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Suporters and and opponents of the Seattle head tax repeal pack the City Hall lobby ahead of a special meeting. (GeekWire Photo / Monica Nickelsburg)

Whatever bridge existed between Amazon and Seattle government has been slowly burning for weeks as the debate over a new tax on the city’s top-grossing companies raged on.

The City Council threw water on the issue Tuesday, voting 7-2 to repeal the tax, which was originally intended to address homelessness, a consequence of Seattle’s historic boom. Although the city turned down the heat, it remains to be seen whether that bridge can ever be rebuilt. But Amazon did indicate a willingness to move forward with its hometown in a statement issued after the vote.

Seattle repeals head tax 7-2 in dramatic reversal that leaves city divided over homeless crisis

“Today’s vote by the Seattle City Council to repeal the tax on job creation is the right decision for the region’s economic prosperity,” Amazon VP Drew Herdener said in the statement. “We are deeply committed to being part of the solution to end homelessness in Seattle and will continue to invest in local nonprofits like Mary’s Place and FareStart that are making a difference on this important issue.”

It’s the first time Amazon has publicly supported the City Council since it began discussing a tax of about $500 per employee, per year on companies with more than $20 million in annual revenue. Amazon balked at that price tag, pausing construction on its Block 18 office tower and reconsidering moving into the massive Rainier Square development, pending the city’s vote.

The pressure led Seattle Mayor Jenny Durkan to broker a compromise with the City Council of $275 per employee, down from $500. Amazon begrudgingly resumed construction on Block 18 but said it was weighing its options for Rainier Square. Amazon did not immediately respond to GeekWire’s questions about whether it would commit to leasing the massive office complex now that the head tax has been repealed.

Seattle repealed the head tax less than a month after unanimously voting for the plan. When the City Council approved the tax on May 14, Amazon issued a sharp rebuke.

“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 said in a statement at the time.

Amazon was the explicit target of Seattle City Councilmember Kshama Sawant and her supporters, who carried signs reading “Tax Amazon” and marched on the e-commerce giant’s campus in support of the head tax.

Supporters of the head tax rush the City Council chambers during a vote to repeal the controversial legislation. Behind the banner, Councilmember Kshama Sawant calls for order. (GeekWire Photo / Monica Nickelsburg)

But Amazon is one of hundreds of companies that would have been affected by the tax. Others in the tech community — Redfin, Tableau, and Vulcan to name a few — also publicly criticized the tax and called for more fiduciary responsibility in city government.

Ad Lightning CEO Scott Moore. (Photo via Ad Lightning)

Scott Moore, founder and CEO of Ad Lightning and a member of the Clyde Hill City Council, said “the city’s political leadership needs a wake up call.”

“The tech industry is highly adaptable,” he went on. “If Seattle becomes inhospitable, businesses will relocate to friendlier locales. But I would like to see leadership on the homeless issue from the CEOs of major employers as well as from political leaders.”

Moore believes a future in which municipal government and the tech industry work together on issues like homelessness, but only if the city rethinks its approach.

“We should start with a study of causes and potential solutions and then engage in public debate on how to fund recommended solutions,” he said. “Business can help with this process, but they need a seat at the table and a good faith expression from government leaders.”

Andrew Coak, a housing assistance case manager at the Downtown Emergency Service Center, believes the business community is peddling a false narrative. He challenges accusations that the city is wasting taxpayer dollars and failing to address the homelessness crisis.

Nelson Del Rio. (Blokable Photo)

“We’re spending more money because it’s a growing issue,” he told GeekWire ahead of Tuesday’s meeting. “We are seeing more and more people lose their housing in Seattle each year so of course, we’re spending more money on it. I have to say that in my own personal experience, I’m heavily audited by the city so I feel like we are being responsible stewards. But the real issue here is housing, which is the most expensive intervention and we don’t have the money currently to spend on emergency services and building the housing that we need.”

Nelson Del Rio, co-CEO of the modular housing startup Blokable, believes that the lack of a coherent strategy is widening the chasm between the tech industry and City Hall.

“It is wonderful that government and businesses alike are becoming aware of the severity of the issue and the need for implementation of scalable solutions,” he said. “However, given available solutions, nobody sees an economically scalable and sustainable solution and that leads to confusion and disagreements.”

Seattle City Councilmember Lisa Herbold defended her vote to repeal the head tax in spite of her support for its mission because it was “not a winnable battle.” She said it would be impossible for the city to raise enough funds to out-spend the campaign to get a referendum on the head tax on the November ballot. Amazon donated $25,000 to that campaign.

Starbucks, another large Seattle tech company that opposed the head tax, is hosting a “Summit on Family Homelessness” next Tuesday in Seattle. Business leaders from companies like Vulcan, Zillow, Tableau, Amazon, PEMCO, and more will convene with representatives from King County, City of Seattle, United Way of King County, and other organizations to come up with ideas to help realize the “No Child Sleeps Outside” vision, an initiative launched by Mary’s Place and supported by Starbucks.

“We welcome this move by the City Council and believe the best path forward is to implement the reforms recommended two years ago by the city’s own homelessness expert,” John Kelly, Starbucks senior vice president of public affairs, said in a statement. “Starbucks remains a committed partner to government officials, business leaders, and family service providers. Together we must work to bring families inside, once and for all.”

The Seattle Metro Chamber of Commerce, which aggressively campaigned against the tax, sees its repeal as an opportunity to create a less divisive approach. Chamber CEO Marilyn Strickland called it a “chance to move forward in a productive, focused, and unified way on the homelessness crisis.”

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