measure on the November ballot. On Monday morning, the city’s Office of Economic and Revenue Forecasts will present its latest revenue projections, which will reveal whether this year’s budget deficit is smaller or larger than the $241 million shortfall projected in April.