A view from a unit in Broadway’s affordable senior community Pride Place
Seattle is building a Social Housing Public Development Authority to create affordable, publicly owned housing across the city.
Now, a proposal is being lined up for the fall ballot to pay for it by adding a new tax on the companies creating the city’s millionaires. There is political urgency with strong turnout expected for the 2024 presidential election. The city also has a housing crisis to solve.
The Let’s Build Social Housing ballot initiative unveiled this week would add a 5% tax on companies for every dollar over a million paid to a Seattle employee in annual compensation including salary, stock, and bonuses.
The House our Neighbors group behind the proposal says the tax would add up to around $50 million a year to fund the development authority and power its ability to borrow to build or acquire 2,000 units of housing over 10 years.
It could be a relatively small price to pay for a city stuck in an affordability crisis that is only getting worse.
“If we were honest with ourselves and the public, we do not have a plan to address our affordable housing needs at scale,” Tiffani McCoy, House Our Neighbors Policy and Advocacy Director said in a statement to media. “No level of government has a plan and the private sector cannot fill this need. This is where social housing comes in.”
The new tax could be seen as an extension of the JumpStart program created during the pandemic to fund social services and affordable housing.
The JumpStart program levies Seattle companies with payrolls $7 million and up will on pay to employees making more than $150,000 per year. The JumpStart tax rate ranges from 0.7% to 2.4% with tiers for various payroll and salary amounts. JumpStart — now referred to as the Payroll Employment Tax by Mayor Bruce Harrell’s administration — has grown into a key source of revenue for the city and its leaders have increasingly tried to dip in on the $230 million or so pool to fund resources beyond its initial intents related to pandemic recovery and affordability in the city.
But unlike JumpStart, the new LBSH initiative would set up protections for the tax to be dedicated — for a time — solely to the social housing development authority. It would also be applied to some industries that are currently exempt from JumpStart, The Stranger reports.
In addition to JumpStart’s success in generating revenue for the city, the tax has also forged a legal pathway for possible additional payroll taxes like the social housing proposal. In 2022, an appeals court ended the Seattle Metropolitan Chamber of Commerce’s legal challenge attempting to upend the JumpStart tax.
The House Our Neighbors coalition was led by Real Change. UPDATE: The group is now organized as a 501(c)(4) nonprofit.
Around Capitol Hill, many of the area’s affordable housing projects have been developed by Community Roots Housing, the former Capitol Hill Housing group that serves as a citywide Public Development Authority and the city’s Community Development Corporation for Capitol Hill. Community Roots housing typically finances its projects with a mix of government funding, philanthropy, and standard lending. Its recent projects include the 110-unit Station House above Capitol Hill Station. In 2019, it partnered to create the Liberty Bank Building at 24th and Union as a model for “inclusive development” in the city.
The plan for creating a larger Seattle public housing developer has been broadly supported but there is no dedicated funding for the effort.
In February 2023, Initiative 135 to create a Seattle social housing developer won handily with 57% of voters approving the proposal. But House our Neighbors said the plan came without funding components because of limitations imposed on the state’s initiative process. Meanwhile, Public Development Authorities do not have taxing authority in Washington.
Mayor Harrell, and the Seattle City Council, meanwhile, skirted the issue during the 2024 budget debate by failing to fund the authority.
Newly seated District 3 representative Joy Hollingsworth said she backed I-135 as a candidate. “We have to explore all pathways from affordable housing to home ownership opportunities for our community,” Hollingsworth said at the time.
House our Neighbors hopes the promise of social housing will be enough to inspire support to put the question of funding on the ballot — and win the vote — saying its new proposal would generate roughly $53 million per year and help create 2,000 social housing units in 10 years.
“This estimate is just based on the social housing payroll tax, and use of rental revenue incomes,” the group’s statement on the proposal reads. “The Seattle Social Housing Developer can also bond and tap into grants from the local, state and federal government.”
To get the initiative on the ballot by November, backers must collect 30,000 signatures by June.
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Need to tax the rich corporations to pay for housing. It’s how it should always be.
no problems with that if we actually allow housing to be built. that’s our bottleneck right now.
Have you seen the 10+ huge apartment blocks being built south of Jackson? No bottleneck down there.
so you’re saying that there’s no need for more housing? we have enough?
that’s too far away
The city seems to be managing everything else super well, so let’s give them something new to handle.
The only city in the world that does social housing well is Singapore. There the focus is on allowing residents to buy their subsidized homes as a long-term wealth builder; the city acts as financier and contracts out the building and management process to professionals in those fields. It has been a massive success.
I hear good things about the social housing program in Vienna, too.
I get the impetus to encourage ownership over renting, but I do think the notion underlying it all, that renters won’t care enough to put work back into their building like a homeowner would, is more indicitive of the completely untenable financial circumstances that most US renters are forced to deal with here due to a fetishization of private markets and now the ability for private equity firms to literally be your landlord. Simply put, people need time and money to care about their surroundings, and being squeezed for your last dime isn’t going to encourage you to sweep up the lobby and patch up chipped paint.
