As she grapples with the city’s finances, Seattle Mayor Jenny Durkan’s budget plans include eliminating a $30 million fund created last year to combat displacement and advance community equity via real estate investments in development projects.
Durkan is proposing to cut the “Strategic Investment Fund” through supplemental 2020 budget legislation, council analysts said in a meeting Thursday, eliciting criticism from some council members. Since the COVID-19 pandemic hit and wrecked the economy, the mayor and the council have been working to plug massive revenue holes with an array of reductions and other solutions.
“The 2020 and 2021 budgets forced the City to make a series of cuts while increasing spending on new resources to address COVID-19,” Durkan spokesperson Kelsey Nyland said in a statement.
“Facing a $300 million shortfall in 2020, the City paused spending on (the fund) and then included in the Mayor’s budget a proposal to reallocate” the money to shore up other needs, including other programs designed to promote housing and economic equity, and including COVID-19 services, Nyland said.
The mayor submitted the supplemental 2020 legislation to the council last month along with her 2021 budget plan, which would address next year’s projected revenue gap with cuts across departments, emergency reserves and the council’s new tax on big businesses, while allocating $100 million for spending on communities of color.
Durkan promised $100 million over the summer in response to the uprising for Black lives and recently appointed a task force to guide the proposed spending, calling it her Equitable Communities Initiative.
The $30 million Strategic Investment Fund, however, was created last year with money from the $143.5 million sale of a property in South Lake Union known as the Mercer Mega Block. The fund was supposed to finance real estate transactions associated with community-development projects.
“The 2020 Adopted Budget makes significant investments in strategic land acquisition to advance racial equity and address displacement,” this year’s budget, put together a year ago, said about an allocation for the fund’s staff work and community outreach.
The fund was meant to “support strategic investment in areas at high risk of displacement or in areas of low access to opportunity that present unique opportunities for transformational equitable development.” The idea was to focus on projects near transit stations and parks and on projects with a mix of elements, such as housing, affordable commercial space and child care.
“We are taking a generational leap forward by using the proceeds from this sale to invest in job creation, great transportation and pedestrian benefits, affordable housing and homeownership models, and public spaces,” Durkan said a year ago in a news release about the Mercer Mega Block proceeds.
“The $30 million was restricted to real estate transactions” and the intention was to spend the money over several years, Nyland said in an email Friday.
An interdepartmental team was supposed to work with community partners to hammer out criteria for allocating money from the fund. “A short-list of priority opportunities will be further vetted in the first quarter of 2020,” this year’s budget said. “The city will begin executing this investment strategy in mid-2020.”
That work didn’t happen, due to the pandemic, the mayor’s office said Friday.
“When COVID-19 hit, we paused on the effort to identify specific funding opportunities” and notified the council, Nyland added. “Seeing as the $30 million had not yet been spent — and investment areas had not yet been identified — the City used the money to help rebalance the budget and address our $300 million revenue shortfall.”
Some council members criticized the elimination of the fund during Thursday’s meeting, noting Durkan’s moves would nix an existing fund designed to promote equity and then promptly create a new equity initiative from scratch.
“I just think it’s ironic,” Councilmember Tammy Morales said. “I’m just struggling to understand the logic here.”
Councilmember Kshama Sawant said the mayor “has attempted to hide this cut” in supplemental legislation, “which is rarely scrutinized.”
“She talked about the $30 million last year in the same way she’s talking about the $100 million this year. But not one penny of the $30 million has been seen by the community,” Sawant said.
Councilmember Teresa Mosqueda also expressed concern about the reduction. “This was a bit of a surprise to me … and many in the community,” she said.
In response, Nyland said: “The Mayor’s proposed budget changes in 2020 and 2021 are all publicly available online.” The Strategic Investment Fund is one among many programs placed on the chopping block in order to address many other needs, Durkan’s office stressed.
Durkan’s budget director, Ben Noble, said Friday there was no intention to hide the reduction. In April and June meetings with the council, Noble did note the possibility of using Mercer Mega Block proceeds to help address the city’s budget woes.
The Strategic Investment Fund and Durkan’s new Equitable Communities Initiative are different, Noble added. The $30 million was set aside for a narrow purpose, whereas the mayor is asking a community task force to help decide how to spend the $100 million, he said.
The council could now decline to eliminate the Strategic Investment Fund, though that would require cutting $30 million somewhere else, perhaps by reducing the $100 million initiative, council analyst Dan Eder said.
“If there are additional funds available in 2020 or 2021,” the mayor would consider proposing that the $30 million be restored, Nyland said.