Real estate agents were not tossing their hats in the air this week with the news that the city of Seattle was adding a tax to large businesses of $ 275 per full-time worker per year to help combat homelessness, which is a big problem in the city.
The tax is applicable to businesses who gross over $ 20 million a year – Amazon and Starbucks are companies with a big presence in Seattle downtown – and is designed to help finance affordable housing and homelessness. It was going to be $ 500 per worker in an earlier tax plan but Mayor Jenny Durkin said she would veto this so a concession has been made.
It’s not that brokers in the city, which allegedly has the third worse homelessness problem in the country, don’t have a heart , it’s more that they are not impressed with what the city has been doing with its funds so far to help alleviate the city’s woes in this area.
Matthew Gardner, chief economist of Windermere Real Estate, which gave $ 465,000 towards housing affordability and homelessness in Seattle last year, told Inman, “The city has this scatter gun approach.
“In the past four years funding to help homelessness has increased by 60 percent and they’ve achieved nothing,” he said. In the same period the city has been hampered by the homeless population increasing by 37 percent, he said in a position paper he wrote against the head tax.
Jennifer Johnsen Cameron, VP of Brand Management at Realogics Sotheby’s International Realty agreed: “Revenue is not our city’s problem. It is spending efficiently that is the issue. What we need and what we deserve is more transparency and more accountability.”
In her opinion, the tax decision has exposed the weakness of the city’s decision makers. “Just as new opportunities are coming down the pipeline with several new high rise tours on the horizon the future looked pretty bright, but this has cast a shadow over our city’s future and the long term impact of our real estate market in downtown Seattle.”
Gardner thinks the city is attacking the wrong thing.
The biggest problem to Seattle’s housing challenges is the zoning, he argues. “We are supposed to be an urban metropolis yet the majority of land is zoned for single family homes which might have been appropriate in the 1970s and 80s but it’s not appropriate now.” Within less than a mile of the city center, you find single family homes, the CBD is remarkably small, he said.
But there’s no political will to change the zoning due to what Gardner called ” classic NIMBYism.”
If Amazon gets annoyed about this move – and it has been quite vocal about it to the point of halting a large expansion in Seattle until it knew what the city would decide – it is possible that it could build up its presence in Bellevue or Kirkland out of the city.
Gardner said a lot of apartments, around 6,000 are planned in Seattle in the next two years for rent, and the bulk of demand for this housing will come from Amazon’s 45,000 workers.
The perceived demand is predicated on the continuing growth of Amazon. If it doesn’t grow or stops, there will be some lowering of rental rates in apartment buildings, he said.
“If I were an apartment developer, I’d be concerned. I’d be very concerned.”
For Gardner, his fear is that Seattle will be perceived as antagonistic toward corporates.
“If it becomes known as not business friendly, companies have got alternatives,” he said.
Gardener also noted that Amazon and other large Seattle companies give a lot philanthropically. ” I wonder whether that will start to slow down with that giving, and then it becomes a zero sum game,” he said.
On the bright side, while Seattle had some of San Francisco’s problems of homeless population and inequality, housing was still much cheaper and Seattle residents don’t pay state income tax.
Avenue Properties’ broker Moya Skillman was upbeat: “While we are disappointed in the council’s decision, we are optimistic about the strength of economy in the Greater Seattle area. There will be a ripple effect in some areas, but there are so many great reasons to live in Seattle. We have so much to offer: a growing tech industry, thriving arts and culture, outdoor recreation just minutes from your door.”