News

Leadership wanted as Seattle recovers from head tax debacle

Posted on June 22, 2018

This story was originally published in the Puget Sound Business Journal on June 15, 2018.

By Casey Coombs and Emily Parkhurst – Puget Sound Business Journal

In a surprise move this week, the Seattle City Council repealed a $275-per-employee tax on businesses that they unanimously approved only weeks before.

For many, the process from creation to implementation to repeal of the tax to fund homeless services and affordable housing has been confusing and hurried. It’s also been divisive.

The head tax debate has left many wondering if the chasm between businesses and city government can be bridged. There’s been a lack of leadership on both sides, critics say.

“If City Hall came to businesses and said, ‘Please invest. Here’s what we’re going to do and here’s the evidence-based results that this actually works,’ we’d write checks,” said Fire & Vine CEO Chad Mackay. “I think it’s just a failure in leadership.”

John Oppenheimer, CEO of Columbia Hospitality Group, said one of the things that’s frustrated him most about the homelessness issue is that there are so many groups working on it and they’re not coordinating their efforts.

“Perhaps we need to look at (the business community) and ask if we’re guilty of the same thing,” he said.

The division

After the City Council approved the so-called head tax May 14, Amazon threatened to stall development in Seattle. Then, approximately 45,000 people signed a petition that would have put the measure on the ballot. Amazon, Starbucks, Vulcan and others put more than $379,000 behind the petition drive.

Meanwhile, a group of about 60 Amazon employees petitioned the company from within to support the tax. Worker advocacy groups and unions also got into the fight.

“Some of the largest corporations and richest humans in the world have invested big money to mislead voters about Seattle’s progressive business tax,” worker advocacy group Working Washington said this week. “They seem willing to pick a vicious and unnecessary fight with poor people.”

“The voice of the voters has been crystal clear on this issue and they weren’t duped by anyone, as some councilmembers suggested on Tuesday,” said Downtown Seattle Association CEO Jon Scholes. “Voters are frustrated with the council’s response to the homeless crisis and they believe taxing jobs is bad public policy.”

Now, though, many in the Seattle business community are hoping to move forward in a productive way. The process has revealed a lack of leadership from the city and from the business community, critics say. Both want to reduce homelessness, but seem unable to work together.

It’s time for that to change, said Steve Schwartz, senior manager of public affairs for Tableau Software.

“There is still a lot of hard work ahead to come up with real solutions that work for everyone,” he said. “It was a first down, not a touchdown. The touchdown will come when we reduce the number of people living unsheltered and unsupported in our region down to zero.”

There has been criticism that the Seattle Metropolitan Chamber of Commerce was invited to the table early on in the development of the head tax but declined to participate.

The chamber’s new president, Marilyn Strickland, said this week that the business and philanthropic community has done a lot to address homelessness, “but we can do more.” She suggested technology could be better leveraged to make the system more efficient, and that the city should expedite permitting for affordable housing builders.

Strickland said she did not talk to the mayor or City Council ahead of this week’s vote, nor does the chamber have a plan on how to move forward.

“We’re having some meetings to figure out what that would look like, but it’s still early in the process,” she said.

‘Hope is not a strategy’

In a roundtable discussion June 4, a group of Seattle business leaders offered suggestions for ways businesses could get involved.

Maria Barrientos, a Seattle developer with Barrientos+Ryan, sits on the King County affordable housing task force where she’s been working for years on ways to develop workforce and affordable housing throughout the region.

“Everyone else on that committee is a homeless advocate or an affordable housing advocate,” she said. “They’re surrounding themselves constantly with just activists and that’s who they hear from.”

While politicians say they want to hear from business leaders, Barrientos said she’s been frustrated by their lack of response.

“None of them will return an email or a phone call,” she said. “They haven’t wanted to hear any narrative that does not mirror their own.”

Greg Root, co-chairman and president of GM Nameplate, Seattle’s largest manufacturer, invited the city’s leaders to visit the company’s facility and learn more about “what a true partner for success process looks like.”

“Accountability and transparency and a measurable set of goals go a long way to creating excellent outcomes,” he said. “One thing you cannot do is break your own rules when you don’t achieve the results you hope for.”

Seattleites tend to shy away from conflict, said Heather Redman, co-founder of venture capital firm Flying Fish Partners and the chairwoman of the Seattle Metropolitan Chamber of Commerce, and that’s part of the problem.

“The willingness to put yourself out there, have an opinion, write a check, talk to people directly — that’s not a Seattle thing and it’s not a Seattle business thing,” she said. “I hope that gets better.”

Some were hopeful the head tax would bring the community together and that leaders would take a cue from New York City, where businesses aren’t afraid to get involved in political battles.

“Hope is not a strategy,” said John Murray, a partner with lobbying firm Monument Policy Group who worked on the No Tax on Jobs campaign. “Saying, ‘I hope it gets better, but I’m going to go run my business’ — you can’t keep doing that and think things are going to change.”

For advocates of the head tax, including an Amazon employee who spoke on condition of anonymity, the City Council’s reversal on the head tax was a disappointment.

“It’s discouraging and I was blindsided by how suddenly everything happened,” the source said. “It felt like they waited for everyone to relax and then pulled the rug out from under us.”

But the source, who headed up a petition within Amazon to support the tax, said the issue has started a discussion inside the company about housing as a social justice issue.

“I’m excited to continue that with other employees,” the source said.

Mackay of Fire & Vine Hospitality thinks the head tax could become a rallying cry for the business community to finally come together.

“We actually probably have the City Council and such bad policy to thank for bringing us all to the table,” he said.

The tech community has for years said little when it comes to local public policy, he said, and that’s been frustrating for restaurant owners like him who have been involved since the start of the $15 minimum wage debate.

“It’s time for everybody to be at the table. There’s a few of us that have been at the table for years now and thank you, tech sector, for waking up and realizing this is your city, too,” Mackay said. “Together we can be strong. Our voices are bigger. We have more employees, more people, and more at stake.”

No Tax on Jobs reported $379,067 in contributions as of Wednesday. (Contributions marked with an asterisk are pledges where some or all funds have not yet been reported as received.)

Northwest Grocery Association: $50,000
Washington Food Industry Association: $30,000
Amazon.com: $25,733
Vulcan Inc.: $25,000
Starbucks: $25,000*
Martin Selig Real Estate owner Martin Selig: $25,000
Seattle Hospitality Group owner Howard Wright: $25,000 (Disclosure: Wright is a columnist for the Puget Sound Business Journal.)
Kroger: $25,000*
Albertsons: $25,000*
Martin Smith Inc. owner Martin Smith: $20,000
Holland Partner Group: $20,000
International Parking Management: $15,000*

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