Home sales are up. Office towers are selling for sky-high prices. Developers are building more new apartments than Seattle has seen in decades.
And, down at City Hall, the people who keep track of the money can’t help but smile.
City tax revenue from real-estate sales and construction took a nosedive when development activity dried up and property values plunged during the recession.
Now real estate is bouncing back, and it’s helping to fill the city’s coffers, at least a little.
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“It’s definitely helpful,” says Dave Hennes, a revenue analyst with the Department of Finance and Administrative Services. “It’s a far cry from when we were falling off the cliff a couple years ago.”
But the numbers still fall far short of their pre-bust peaks.
Almost every real-estate transaction generates tax revenue for Seattle: Sellers pay a 1.78 percent excise tax – 1.28 to the state, 0.50 to the city
It stands to reason that the tax would produce more money when sales volumes and prices rise, and that’s just what’s been happening lately.
House and condo sales in Seattle were up 14 percent from 2011 during the first eight months of this year, according to Northwest Multiple Listing Service data.
And the median sale price in August was up 9 percent year-over-year.
But excise-tax revenues can really take off when big commercial properties sell. And a lot more of those buildings are changing hands this year, in some instances for record prices, as institutional investors conclude Seattle is a good place to park their capital.
Just the $480 million sale of the 42-story Russell Investments Center in April, for instance, pumped $2.4 million into the city treasury.
If the sale of Vulcan Real Estate’s 11-building Amazon.com complex in South Lake Union closes this year and the properties fetch $1 billion or more, as many anticipate, that’s at least another $5 million for City Hall.
The Finance Department originally forecast city real-estate excise-tax collections would total $31.5 million this year, up 5 percent from last year and 36 percent from 2010.
Last month it revised its 2012 forecast upward, to $36.2 million.
But that’s still barely half the $71.8 million that was collected in 2007, when many of downtown’s biggest buildings – including the 76-story Columbia Center – were sold, in some cases more than once.
The other big revenue stream for the city that stems from real-estate activity is the sales tax developers pay on new construction – materials, labor, services. Most of that money goes to the state, but the city gets 85 cents on every $100 transaction.
More construction means more tax dollars. And the Finance Department says construction-related taxable sales jumped a whopping 35 percent between the second quarter of 2011 and the first quarter of this year.
Revenues are on a pace to exceed last year’s collections by about 20 percent.
The department attributes almost all the gain to the apartment boom, a phenomenon from which Seattle has benefitted more than any other local jurisdiction.
Three-fourths of the new units under construction in King and Snohomish counties are inside the city limits, research firm Apartment Insights Washington said in a recent report.
More than 9,000 apartments are being built in the city now, according to data from Dupre + Scott Apartment Advisors, another research firm.
It’s a stark contrast with 2011 and 2010. In those years – combined – developers delivered fewer than 2,000 units.
Those new apartment projects won’t stop producing tax revenue when they’re finished, Hennes says.
Their owners will pay property taxes – most likely much more than the properties were generating before construction – to the city, county, state, school district and a host of other jurisdictions.
But the real-estate recovery doesn’t necessarily mean the city is rolling in surplus cash.
Construction sales-tax collections accounted for just 2.7 percent of the city’s general-fund revenue last year, the Finance Department says.
And real-estate excise-tax revenues, which by law must be spent for capital projects, fund just 4 percent of that program.
Eric Pryne, email@example.com
Seattle sixth in exports, thanks to airplanes
It’s often said the Seattle metropolitan area is one of the most trade-dependent in the nation. It might be more accurate to say Seattle happens to be a hub for one of the nation’s biggest export industries – airplanes and other transportation equipment.
Data on exports in 2011, released last week by the U.S. International Trade Administration (ITA), underscore just how much Seattle’s export business relies on a single sector.
Of the $41.1 billion in merchandise exported from the metro area last year, $26.6 billion – nearly two-thirds – was transportation equipment.
Although that category includes cars and trucks as well as planes (the data are not broken down further), it’s no stretch to assume aerospace makes up the vast bulk locally.
Looked at another way, 12.2 percent of all U.S. exports of transportation equipment left from metro Seattle.
Thanks to the presence of aerospace, Seattle ranked sixth among all metro areas in terms of total exports.
The local area is the third-biggest exporter to China and Japan, after New York/New Jersey and Los Angeles/Long Beach, and the fourth-biggest exporter to Hong Kong.
The Seattle area’s 2010-11 growth rate in exports was 16.1 percent – above the national average of 15.2 percent, but only 164th out of 366 metro areas
The ITA statistics count only tangible products, so other Puget Sound-area specialties such as software, video games and earnest indie-rock bands don’t show up in the numbers.
Drew DeSilver, firstname.lastname@example.org