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In a Sign of Protest, Amazon Pauses Development of Downtown Seattle High-Rise Over Proposed 'Head' Tax

E-Commerce Giant Would Pay More Than $20 Million in Taxes on High-Grossing Businesses
May 3, 2018
Amazon said it is evaluating plans to sublease space in Rainier Square, a 41-story tower in the Metropolitan Tract of Seattle.

Amazon has stopped pre-construction work on its 17-story Block 18 high-rise near its corporate headquarters while it awaits a Seattle City Council vote on a contentious proposal to tax worker hours at high-grossing businesses.

The council is considering a "head tax" seeking to raise roughly $75 million a year to pay for affordable housing and services for the homeless in the city, which has seen an explosion of growth, driven largely by Amazon and other tech companies.

The e-commerce giant said in a statement it has paused construction planning at the 405,000-square-foot Block 18 at 7th and Blanchard until the council can vote on the issue and is studying the possibility of subleasing its recently leased space in another 722,000-square-foot tower under construction on Rainier Square.

“I can confirm that 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 Rainier Square building," said Amazon Vice President Drew Herdener in the statement.

The move comes on the heels of Amazon’s confirmation that it plans to add 2,000 engineers and other research and development jobs at its Boston tech hub, and expand into 430,000 square feet at WS Development's massive Seaport waterfront project. The company also announced plans to add 3,000 jobs at its Vancouver, British Columbia office.

The Block 18 and Rainier Square projects have the capacity to house 7,000 new Amazon jobs and support indirect jobs in construction and related industries and other functions, both initially and on an ongoing basis.

By some estimates, the new tax of 26 cents per hour which pencils out to $540 per fulltime employee annually would cost Amazon, which employs more than 40,000 workers in Seattle, more than $20 million. The news on the construction stoppage was first reported by the Seattle Times.

Supporters of the tax proposal say businesses that have benefited most from Seattle's economic boom should help solve urgent problems such as rapidly climbing rents and downtown's soaring rate of homelessness.

At a special meeting of the council's Finance and Neighborhood Committee yesterday, Councilmember Kshama Sawant urged that the city "not accept this extortion."

"We're talking about a tax that applies to only the top 3 percent of businesses," Sawant said.

The employee-hours tax would apply to companies with gross annual income of more than $20 million, which would apply to less than 600 businesses, city officials said at the meeting.

Randyl Drummer, Senior News Reporter  CoStar Group   

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