Austria has over half a million people renting extremely affordable public housing units, and they are seen as some of the most desirable places to live (and not just by poorer citizens). Of course we have to get everyone housed first for Seattle to pan out the same as Austria, but point being Singapore is not the “only” place to do public housing well.
or maybe we just legalize the building of more housing?
The notion in Singapore has little to do with renters wanting/not wanting to work on the building. It has to do with the notion that the best role of the government is to help families become and stay independent through wealth creation. Also a recognition that the state cannot do everything. That said, I have also heard good things about the Vienna social housing but I’ll point out that Austrian government agencies seem to be far better run than what we see here most of the time.
Singapore also has the death penalty for drug dealing, and close to it for drug possession. Doubt that would work out here.
Ok non profit. got 2,5 million available to house Homeless,.giving you 25K…..impress me…..or not.
Wut
Note, many of the up to 2000 affordable units they hope to create over ten years are units already in existence or built. In other words, they will be taking other housing off the market in many instances, not creating new housing. This will increase the pressure on those not qualified to inhabit their homes, who will have to struggle to find housing even more.
if you have a way to house someone without taking that housing off the market, please share!
They sold the initiative as creating new housing. Now they are backtracking and saying initially it will mostly be buying already built units.
It’s just a shell game at that point, you’re not creating housing, and the remaining housing will become more expensive. Certain connected folks (as in NYC rent control buildings) will hoard the housing, and the rest of us will pay more in rent.
And let’s hope we don’t end up with a bribery scandal involving the social housing system as was just announced today in NYC. https://www.nytimes.com/2024/02/06/nyregion/nyc-public-housing-corruption.html
um, build more? we’ve been building housing for millenia, but only in the last 100 or so years have we made it illegal to build housing in most places.
See Chresident’s reply below.
This would be building new housing.
Glen always puts Glen’s interests first. He’s a landlord after all if it wasn’t clear from one of his many hot takes.
Hmmm. If I were putting my interests first I would be applauding the public funding of an agency intending to buy rental properties to create affordable housing. As a landlord, this agency’s actions would be good for me. Their buying existing rental properties has the potential to drive up my property values, or maybe I will even sell them one at a good price. Having another buyer in the market doesn’t hurt me. At the very least, their property purchases will reduce the availability of rental homes for people who do not fit their resident model. I tend to rent my places to those people, so I get the benefit of increasing demand for my offerings. That means higher rents and more money for me. Now that you mention it “we love the cd”, why am I opposed to this? Oh, that is right, it’s because we already have many experienced non-profit housing developers clamoring for funding to build affordable housing. Why create a new one from scratch, especially one that seems more intent on co-opting existing housing than expanding the base of existing housing.
We already have affordable housing developers. I’d rather we give them this money than an unproven organization run by people who largely have zero qualifications outside of being poor.
Note that in the District 3 City Council candidate forum hosted by the 43rd and 37th Legislative District Democrats and Tech 4 Housing, that candidate Hollingworth (now Councilmember Hollingsworth) supported a payroll tax (over and above JumpStart) to fund the publicly owned Seattle Social Housing Developer. Here’s the excerpt from the forum:
Well, Joy can’t get everything right.
The one thing she got right so far
There is something I don’t understand: We already have a low-income, public housing system (Seattle Housing Authority and Seattle Senior Housing), so why is it necessary to create another such agency (Social Housing Public Development Authority)? Why not just add funding to the existing agencies? (to create new units and reduce wait list time).
SHA builds government-managed housing for poor people or subsidizes rent for poor people using tax dollars. It is a type of government-managed, tax payer-funded charity.
Social housing provides housing for most income groups (not just poor people). Rents are based on income not demand (rent subsidies come from neighbors instead of tax dollars). The housing is at least partially democratically controlled by the tenets. The housing will eventually be financially self-sustaining (will require little to no tax-payer funding). Finally, social housing contains a group component (excess collected rent is used to create more social housing).
*growth component
Apparently, I can’t edit my comment.
We have to be careful about how social housing is implemented. This was done in the 60s and 70s and it basically segregated the working poor and created unbearable living conditions for those working to get out of poverty. What we learned from that is publicly funded housing needs to be mixed with other housing with the intent of lifting everyone up. I think we’ve been doing that OK so far though I know the oversight of some of the housing authorities have been lax which has resulted in people being stuck in bad situations. I hope they get it right.
I think you’re thinking about low-income pubic housing projects. Social Housing is completely different and addresses your concerns. See my response to Zach above.
Anyone supporting this is a DA! Get yourself educated. Take and Pass ECON101. Milton Friedman can help you.
Says the commenter supporting the worlds foremost libertarian crank.
Milton Friedman has been one of the most destructive forces in economics during the 20th century, and has contributed absolutely no important knowledge to the field of economics. Anyone advocating his policies or teachings is not serious and knows nothing about our materialist reality. Who will build the roads, Dada? Or run the courts? Friedman’s logic leads you nowhere fast lol. It’s ridiculous.