Amazon has a big middle finger today for all the affordable housing proponents out there. According to a Wednesday report in the New York Times, Amazon—Seattle’s largest employer with 45,000 staff in the city—has abruptly decided to halt a “huge” two-building, 7,000 employee expansion plan there after the City Council announced it was considering a new tax to fund affordable housing.
The ordinance would initially cost $500 per employee for companies with over $20 million in revenue, and in 2021 would transition that model to a payroll tax that perhaps could be “significantly more.” The goal is to raise an estimated $75 million to build some 1,800 affordable housing units and fund services for the homeless, and city officials are reportedly stunned that Amazon has reacted so strongly and with such little warning:
Late Wednesday morning, Drew Herdener, an Amazon spokesman, said that “pending the outcome of the head tax vote by City Council, Amazon has paused all construction planning” on a large building in downtown Seattle that was scheduled to begin construction later this year. Mr. Herdener also said Amazon was “evaluating options” to lease out space it had planned to use in another building that is already going up elsewhere downtown.
The decision took city officials and developers by surprise. In a statement, Seattle’s mayor said she was alarmed by Amazon’s announcement and added that she planned to work with members of Seattle’s business, labor and community leaders in the coming days to find common ground. The council is expected to vote on the tax proposal on May 14.
Seattle city councilman Mike O’Brien told the paper that “They’re not really asking for anything. They’re just telling us what they’re going to do... I need to run a city that has room for prosperous businesses, but doesn’t do it at the expense of people getting pushed into poverty.”
It’s possible the sudden announcement to potentially abandon the projects is a “negotiating tactic to help extract concessions from the council,” the Times added. But this is not a good look for a corporate giant that just posted over $50 billion first-quarter revenue in 2018, that would only have to initially pony up $20-30 million annually under the tax, and has long been accused of paying even its own employees well under the amount necessary to secure housing at market rates.
CEO Jeff Bezos is personally worth $130 billion and makes $107 million a day.
Seattle is undergoing a housing crisis, according to Seattle Magazine, with just dozens of mostly ultra-expensive homes for sale in an urban center of 88,000 people, and median home prices rising 19 percent per year. Seattle is the 22nd-largest city in the US, but has the third largest homeless population, according to Politico—and its skyrocketing home prices and rents are fueled by an influx of roughly 100,000 new tech jobs since the end of the Great Recession that’s seen just 32,000 new dwellings built in response.
This is at the same time that Amazon just got a nearly $800 million windfall from Republican-backed federal tax cuts. It’s also still running its nationwide search for a second headquarters that has mostly entailed seeing which city governments are willing to debase themselves the most in the form of jaw-dropping sweetheart tax deals. Those cities might want to take a note of this and wonder whether they’d be getting a good corporate citizen.