Last year, with I-135 securing more than 57% of the vote, housing justice advocates won a historic campaign to establish the Seattle Social Housing Developer (SSHD). Now, they have announced a new tax on wealthy corporations to fund the developer with a second initiative, enabling the construction of about 2,000 homes over the span of 10 years.
On Feb. 6, organizers with the House Our Neighbors (HON) coalition filed an initial petition with the Seattle City Clerk and held a press conference announcing their campaign; on Feb. 13, the second draft was finalized as I-137. If passed by voters, the new initiative would levy a 5% payroll tax on corporations with employees who earn more than $1 million per year. Since it is a marginal tax, the additional rate would only apply to income in excess of $1 million. The companies, not their employees, would be responsible for paying the tax.
For I-137 to make it on the November general election ballot, volunteers will need to collect more than 26,500 signatures from Seattle voters. HON policy and advocacy director Tiffani McCoy said the group hopes to gather 35,000 signatures by June to account for potential invalid signatures.
Advocates are applying the lessons they learned from their 2022 campaign, having launched canvassing efforts a month earlier to allow for more time for collection. This is in contrast to the first campaign, when organizers missed the deadline to make it onto the November 2022 ballot. Instead the levy went on the February 2023 ballot, which was perceived as less favorable due to special elections’ historically low voter turnout levels.
At the time of I-135, HON was a project of Real Change but has since spun off as its own independent organization. The Real Change advocacy team has endorsed I-137; the views of the newsroom are independent from the organization.
The proposed payroll tax builds off Seattle’s existing JumpStart tax, which levies a tax of between 0.75% and 2.6% on corporations that earn more than $8.5 million per year and have employees who make more than $182,000 per year. Unlike the JumpStart tax, the new social housing tax would not exempt grocery stores and health care companies nor would it set a minimum revenue threshold (although companies that give employees compensation packages worth more than $1 million per year are not your typical mom-and-pop stores).
Using publicly available tax data, HON volunteers estimated that the new social housing tax would net about $52 million per year, but this figure could fluctuate widely if implemented.
At the HON press conference, McCoy was joined by allies from labor unions and other progressive organizations, including PROTEC17 executive director Karen Estevenin and longtime Low Income Housing Institute (LIHI) head Sharon Lee.
Estevenin said new social housing could help Seattle public employees, whom PROTEC17 represents, be able to afford to live in the city they serve.
“Social housing will enable city workers and people in this city from a broad range of incomes [to have] greater access to affordable housing in Seattle,” she said.
According to Lee, a dedicated revenue stream from the social housing payroll tax would help SSHD overcome one of the biggest barriers in building new affordable housing — the lack of available funds.
“We spend so much time trying to find pieces of property, having to wait a year or two years for financing, another year for permits,” Lee said. “It just takes too long.”
Lee said SSHD would complement the work of nonprofit housing developers like LIHI. Unlike those organizations, which focus primarily on people who make less than 80% of the Area Median Income (AMI), Seattle’s social housing would be eligible for everyone making up to 120% of AMI. The social housing model allows middle-income tenants to subsidize their lower-income neighbors, creating mixed income communities. Additionally, SSHD would focus on creating more family-sized three- and four-bedroom units, an area of the Seattle housing market that for-profit developers are almost entirely neglecting.
“I think we need to really be getting away from this idea of segregating out people based on their income level,” McCoy said. “We are creating really negative ripple effects with this zoning policy as well. So we’re creating low-opportunity zones, where there’s less money also for education, the Seattle Public School system, less money for local small business revenue, et cetera.”
Housing owned by SSHD would be publicly owned and permanently affordable, with residents paying no more than 30% of their monthly income on rent. The public development authority’s board is also made up of a majority of renters and is required to build new housing to ultra-green passive house standards.
Ben Maritz, an affordable housing developer, made the business plan for HON and estimates SSHD’s initial portfolio would be composed of housing bought off the private market. With consistent I-137 tax revenues as well as tenants’ rents, the developer would then invest primarily in new housing. As a public agency under the city of Seattle, SSHD would be able to issue municipal bonds, which have far more competitive interest rates than the commercial loans private, for-profit developers rely on. This access to credit would have a multiplier effect on the amount of housing SSHD is able to buy and develop. Bonding capacity was not factored into Maritz’s projections due to complexity and a desire to offer a conservative estimate.
Under I-135, Seattle is required to evaluate whether city-owned parcels of land can be transferred to SSHD when the city concludes it no longer needs those properties.
While HON supporters at the press conference were enthused by the newly launched campaign, not everyone is on board. Seattle Metropolitan Chamber of Commerce President and CEO Rachel Smith released a statement the same day, pouring cold water on I-137, stating that big businesses were not consulted prior to the initiative’s submission to the city clerk. She also claimed that the plans laid out by HON were insufficient.
“[T]his tax proposal hits a familiar refrain: tax first, plan later and hope for results,” Smith wrote.
Speaking to KOMO News on Feb. 7, Seattle Mayor Bruce Harrell said he couldn’t legally comment on I-137 but preferred efforts that include involvement from both businesses and housing justice advocates. During their campaigns, most of the six new Seattle City Council members have previously stated they were hesitant to raise additional taxes on the rich and instead preferred cutting city services to address Seattle’s impending budget deficit. Nevertheless, it will be the voters who have the final say on I-137.
The introduction of social housing has certainly been quick for Seattle standards, with the first SSHD board meeting convening only 10 months ago. The developer was hampered throughout much of 2023 by a lack of funds. In January, it received $850,000 from Seattle for startup costs, as well as $200,000 from the Washington Legislature. This money is being used to hire the agency’s first staff; SSHD just contracted a hiring firm to find a CEO.
While opposition groups like the Chamber of Commerce may be skeptical about the fast pace of change, McCoy said the urgency is necessary to deliver enough social housing to address the true scale of the housing crisis.
“We at House Our Neighbors do things because they’re necessary, not because they’re politically popular,” she said.
Guy Oron is the staff reporter for Real Change. He handles coverage of our weekly news stories. Find them on Twitter, @GuyOron.
Read more of the Feb. 14–20, 2024 issue.