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Seattle government reacts after Amazon construction screeches to a halt

Amazon's headquarters in Seattle in front of its new office space under construction in 2018. (Matt Pitman, KIRO Radio)

Seattle leaders often argue that companies are blackmailing the city when they say they will leave town if a new head tax is passed. It will never happen, according to Seattle Councilmember Kshama Sawant.

Amazon could be making its counter argument. It is halting plans to expand in Seattle, citing the head tax as the deterrent. The online retailer has planned new office space in Seattle, along with up to 8,000 new jobs. But The Seattle Times reports that Amazon has told its developers it is halting its project to build a 17-story office building until after the Seattle City Council votes on its proposed head tax. That could happen sometime in May.

The company is also considering subleasing all office space in its Rainier Square Building.

Amazon and Seattle’s head tax

The news comes a couple of months after some local leaders attempted to “hit the refresh button” on the city’s relationship with Amazon. But as the council pursues a new tax on large companies like Amazon, the online retailer appears to be hitting the pause button on Seattle.

Council members are attempting to raise more money to spend on the region’s affordability and homelessness crises by implementing an employee hours tax, aka a head tax. The success of large tech companies like Amazon — drawing highly-paid employees to the area — has been pointed to as one reason that the region’s affordability problem has exploded.

The current proposal is to tax employers 26 cents per employee, per hour. The city will shift to a payroll tax in 2021. It aims to raise $75 million annually. The council could vote on the proposal as early as May 14.

Meanwhile, Amazon continues to make investments outside of Seattle. Earlier this week, the company announced it will expand operations in Vancouver B.C. with a new 416,000-square-foot office building, allowing the company to add 3,000 new jobs. The Vancouver announcement received a warm welcome from Canadian leaders, drawing Prime Minister Justin Trudeau to the event. Trudeau said “…companies like Amazon are bringing even more energy, vision – and thousands of good jobs – to Canada. We are proud to champion these companies.”

A day later, Amazon announced it will add 2,000 jobs in Boston as it expands the tech hub there.

The company also plans to expand into a second headquarters — HQ2 — equal to that of its Seattle location. That new location will add up to 50,000 new jobs to whatever city it lands in. The search for a new city is still on. No Washington cities made it onto the list of finalists, despite the Puget Sound region’s counties and cities coming together to offer the company locations for the second headquarters.

Seattle leaders respond

Hours after news broke of Amazon halting its headquarters construction, Seattle city leaders began to respond.

“I’m deeply concerned about the impact this decision will have on a large range of jobs – from our building trades, to restaurant workers, to nurses, manufacturing jobs and tech workers,” said Mayor Jenny Durkan. “At the same time, our city must urgently address our homelessness and affordability crisis and lift up those who have been left behind. I fundamentally believe we can do both by working together. In the upcoming days, I will be bringing together council members as well as business, labor and our community leaders to work together to see how we might forge common ground in dealing with our challenges while keeping jobs.”

At a Wednesday afternoon council meeting, Councilmember Kshama Sawant said she would like the council to go beyond the proposed $75 million head tax revenue and get $150 million from large Seattle companies.

“I think we should hold the council’s feet to the fire to pass $150 million for affordable housing,” Sawant said. “….When we are talking about $150 million from the largest businesses, I think even that much is pocket change for these wealthiest businesses.”

She speculated that Amazon could be on the hook for $20 million a year under the head tax, and that “Amazon is perfectly capable to paying that, and double, and even four times that amount.” Sawant said that Trump’s tax cuts have given Amazon a $789 million “windfall” which could pay its portion of Seattle’s head tax over 40 years.

Councilmember Sally Bagshaw said that the council has been hearing from local labor unions about fears they will be losing construction jobs if Amazon halts its plans in Seattle.

 

Growing Seattle

Councilmember Teresa Mosqueda said Wednesday that the head tax is not about one company, but 500 of the largest companies in Seattle that make more than $20 million annually. She argues that the housing crisis warrants exploration of the tax, even though it won’t completely solve the problem.

“The fact that we have 1,000 people moving into this region a week, means that we don’t have enough housing for the folks who are here and the folks who are coming,” Mosqueda said. “…I don’t think that this down payment will solve the problem. I wish it would, I wish we had enough funding to solve the problem … the increased rates in rent and the cost of housing in our community means that we have to act with urgency. Folks are dying right now.”

The city council has recently doubled the money spent on homelessness and has spent $1 billion on the issue over the past 20 years, according to the Times. The crisis persists. Seattle currently spends about $200 million annually on homelessness and affordability.

Councilmember Bruce Harrell said that the council is not making it clear how it will use the additional money from the head tax to directly address homelessness and affordability.

“It’s hard looking at Amazon’s growth and looking at the wealth that has been created … it’s hard extracting lot of public sympathy for a company owned by the richest man in the world,” Harrell said. “… I’m not angry at him for being the richest man in the world. It’s not as though the average person on the street is saying, “Dang it, we just got Jeff Bezos for $20 million.’ I don’t think that evokes a lot of sympathy.”

“Whether it is $150 million or $50 million, if we don’t move the needle then all we did was tax big business … how do we know whether $75 million, more or less, achieves the problem, particularly not just for affordably … but for immediate homelessness?” he said. “I think we get caught up on these tangents; whether you are protecting big businesses, or destroying big businesses. Let’s focus on solving the problem.”

The Times speculates that Amazon could be halting construction as a “political maneuver” to fight back against the head tax. Whatever the motivation, the news could radiate through the local economy, affecting housing and development.

 

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