The Seattle Metropolitan Chamber of Commerce’s Executive Committee on Oct. 30 voted to endorse Seattle Proposition 1B, to fund social housing with existing revenue, on the February 2025 Special Election ballot.
About Prop 1B
Seattle Proposition 1B was proposed in September of 2024 by Seattle City Council as an alternative to Proposition 1A (formerly known as Initiative 137).
Proposition 1B would allocate $10 million annually of existing JumpStart Payroll Expense Tax revenue to the Seattle Social Housing Public Development Authority for five years.
The Office of Housing would Seattle Metro Chamberister the allocation, which would be adjusted annually based on the Consumer Price Index for the Seattle-Tacoma-Bellevue area. Up to five percent of total annual allocation could be used by the PDA to pay for Seattle Metro Chamberistrative costs. The remaining funds could be used for the acquisition, construction, and rehabilitation of social housing, including predevelopment costs.
Social housing is publicly owned affordable housing that serves a variety of income levels up to a designated percentage of Area Median Income and caps rental payments at a certain percentage of renter income (typically 30%).
Proposition 1B would require that the authority use city funds only to cover costs for social housing residents not exceeding 80% Area Median Income. To receive the allocated funds, the authority would need to hire chief executives and submit a complete application for awards, which will be subject to the Office of Housing’s standard underwriting and review process for affordable housing.
If the funds are not awarded to the authority within three years of the original allocation, they will be made available to other housing providers. The Office of Housing would, through its annual report to the Seattle City Council, will report on awards made to the social housing developer, which would include funding amounts, number of units produced or acquired, and affordability level of units.
In February, voters will first be asked regardless of which they prefer if either proposition should be passed (Question 1). They will then choose between Proposition 1A and 1B (Question 2).
About Prop 1A
Unlike Proposition 1B, which uses an existing revenue source, Proposition 1A would establish a new payroll expense tax levied upon employers who pay at least one employee over $1 million a year for work done in Seattle.
Qualifying employers would pay a 5% tax on every dollar of compensation over $1 million for a single employee. The taxpayer would determine the amount of compensation subject to the tax using the method defined in Seattle Municipal Code 5.38.024, which applies to the existing JumpStart Payroll Expense Tax.
House Our Neighbors estimates the tax would collect $50 million a year. Unlike Proposition 1B, Proposition 1A would reserve most of the social housing units for renters at 80% to 120% Annual Median Income (1B would limit the use of public funds for renters at and below 80% Annual Median Income).
Both propositions would allocate funding to the Seattle Social Housing Public Development Authority, which was created in 2023 after Seattle voters passed Initiative 135 in a February special election. Currently, the organization consists of a mostly volunteer board (some board members receive stipends) and has recently hired a chief executive officer. The initiative required the board comprise of a voting majority of renters appointed by the Seattle Renters’ Commission and members with expertise in urban planning, nonprofit development, and green development.
Proposition 1A has no reporting requirements for the PDA, and the tax has no sunset or limit.
For more information, email larse@www.seattlechamber.com.