In a major development for Seattle’s housing policy, the Seattle City Council voted Tuesday to delay a decision on Initiative 137, which aims to establish a funding source for the city’s newly created social housing developer. Despite gathering well over the required 26,520 signatures to qualify for the ballot, the initiative will not be presented to voters this November, instead pushing the decision to a February special election.
The council’s decision means that the controversial initiative, which proposes a 5% tax on annual individual employee compensation exceeding $1 million, will bypass the high-turnout presidential election. If the council had delayed the decision by even a single day, they would have missed the deadline to submit the ballot language to King County Elections for the November election.
Initiative 137 follows the passage of I-135, which established the social housing developer with the goal of creating mixed-income housing in Seattle. Unlike existing affordable housing programs, this initiative aims to use market-rate units to subsidize housing costs for lower-income tenants. According to a draft business plan from House Our Neighbors, the nonprofit behind both initiatives, the social housing developer could produce 2,000 housing units over the next decade, including the acquisition of existing units and the construction of over 600 new units.
During the council meeting, no other members spoke in favor of removing the initiative from the agenda, with Councilmember Tammy Morales casting the only dissenting vote. Morales argued that the city charter obligates the council to prioritize consideration of such initiatives, stating, “[c]onsideration of such initiative petition shall take precedence over all other business before the City Council.” However, it remains unclear when the initiative will return to the council’s agenda, especially as the body prepares for its scheduled recess at the end of August.
Business groups, including the Seattle Metropolitan Chamber of Commerce, are advocating for the inclusion of a countermeasure alongside Initiative 137 on the ballot. However, city staff have yet to develop a proposal due to time constraints. Councilmember Cathy Moore has expressed interest in increasing the existing Seattle Housing Levy instead, suggesting that residents have been polled on a potential housing levy supplement that would raise costs for property owners by another 10 cents per $100,000 in assessed value—a hike of over 20%.
The Seattle City Council has been criticized for lacking a cohesive vision for affordable housing, having previously rejected a proposal by Morales that would have provided zoning incentives for equitable development. This delay on Initiative 137, despite meeting signature requirements, raises questions about the council’s commitment to addressing the housing crisis.
The council’s reluctance to move forward with Initiative 137 may also stem from concerns about the upcoming November ballot, which includes a $1.55 billion transportation levy that was approved last month. Introducing a separate tax increase alongside it could create apprehension among council members.
Additionally, the Seattle Office of Economic and Revenue forecasts revealed a looming general fund deficit exceeding $250 million for the next year, further complicating the city’s financial outlook. While the JumpStart tax is expected to generate more revenue than anticipated due to local tech companies’ performance, concerns linger about how Initiative 137 could impact job creation and revenue generation.
Despite the setback, Initiative 137 still has the potential to succeed in the February ballot, having previously passed during a special election in 2023 by a significant margin. However, questions remain about voter sentiment towards a targeted higher-income payroll tax compared to a broader property tax increase, especially given the Chamber of Commerce’s previous opposition to tax hikes.