Seattle’s social housing developer struggles to take shape

More than a year after voters signed off on its creation, Seattle’s social housing developer still hasn’t hired a CEO. It doesn’t have a chief financial officer, either, nor an office. Its website is sparse and its board members haven’t been paid, as was required by the initiative. One staff member is paying for Google Workspace out of his own pocket.

Kaileah Baldwin, board chair, said all of this work requires money she expected months ago but that she still doesn’t have. Startup dollars from the state and city have been slow to arrive, derailing plans to stand up the body’s administrative structure.

“Where we’re at now, I’d pictured we’d be in December,” she said.

The clock is ticking for the new developer to get its house in order. A campaign to raise payroll taxes on companies with high-earning employees is underway that, if successful, would send more than $50 million a year to the social housing developer a year from now.

For skeptics of the payroll tax proposal, particularly those in Seattle’s business world, the slow start bolsters their doubt about the cost versus benefit of new revenue.

“If they haven’t gone through all the process to be ready by their own admission, why is now the time to be giving a huge infusion of cash?” said Rachel Smith, CEO of the Seattle Metropolitan Chamber of Commerce. “That doesn’t hold a lot of water in relation to the new measure.”

As a result of the slow buildup, the developer has struggled to comply with laws governing public records and open public meetings. Though its website advertises meetings on the third Thursday of every month, it does not publish agendas as required by Washington’s Open Public Meetings Act.

“[T]he Board has failed to provide the public with information about how to access Board meetings,” a lawyer for the chamber wrote in a recent letter to the body’s board. “It does not announce the dates, times, and locations of these meetings ahead of time; nor does it release agendas for upcoming meetings; nor does it publish links that would enable members of the public to attend these meetings virtually.”

Baldwin acknowledged it’s not ideal.

“We gotta take care of this,” she said. “From the jump I was like, ‘We’re gonna make mistakes and we’re going to move through them.’ Yes, we’ve made a mistake and a thing that I know is that lots of people mistakes and lots of organizations make mistakes.”

Voters approved the creation of the new social housing developer in a February special election last year. Its purpose is to purchase or build housing that will be kept affordable forever, with a specific target of people earning at or just below Seattle’s median wage.

Backers argued that homes for working-class families have evaporated and one answer is a form of public housing seen in places like Vienna. As the private market develops more expensive places to live and public dollars are mostly dedicated to housing for the poorest residents, middle-class families fall through the cracks.

The proposal did not include a funding source, which critics were happy to point out. But the campaign said that’s how it had to be; including a tax hike could have meant the initiative was doing two things at once, which is forbidden in Washington state.

Advocates who helped pass the previous initiative have now begun gathering signatures for a second initiative that would raise payroll taxes on companies with employees who make over $1 million. They estimate it would raise $53 million annually, to be used for buying and, eventually, developing housing.

The first initiative required Seattle to pay for the startup costs of the developer, but Mayor Bruce Harrell said the allocation would have to wait until the city’s fall budget discussions. The state Legislature stepped in more quickly, agreeing to pay $180,000 for administrative help. Seattle eventually set aside $850,000 last fall.

So far, though, the vast majority of those dollars have not hit the social housing developer’s bank account. Baldwin said she expected the state money to begin flowing in last August. But the payment got caught up in a back and forth with the Washington Department of Commerce and the first check of $85,000 only came in last week.

Penny Thomas, spokesperson for the Department of Commerce, said it was a “chicken and egg situation” where the department wanted more information about the body’s scope of work before releasing the reimbursement, but without paid staff, the developer was struggling to provide one.

Thomas added that there was also a delay at the state level in processing the request.

The department has been working with city staff who “say they believe those initial speed bumps in the process have been worked through and are hopeful things will be smooth from here on,” Thomas said.

The city, meanwhile, is “actively negotiating the City’s contract with the Social Housing [public development authority]” and expects to have the agreement finalized “very soon,” Harrell spokesperson Callie Craighead said Wednesday.

The result, though, is a backlog of needs. Baldwin said all board members are owed back pay. The search firm helping find a CEO, Simkin, is owed $20,000. The first $85,000 check will pay off fees to lawyers and a bookkeeper, as well as reimbursement to the person paying for Google Workspace.

“It’s been frustrating to keep work moving forward and not be able to pay people for their labor who have been helping this work move forward,” she said.

Though the chamber did not take a position toward the creation of the housing developer, it has taken a doubtful posture toward the proposed payroll tax increase. The organization is now pointing to the slow rollout — including the lagging meeting notices and incomplete responses to public records requests — as supporting evidence for its skepticism.

“As you look through the meeting minutes, nothing there indicates to me that this is an organization that is ready to receive and prudently spend and be accountable to spend $50 million a year, 10 months from now,” said Smith.

Seattle City Councilmember Tammy Morales, who briefly served as acting chair of the developer, said it needs the startup money quickly to get itself established. “They are struggling with getting some basic things set up,” she said.

Tiffani McCoy, organizer for the payroll tax campaign, expressed frustration at the pace both the city and state are moving to write the checks.

“Public development authorities can’t run on IOUs,” she said. “Why has it taken the state and the city so long?”

McCoy said if the owed dollars are released soon, she’s confident the authority can be ready for an infusion of cash a year from now.

Though Baldwin can’t legally comment on the political operation supporting the development authority, she said she believes it can be ready to receive any eventual funding. By fall, Baldwin expects to have a CEO, CFO and workspace all sorted.

“We’re slowly but steadily moving toward housing people,” she said.