Seattle affordable housing goal elusive despite millionaire’s tax

By Randy Diamond
The Center Square

(The Center Square) — Seattle’s own version of Washington State’s planned tax on millionaires is aimed at businesses with millionaire employees, but the goal of using the money to expand affordable housing is becoming elusive.

Officials of Seattle’s Social Housing Developer revealed Thursday night their first move with $133 million in city taxes from businesses received in January will be to acquire two existing occupied market rental buildings — not creating any new housing units.

Seattle Social Housing Developer interim CEO Tiffani McCoy told the independent authority’s board Thursday night that she expected the closing of the developer’s first acquired building would occur in June. She said new housing will take longer.

“It’s very exciting, but just remember, it takes a long time for new construction to come online, so we’re hoping by the end of 2028, early 2029, but at least we are going to be starting pre-development this year on some sites,” McCoy said.

Social Housing Developer spokeswoman Lilly Fowler said in an interview with The Center Square that a second rental building is also expected to be acquired later this year.

The 5% Social Housing tax paid by employers on the amount of a workers salary above $1 million remains unpopular with the business community. It has fueled concern that a continuing job exodus from Seattle could accelerate.

Businesses hurt by tax

“Seattle is a business tax outlier in the region,” said downtown Seattle Association President and CEO Jon Scholes in a statement to The Center Square. “That fact has been damaging to our competitiveness, and we’ve been shedding jobs the last couple of years as a result. We don’t need more business taxes in Seattle; we need more businesses in Seattle paying taxes.”

The tax is in addition to the city’s JumpStart payroll tax which went into effect in 2023 and taxes companies whose employers make more than $150,000 a year. The city also has a Business and Occupation Tax.

But the Social Housing Developer’s strategy of focusing on acquiring apartment building instead of putting the sole focus on building new apartments is also raising questions,

Acquiring new apartments buildings is easier in Seattle than building new units because the permitting process for new construction can take a long time, said Shannon Affholter, the co-chair of the Department of Real Estate at the University of Washington in Seattle.

“When approvals stretch out for years, it discourages building altogether,” Affholter said. “Buying existing properties may be faster, but it doesn’t add the new housing units the city really needs.”

He said the approval process needs to be made faster.

Fowler said that the Social Housing Developer acquiring existing rental buildings will still be helpful for tenants.

“It’s not creating new units,” she said. ”We still think we are doing good by acquiring buildings because we are able to stabilize rents.”

She said rent reductions in the market-rental buildings, would be done on a case by case basis for tenants who qualify.

Fowler said existing tenants would not be evicted, regardless of income level, to make way for more affordable apartments.

Locations not yet public

Fowler won’t reveal the location of the buildings because the buildings have yet to become the property of The Social Developer.

She said bringing the apartment buildings under the owner of The Social Housing Deveeloper will be positive for tenants.

“Hoprfully, bring down some rents, have building be under public ownership and have the tenants have a say in the way the building is run,” she said.

But even long-term, the Social Housing Developer plans on acquiring many more apartments than it will be building.

At a Seattle City Council committee meeting on Feb. 11, Social Housing officials projected that they would built 630 new units by 2031 but acquire apartment buildings with 1030 units by the same time.

McCoy said at that meeting that the Social Housing Developer would be updating the estimate because the new tax was originally expected to bring in only $50 million a year.

The Social Housing Tax went into effect for the tax year 2025, but the first payments were submitted this January.

The Social Housing Developer has yet to release new figures. Fowler said McCoy was unavailable for an interview.

Only a fraction of needed housing

In any case, the Social Housing Developer will be able build only a fraction of needed affordable apartments. Seattle officials estimate the number of needed affordable units at more than 100,000 over the next 20 years

Under the social housing concept, a mix of tenants from various income levels are housed in a building with the richer tenants subsidizing the rents of lower-income tenants.

Seattle’s program is based on a concept pioneered in Vienna, Austria.

Seattle voters first approved the Social Housing Developer in 2023 in a referendum. McCoy was one of the prime organizers of the original measure.

But it took a second referendum in 2025 for voters to approve the tax on businesses as a funding mechanism.

The business community opposed the measure led by The Seattle Metro Chamber of Commerce. Both Amazon and Microsoft each donated $100,000 to the opposition campaign.

Seattle’s new Mayor Katie Wilson, who was a community organizer in both the areas of housing and transportation, credited the Social Housing referendum in 2025 as the reason she joined the race for mayor.

Incumbent Seattle Mayor Bruce Harrell was an opponent of the business tax. Wilson said the success of the ballot measure funding the tax Wilson said convinced her to run.

National model

Wilson has called Seattle’s program, a national model that can be used in other U.S. cities to increase affordable housing.

At an event in February hosted by social housing advocates, Wilson lauded the program.

“There is a lot of wealth in the city, and we continue to have one of the most regressive tax systems in the country, in the state,” Wilson said. “And it is very gratifying to know that we’re going to be able to use a little bit of that wealth and put it to work building housing.”

Back in January, the board of the Social Housing Developer fired CEO, Roberto Jimenez just after 18 months after he took the job.

The reason for the firing was not disclosed though some boards were upset that he had not moved to Seattle from Sacramento where he had headed a non-profit housing development corporation. Jimenez could not be reached for comment.

He was replaced by McCoy who had no housing development experience. McCoy was a member of Mayor Wilson’s transition team.