Amazon (NASDAQ: AMZN) has announced a halt to its expansion plans in Seattle over a tax being considered by the City Council. The company said it would halt construction of a new building, known as Block 18, it was planning to erect adjacent to its new office complex. The building was scheduled to begin construction later this year. The company also said it would reconsider occupying another building that is already under construction.
The new tax being discussed by the Seattle City Council would charge large employers in the city about $500 per employee. Only companies with at least $20 million in taxable gross receipts annually would have to pay the tax. Most of the estimated $75 million raised by the tax would go towards building roughly 1,800 affordable housing units in the city. The rest of the money would go to funding services for the homeless.
The tax is squarely aimed at Amazon. As Seattle’s largest employer with more than 45,000 local employees, Amazon would owe $20 million to $30 million annually from the head tax. Amazon has been quietly lobbying behind the scenes against the tax proposal for months. The council is expected to vote on the tax proposal on May 14.
A report to Congress by the Department of Housing and Urban Development stated that the Seattle area had the third largest homeless population in the country in 2017, behind New York and Los Angeles. Amazon has been blamed by many residents for the city’s soaring housing costs. People unable to keep up with the costs live in recreational vehicles in industrial neighborhoods or in cars or in tents by the sides of freeways.
Amazon is now openly opposing the tax. Amazon spokesman Drew Herdener said in a statement, “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.”
The decision took city officials and developers by surprise. The decision by Amazon could put 7,000 or more jobs in jeopardy. In a statement, Seattle mayor Jenny Durkan said she planned to work with members of Seattle’s business, labor and community leaders in the coming days to find common ground on the matter.