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After Amazon opposition, Seattle passes compromise tax to fund homeless services

People fill a hallway before a Seattle City Council meeting where the council voted on a proposal to tax large businesses such as and Starbucks to fight homelessness.
People fill a hallway before a Seattle City Council meeting where the council voted on a proposal to tax large businesses such as and Starbucks to fight homelessness. (Elaine Thompson/AP)
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The Seattle City Council passed a new tax on big businesses Monday to help address the city’s growing homelessness problem, agreeing to a lower rate than initially proposed after complaints from and other city firms.

Seattle Mayor Jenny A. Durkan (D) is expected to sign the measure, which passed unanimously and will impose an annual tax of $275 on each employee at businesses making at least $20 million a year in revenue.

The initial proposal — $500 per employee — met aggressive opposition from Amazon. Some construction workers opposed the tax out of concern for their jobs while supporters pressed the council to do something about the rapidly expanding number of homeless families in the city.

After the council began considering the tax earlier this month, Amazon took the unusual step of halting construction plans on its expansion, putting the brakes on a development site in the northern end of the city’s downtown and vowing that it would forgo additional leased space if the council moved forward.

Amazon chose 20 possible cities for next headquarters. These application videos show how hungry cities are for HQ2. Amazon CEO Jeffrey P. Bezos owns The Post. (Video: Monica Akhtar/The Washington Post)

The issue took on national importance because Amazon is in the midst of a high-profile search for a second headquarters in one of 20 other cities. So far, mayors in other cities competing for HQ2, as the project is sometimes called, have taken a wait-and-see approach.

Despite letters from hundreds of business leaders opposing the tax, in an initial vote Friday the nine-member panel passed the $500-per-employee tax. More than 100 people marched through Amazon’s campus Saturday and held a rally outside the company’s new spherical greenhouses, some holding signs saying “Tax Amazon.”

But the mayor expressed reservations about the effect the $500-per-job tax might have on the city’s economy, threatening a veto and vowing to work toward a compromise, leading to the $275 rate. The measure is expected to raise an average of $47 million annually to help house and serve homeless residents, as opposed to $75 million under the initial proposal.

In addition, the compromise legislation is set to sunset after five years, unlike the initial proposal, which had no end date.

As Amazon pursues a second headquarters, it battles hometown Seattle over tax to stem homelessness

Residents showed up two hours before the vote Monday to wait in line and claim a space in the chamber, which was packed to capacity.

Although many agreed that Seattle needed to address the city’s crisis over homelessness, they differed about the merits of the tax.

“When you work minimum wage at $15 an hour, you end up spending 90 percent or more of it on rent and the rest of it in bills,” said Alexander Finch, 27, who identified himself as homeless and living in one of the city’s tent communities. “So you’re either well-off and hungry or homeless and well fed.”

John Bufford, 47, of Tacoma, an elected union representative for International Union Painters and Allied Trades, said some members of the council seemed to be more interested in personally targeting Amazon chief executive Jeffrey P. Bezos rather than addressing the problem. Seattle Council member Kshama Sawant has repeatedly called Bezos a “bully” who attempted to extort the city by halting its construction plans. (Bezos owns The Washington Post.)

“As a union rep, we meet with our employers to discuss our problems and come up with solutions jointly,” Bufford said. “It seems like some of the council members, mainly Mrs. Sawant, have gone on the offense against Amazon in particular.”

Some opponents of the measure called for greater accountability on how funds addressing homelessness are spent. John Wisdom, 61, Seattle, a retired executive with PACCAR manufacturing, cited hundreds of millions of dollars already spent by surrounding King County to address the issue in recent years.

“The spending keeps going up and we’re not seeing results. The results are getting worse every year,” he said.

Seattle and King County declared a state of emergency over homelessness in 2015, but since then, cost-of-living pressures have worsened. The number of homeless students in the city’s public schools has tripled, to nearly 4,300 last school year. Seattle home prices are rising faster there than anywhere else in the country. The median price for a house is now $777,000.

Seattle is far from the only big city to have wrestled with increasing populations of homeless people, however, as housing costs have risen in recent years. Two areas considered favorites by analysts for the second Amazon headquarters, Boston and Washington, D.C., have experienced their own surges.

Under the originally passed proposal, Amazon would have paid an estimated $20 million to $25 million in the first year of the tax. That figure could quickly rise when the funding mechanism would transition to a payroll tax. The company made about 80 times that, $1.6 billion, in net first-quarter profits.

“It seems to me this debate is about the anger or fear at what the city is becoming,” said Council President Bruce Harrell, who had to warn members of the crowd after repeated yelling and chanting during the proceedings.

He said he was worried about the effect the larger tax would have had on jobs in part because of concern over how the money would be spent.

“When I looked at this new revenue tax stream, I think we have to convince the public that we are using it wisely and strategically, and I think we’ve failed in that regard as a city,” he said.

Scruggs reported from Seattle.