A private-sector developer says the answer may be: Go bigger.
Well now the Seattle City Council finds itself in quite the pickle. It’s stuck, somewhere betwixt and between Seattle’s socialist dreams and capitalist realities.
This past week a bare five-member majority signaled “yes” to a $500 per employee “head tax” to help the homeless. But that’s not enough to override a threatened mayoral veto. Meanwhile, the council also signaled “no” to a smaller head-tax plan, which was designed to assuage Amazon from bolting town with 7,000 jobs.
Quipped UW public policy professor Jacob Vigdor: “ … What we have here is a governing body that can’t govern, debating a progressive tax that isn’t progressive, for a homeless plan that doesn’t house most of the homeless.”
Harsh! But also … mostly true. Although even more head-shaking was, in the midst of the debate, King County Executive Dow Constantine suddenly emerged to call for everyone to … slow down.
This is the same man who 2 ½ years ago, in November 2015, declared that homelessness here was so bad it was a five-alarm state of emergency. Yet here he was Friday:
“I think it would be a good time for us to all calm down, take a deep breath and consider what we can do united,” he said before going back to his regular job of gazing longingly at the governor’s mansion in Olympia.
Ok, all potshots aside: He may be tardy, but he’s got a point. The city does seem more obsessed with taxing business than helping the homeless, as Constantine said. And then:
“Once we agree on the things we are going to do first, identify which governments, which businesses, which nonprofits and philanthropies will take on each piece of the puzzle … identify the gap in resources, and together agree on a region-wide public and private approach to filling that gap,” Constantine said.
Yes, let’s do that! Public and private, city and county. Figure out first exactly what you’re going to do, and then ask for the money to carry it out.
There are people around town who maybe can help. Recently the big hotel builder Dick Hedreen sent the Seattle mayor and every City Council member a letter describing how they could use debt-financing, as the private sector does, to leverage assets to build far more affordable housing units at a much faster pace.
A revenue stream of $75 million a year (the amount of the proposed head tax) could cover the debt payments for building about 7,500 apartments units, he said — which is more than three times the number the city is proposing to build.
He also suggested it’s crazy the city is actively selling off land, such as nearly 5 acres near Yesler Terrace that’s currently on the market. It’s the perfect site for “the kind of massive, affordable-housing project we should be doing right now,” he said.
“I just wonder, looking on, if they get much advice from people in the business,” Hedreen told me.
Now Hedreen may still be radioactive down at City Hall because of a big battle he had recently with unions over a huge hotel he’s constructing. But the man knows how to build stuff — he’s got 50 years worth of hotels and apartment buildings to his name. Maybe he’s got some good ideas.
“I haven’t gotten any response to that letter, except from you,” he said.
What if a smaller tax on big businesses was extended across the entire county, instead of just Seattle? Employment taxes are a bad idea, in my view, but this would at least dramatically lower the “per head” rate. Add to it, say, a 0.1 percent sales tax, or a repurposing of some existing homelessness spending, and you could have enough money to debt-finance 15,000 units. That’s more than that alarming McKinsey report said was needed to solve the housing part of the homelessness problem (the drug-addiction and mental-illness parts would still need attention).
“They should go much bigger on housing,” Hedreen said. “If they showed they were meeting the scale of the problem, and that they had gotten private and business input on how to do that, they would get a lot more support.”
When you’ve run yourself into a corner, the only way out is to go back and start over. Not sure that’s going to be an easy conclusion for this group to come to.
Information in this article, originally published May 11, 2018, was corrected May 12, 2018. A previous version of this story incorrectly stated that Jacob Vigdor was a business-school professor. He is a public policy professor.