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Seattle City Council proposes alternative to citizen-led social housing ballot measure

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(The Center Square) – Seattle City Councilmembers Martiza Rivera, Cathy Moore, Bob Kettle and Tanya Woo have introduced an alternative to Initiative 137 that would fund the development of affordable, social housing through a tax on employers with workers who make more than $1 million per year.

Council Bill 120864 would amend the city’s JumpStart Payroll Expense Tax in order for the Seattle Social Housing Developer to receive $10 million on an annual basis over five years. There could be future funding if the developer sees positive results.

The funding would be used to acquire, develop, or rehabilitate social housing and provide administrative support to the Seattle Social Housing Developer.

Social housing is housing that is removed from market speculation, is publicly-owned and funded, and is available to people without income restrictions

The $10 million in annual funds the proposed alternative measure would create is 19.2% of the $52 million proponents of the original I-137 estimate that the tax would generate each year.

Under I-137, a 5% compensation tax would be placed on companies that pay over $1 million a year on Seattle-based employees. At least 95% of tax revenue would be allocated to the Seattle Social Housing Developer.

Up to 5% of the tax revenue would be allocated to administer the tax, but the amount to administer the tax cannot exceed $2 million per year.

Seattle city councilmembers are proposing dipping into the city’s existing payroll tax that is paid by Seattle businesses with at least $8.5 million in local annual payroll. Revenue projections are expected to reach $430 million this year.

The proposed $10 million to social housing in Seattle represents 2.3% of the annual revenue the payroll tax generates.

The alternative ballot measure would use payroll expense tax funds for units up to 80% of the area median income, whereas all other developers are restricted to 60% of the area median income restrictions.

The original ballot measure would set rent rates at social housing units to be no more than 30% of the household’s income. So if a tenant were to make more money, then said tenant would see their rent adjusted to continue to match the 30% rate. There is no time limit on how long a tenant can stay at a social housing unit.

The Seattle Social Housing Developer has struggled to get off the ground since voters approved the creation of a new public agency to develop, acquire, and maintain social housing in the city in February 2023. It only named its first CEO in July.

Rivera said the alternative measure ensures accountability of the agency’s work to create more social housing.

“It allows the Seattle Social Housing Developer – to demonstrate proof of concept, rather than the city simply handing over a blank check to yet another new agency with no track record of creating housing,” Rivera said in a news release. “As stewards of public funds, we are ultimately responsible for ensuring that taxpayers see the intended outcomes from this investment.”

I-137’s sponsor, House Our Neighbors, stated on its social media page that it opposes social housing funding from the payroll tax and will explore legal options.

I-137 and the alternative legislation will be considered by the full council in a special meeting on Thursday. If approved, both proposals will appear on the ballot in February 2025.