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Amazon Halts Construction On Block 18 In Response To Seattle's Homelessness Tax Proposal

Amazon may sublease out its space at the under-construction Rainier Place redevelopment if Seattle City Council approves a business tax to help fund aid for the homeless.

Amazon rattled the downtown commercial real estate community Wednesday when it paused construction on its 17-story Block 18 business tower until the Seattle City Council votes on a tax that could cost the online retail giant millions of dollars a year.

In addition, Amazon may sublease out its space in the under-construction skyscraper going up at Rainier Square. An estimated 7,000 to 8,000 employees were set to work in the new spaces, the Seattle Times reports.

Amazon recently planned to increase its total Seattle office square footage to 14M SF, up from the 10M SF it currently occupies, Bloomberg reports. Amazon employees take up about one-fifth of the city’s commercial office space. The additional 4M SF of office space would house another 20,000 employees.

This week, the company announced plans to add office space for 3,000 employees in Vancouver, British Columbia, and 2,000 in Boston.

The business tax to fund help for the homeless would cost businesses that gross more than $20M per year 26 cents per Seattle employee-hour. There are about 500 of those companies in Seattle, or 3% of the city’s businesses. The tax is expected to raise $75M per year.

The Seattle Times calculated that if Amazon had 50,000 Seattle employees by 2021, its yearly payroll tax obligation would be $39M under the current proposal.

Amazon has fueled the city’s latest construction boom.

Developers have been adding 10,000 apartments and a few office towers to downtown Seattle every year with the expectation that Amazon and its employees will fill the space. 

The tax is supported by five of the city’s nine council members, and that is all it needs to pass. Mayor Jenny Durkan has not been a champion of the tax, but hopes to seek common ground between the council and company. Those who support the tax claim economic growth has pushed up housing prices, which now have a median price of $820K. Average two-bedroom rentals cost $2K a month. 

Proponents of the tax claim the high cost of housing is causing homelessness. Seattle has been in an official state of emergency due to homelessness for the past two years. The number of deaths attributed to homelessness was a record 169 last year. 

Amazon has addressed homelessness in some of its outreach. The company gave a former hotel to Mary’s Place, a nonprofit shelter that helps homeless women and their families. The former hotel sits on land that is slated for development. The company has also promised to give Mary’s Place — at no cost — part of its new company building to use as a 47K SF shelter that will house 200 people in 65 rooms.