Amazon pauses plans for Seattle office towers while City Council considers business tax

Amazon pauses plans for Seattle office towers while City Council considers business tax

The motion is a daring political transfer of the type Amazon has hardly ever made in Seattle and will lend weight to a big-business backlash in opposition to a proposed head tax on giant employers.

Amazon has paused development planning on a brand new downtown Seattle tower because the City Council considers a new tax on large employers to deal with homelessness, an organization govt stated Wednesday.

The retail large additionally might sub-lease slightly than occupy area in a skyscraper underneath development at Rainier Square, stated Drew Herdener, an Amazon vice chairman and spokesman.

The message is a daring and public political transfer of the type Amazon has hardly ever made in Seattle and may lend weight to a big-business backlash in opposition to the proposed tax.

Council members pushing the measure gave no indication Wednesday they intend to again down, nonetheless.

Whether Amazon’s pause may flip into a significant slowdown in progress for the corporate within the metropolis is unclear, however it comes at a time when the retailer is quickly increasing elsewhere and searching for a second headquarters in North America.

This week, Amazon introduced additions of office area for three,000 staff in Vancouver, B.C. and a pair of,000 in Boston.

Seattle Times editorial columnist Brier Dudley first reported the pause.

Amazon has been beating profit expectations and has deliberate to fill its 17-story Block 18 tower and the Rainier Square skyscraper with 1000’s of employees.

Five of the council’s 9 members are backing an employee-hours tax on companies grossing no less than $20 million per yr in Seattle that will increase an estimated $75 million yearly. They’re calling for the cash from the so-called “head tax” to be spent on low-income housing and emergency companies for homeless individuals.

The Seattle Metropolitan Chamber of Commerce, which counts Amazon as a member, has come out strongly in opposition to the proposal, describing it as a “tax on jobs” by a council that may’t be trusted to spend effectively.

The head tax may value Amazon, town’s largest employer, greater than $20 million per yr. It would apply in 2019 and 2020. In 2021, it will get replaced by a zero.7 p.c payroll tax.

Under that method, Amazon’s legal responsibility would seemingly improve. Assuming Amazon had 50,000 Seattle staff by 2021, the corporate’s payroll tax obligation could be an estimated $39 million. (Analysis of worker knowledge posted to job-reviews web site Glassdoor suggests Amazon staff within the metropolis are paid a mean of about $110,000 per yr.)

“Pending the outcome of the head tax vote by City Council, Amazon has paused all construction planning on our Block 18 project in downtown Seattle and is evaluating options to sub-lease all space in our recently leased Rainer Square building,” Herdener stated.

Amazon has about 45,000 staff within the metropolis unfold across more than 40 buildings in South Lake Union and Denny Triangle. It occupies about 10 million sq. toes of office area in Seattle – about one-fifth of town’s top-class office area. That’s by far probably the most of any firm in any massive metropolis within the nation.

But the retailer nonetheless has deliberate so as to add no less than one other four million sq. toes – which might make room for an extra 20,000 staff.

Block 18 could be a part of the core campus surrounding Amazon’s new biospheres and would clock in at about 400,000 sq. toes. The firm in October stated it will occupy all 722,000 sq. toes of office area within the Rainer Square skyscraper, slated to be the Pacific Northwest’s second-tallest.

Taken collectively, these two buildings would have room for greater than 5,000 office employees, based mostly on the speed at which the corporate occupies its present footprint within the metropolis.

Seattle’s report development increase in recent times has been predicated largely on Amazon’s progress. The metropolis has been including about 10,000 new flats and some high-rise office buildings annually, as builders financial institution on the corporate and its staff filling up a lot of that area.

But supporters of the tax have stated the businesses driving an financial increase in Seattle are additionally, by drawing high-wage tech employees to town, driving up rents and residential costs and exacerbating inequality.

Since Amazon opened its South Lake Union headquarters in 2010, Seattle housing prices have grown at among the many quickest charges within the nation. During that span, the median value of a single-family home in Seattle has grown 110 p.c to $820,000, while rents have grown 64 p.c, with the standard two-bedroom now costing greater than $2,000.

Councilmember Mike O’Brien, a sponsor of the measure, stated he discovered about Amazon’s pause Wednesday morning in a gathering with firm executives. He stated the executives didn’t ask for particular modifications to the proposed laws.

“It’s obviously a little disconcerting when a major business says, ‘We’re rethinking our strategy here,’” O’Brien stated at City Hall.

“We have a crisis around homelessness,” the council member added. “If Amazon generally wants to engage about how they can be part of the solution, we welcome that conversation. But we need companies that are profitable and making billions of dollars every year to help with the folks that are being forced out of housing and ending up on the street.”

Councilmember Kshama Sawant, a proponent of the tax, described Amazon’s pause as “extortionary.

Though he lacks sympathy for an organization run by the richest man on this planet, Council President Bruce Harrell has but to signal on to the measure.

“One of my biggest concerns is whether we really solve the problem,” Harrell stated Wednesday. “If we don’t move the needle, then all we did is tax business.”

Mayor Jenny Durkan’s office didn’t instantly return a request for remark.

Durkan has not been a champion of the tax however has expressed willingness to work with council members on the laws.

Under the draft laws, which has but to cross by way of any council committee, about $50 million per yr would go to construct low-income housing. About $20 million would go to emergency shelter and companies.

Councilmember M. Lorena González, additionally a sponsor, voiced assist for the tax Wednesday morning, saying the income would assist “house our most vulnerable Seattle residents,” she wrote on Twitter.

The Martin Luther King County Labor Council has endorsed the proposal.

Jaime Smith, a spokeswoman for Gov. Jay Inslee, stated Amazon “reached out to us to talk at a high level about this.” But she stated the considerations raised had been extra about “the broader issue” of the corporate’s popularity and therapy in Seattle, and “not so much about the head tax, per se.”

State Sen. Reuven Carlyle, D-Seattle, spoke out in opposition to the tax Wednesday, encouraging the council members to withdraw the proposal in mild of Amazon’s pause.

“I personally believe that if this plan goes forward, we need to be wide awake to the likely unintended consequences of the loss of many thousands of jobs,” Carlyle stated. “I don’t consider for a New York second that at the moment’s announcement is even near a bluff.

Seattle-area political leaders met with Amazon executives on the firm’s campus in February, responding to the retailer’s shock announcement it will construct a second headquarters.

On Wednesday, Councilmember Lisa Herbold, one other sponsor of the tax laws, described the corporate’s new pause as “an unfortunate reaction.”

“It’s not what I would expect from a corporation that says that it is committed to working with Seattle, as it did last year when we worked together to put together the reset meeting,” Herbold stated. “This is really backsliding on that commitment.”

Seattle Times workers reporters Vernal Coleman, Mike Rosenberg and Vianna Davlia contributed to this story.

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