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Amazon, Starbucks Blast Seattle Council's Approval of Scaled-Back Business Tax

E-Commerce Giant Resumes Work on Block 18 Project, but Says It's 'Questioning Our Growth' in Headquarters City
May 16, 2018
Amazon said it will resume construction of its Block 18 expansion in Seattle but issued a statement saying the new tax "forces us to question our growth here."

The Seattle City Council's approval of a scaled-back corporate tax aimed at addressing the city's rising housing prices and burgeoning homeless crisis brought harsh words from, Inc. and Starbucks Corp., two of the city's largest employers set to bear the brunt of the new employee tax.

Seattle city officials, responding to aggressive opposition from large businesses that included Amazon's halting of pre-construction of a high-rise near its downtown corporate headquarters, reduced the per-worker tax levy by nearly half before approving the tax in a unanimous vote during a rowdy meeting Monday packed mostly with vocal supporters of the tax.

Amazon restarted work at the 17-story office complex Tuesday. But it did not mince words about its opposition to the tax that will cost the e-commerce company at least $10 million a year.

In a statement, Amazon Vice President Drew Herdener said the company was "disappointed by today’s City Council decision to introduce a tax on jobs."

"While we have resumed construction planning for Block 18, we remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here," Herdener continued in the statement, while adding that Seattle city revenues have grown from $2.8 billion in 2010 to $4.2 billion in 2017, with even higher projections for 2018.

"This revenue increase far outpaces the Seattle population increase over the same time period. The city does not have a revenue problem -- it has a spending efficiency problem," the company's statement said. "We are highly uncertain whether the city council’s anti-business positions or its spending inefficiency will change for the better."

Starbucks also sharply criticized Seattle's lack of a more effective plan to reduce homelessness. John Kelly, senior vice president, Starbucks global public affairs and social impact, said the city "continues to spend without reforming and fail without accountability while ignoring the plight of hundreds of children sleeping outside."

"This city pays more attention to the desires of the owners of illegally parked RVs than families seeking emergency shelter," Kelly's statement said.

As passed by the Seattle City Council, the tax will be levied on the top 3% of the city's businesses and expire at the end of five years but can be renewed by another council vote. The measure has attracted national attention because Amazon has launched a very high-profile search for a second headquarters in one of 20 U.S. cities competing for the project, slated to bring 50,000 jobs and $5 billion in investment.

Public response of elected officials and business groups to the Seattle tax approval in the finalist cities was largely muted Tuesday. Many have had to defend their pursuit of Amazon jobs in the face of criticism that they are offering too much to offset the impact on local transit, housing costs and the possibility that the incoming workers will drive out poorer residents.

On Tuesday, the Dallas suburb of Arlington revealed it is "no longer moving forward in the selection process" among multiple municipalities that are part of Dallas-Fort Worth's bid to land HQ2. Arlington had proposed Globe Life Park, current home of the Texas Rangers, in a package that included more than $900 million in economic incentives.

In Seattle, the 38 buildings occupied by Amazon's more than 45,000 local employees account for a total capital investment of $3.7 billion and constitute about half of the 16 million square feet of office space owned or leased in the U.S., according to CoStar data.

About two-thirds of Amazon's nearly 150 million square feet of leased and owned property is distribution space, including its extensive and growing network of Amazon warehouse and fulfillment centers. The company also owns 18.7 million square feet of retail space through its 2017 acquisition of Whole Foods Market Inc.

The company controls another 4 million square feet of flex space, including data centers and Amazon Robotics, a 228,000-square-foot R&D facility in Massachusetts where the company is reportedly developing its Vesta home robot.

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