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story.lead_photo.caption People pack the room Monday for the Seattle City Council’s vote on a per-employee tax on large businesses to help the city’s homeless.

SEATTLE -- After a weekend of high-stakes negotiations between Seattle City Council members and Mayor Jenny Durkan, the council voted unanimously Monday to tax the city's largest employers to help address homelessness.

Starting next year, the tax will be $275 per employee, per year on companies that gross at least $20 million per year in the city -- down from a $500-per-head proposal that Durkan threatened to veto.

The city declared a homelessness state of emergency in late 2015. A count last year tallied more than 11,600 homeless people in King County; one in 16 Seattle Public Schools students is homeless.

"We have community members who are dying," City Council member Teresa Mosqueda said before the 9-0 vote. "They are dying on our streets today because there is not enough shelter" and affordable housing.

After voting on an issue that sparked weeks of fierce debate, demonstrations and denunciations, she said in a statement that the tax "will have a meaningful impact on addressing our homelessness crisis by building housing and providing health services."

Amazon now plans to move ahead with construction planning on an office tower after pausing it because of the $500-per-head proposal, a spokesman said after the vote. But the company's plans to occupy a skyscraper under construction are still up the air, he said.

"We are disappointed by today's City Council decision to introduce a tax on jobs," spokesman Drew Herdener said in a statement.

"While we have resumed construction planning for Block 18, we remain very apprehensive about the future created by the council's hostile approach and rhetoric toward larger businesses, which forces us to question our growth here."

Along with the tax, the City Council approved a nonbinding resolution that calls for spending 66 percent of the money on affordable housing; 32 percent on emergency shelter, trash pickup, raises for service workers and other needs; and 2 percent on administration.

The plan says the revenue could help build 591 units of low-income housing over five years -- down from 1,700 units projected under the proposal for a $500-per-head tax.

An effort to prohibit any of the revenue from being spent on sweeps of unauthorized homeless encampments was voted down 8-1.

Council members were working on the deal past midnight Sunday, and council staff members had postponed Mother's Day plans to assist, they said.

About 3 percent of Seattle businesses will be taxed, raising about $47 million per year, according to the City Council.

The earlier proposal would have raised $86 million annually, according to a council estimate Monday, based on updated data from the city's budget office.

The ordinance calls for the tax to end after five years, with renewal requiring a City Council vote in 2023.

With more than 45,000 employees in the city, Amazon could pay more than $10 million per year. Some proponents of the measure used the slogan "tax Amazon," arguing the e-commerce behemoth owed Seattle help with its affordability problem.

Other companies set to be taxed include Starbucks, The Seattle Times and the longtime, family-owned supermarket Uwajimaya.

For months, Durkan left council members to drive the public discussion. But a 5-4 split over the $500-per-head proposal raised the prospect she could exercise her veto power and forced her to engage.

On one side of the debate were advocates, service-worker unions and voters looking for Seattle to do more to help vulnerable people. On the other were business leaders, construction-worker unions and voters critical of how City Hall has been spending money.

Amazon contributed $350,000 to a business group that supported Durkan's mayoral campaign last year.

At Monday's meeting, some in the crowd waved signs that read "housing first," while others countered with signs that read "results first."

In the end, Durkan pushed for the smaller tax. She plans to sign the legislation, she said Monday.

Under the original proposal, the city would have switched from a head tax to a 0.7 percent payroll tax in 2021 -- a change to help low-margin businesses with many modestly paid workers, such as supermarkets. Under the approved ordinance, there will be no payroll tax.

"We saw what happens when we come together, sit down together, and work together -- we can find common ground and get things done," Durkan said in a statement.

Activists who spent months lobbying for a head tax on large employers hailed the City Council's action.

"Is this bill everything we hoped for? No. Is it a major step forward? Absolutely," the Transit Riders Union said in an email to supporters.

Amazon will resume planning for its Block 18 tower and continue weighing whether to sublease the space in the Rainier Square skyscraper, Herdener said. Before the tax debate, the retail giant had been expecting the two buildings to accommodate about 7,000 employees.

In a statement, a Starbucks spokesman accused city leaders of failing to spend effectively on homelessness and of ignoring children sleeping outside.

"If they cannot provide a warm meal and safe bed to a 5-year-old child, no one believes they will be able to make housing affordable or address opiate addiction," said John Kelly, the company's top public-affairs executive.

Council member Kshama Sawant cast the only "no" vote Monday, on an amendment that reduced the size of the tax, but she joined her colleagues in approving the overall measure. She mentioned the immense wealth Amazon has created for CEO Jeff Bezos, who is worth an estimated $130 billion and recently became the world's richest person.

"There is no way this tax will be a burden on big businesses in Seattle," Sawant said, slamming the mayor for siding with "Amazon billionaires."

Business on 05/16/2018

Print Headline: Seattle approves tax on large employers

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