Seattle Employment Archives » Larry & Kathy Reichle

How Seattle spent its boom money

June 19, 2018 by Kathy Reichle Leave a Comment

Now that the construction boom that made the city of Seattle rich is starting to decline—and putting newfound pressure on homelessness spending—it’s time to ask where the money went.

After analyzing the city’s budgets over the last eight years, we found some answers.

How rich were we? Are we still rich?

The year 2013 was a clear turning point. Seattle’s general fund started ramping up from $800 million then to $1.1 billion now. That’s 30 percent growth. Overall city revenue grew, too, from $4 billion to $5.6 billion. But overall revenue also contains the money gushing through Seattle’s utilities. The general fund is where the political action is, and where the tough decisions are made. And yes, Seattle is still loaded compared to the way it was during the recession. But the city is spending pretty much all of it.

Which taxes made Seattle this money?

Business taxes, and sales taxes and new property taxes, in that order, all related to construction. These were the taxes that led the way. Forty million dollars-worth of tax revenues from construction in 2010 ballooned to more than $100 million this year, according to the City Budget Office.

So how did the city spend this dough?

Infrastructure: buttressing the Seawall, roads, and other growth-related investments.

Police officers: Mayor Ed Murray wanted 100 new cops on the beat. He got those cops, and then he wanted 100 more. That didn’t happen. But permanent funding happened: In 2016, the city hiked business taxes, largely pay for this ongoing expense. With the Chamber of Commerce’s blessing.

Homelessness: It is very hard to follow homelessness spending through every annual budget process. But the Budget Office’s 2018 budget proposal reports that Seattle’s spending on homelessness rose from $39 million four years ago to $63 million in 2018. That’s an increase of 60 percent. Until the head tax, many of the commitments already made for homelessness were not secured by their own revenue source, meaning they were paid for by construction boom money. Meaning they could be at risk when the boom stops. The head tax did pass, but it only lasts five years before it must be renewed. And now the tax faces stiff opposition from people who want it repealed.

How did the politics of spending change over the boom?

The politics of spending changed a lot.

After several hard years of killing jobs – 294 in 2011 alone – and snipping away at expenses, in the 2012 budget year the Seattle City Council pushed back. It said no to more cuts and pulled money out of the city’s Rainy Day fund to cover the $18 million crater in its budget.

If council members were gambling on a turnaround, they were right. In 2013 the money rolled in. Cash was back in the Rainy Day fund and spending resumed. Mayor Mike McGinn had a “new approach to address street disorder,” including money to address homelessness, and the council added more money for homelessness on top of that.

It was the start of a new pattern. Each year mayors put forward their own spending proposals, and the City Council usually added more spending on top of that.

In 2015, Mayor Ed Murray and the City Council allowed a $26.4 million budget gap. “Surprise” boom money arrived to cover it.

The following year, the city spent big on everything, including homelessness. The council added $7 million in social services spending. And then Mayor Murray declared a homelessness state of emergency, throwing an additional $7.6 million at the problem. At first, the goal was emergency housing, but last year the focus turned to permanent housing, leading to deeper investments, like $29 million in affordable housing bonds.

But today, with revenue from construction in decline, the Budget Office is telling the city it’s risky to spend on faith that more boom money will cover budget gaps. “A shift to slower growth could happen very quickly,” the director of the Budget Office wrote in a 2018 proposed budget summary. The same document acknowledges that homelessness is “the most significant policy challenge that the City is currently facing.”

Why is Seattle home inventory so low?

March 27, 2018 by Kathy Reichle Leave a Comment

Current homeowners are staying put—leaving fewer options for first-time buyers

Low inventory was the theme of last year’s Seattle real estate news, and so far this year, inventory has been even more sparse. The latest data from Northwest Multiple Listing Service (NWMLS) shows less than a month of inventory available in King County during February—as opposed to about a month that time last year.

It’s a statewide, and nationwide, problem, but it’s especially pronounced in Seattle; according to a report released by Remax earlier this week, the Seattle metro area is tied only with Denver for lowest housing inventory and has one of the fastest markets in the country, driving up competition and prices for would-be buyers.

But why is inventory staying so low—and getting lower?

According to a survey by Equation Research on behalf of home financing company Valueinsured, with real estate prices at a record high—Seattle homes are routinely seeing year-over-year increases in the double-digits—current homeowners are unsure of their prospects after selling. 65 percent of Seattle homeowners who would be open to selling are choosing to hold off because they don’t want to buy their next home in this market.

Those same homeowners wouldn’t blame potential buyers for not wanting to buy in the current market. 67 percent of surveyed homeowners said that people who buy in their neighborhood right now are “overpaying.”

It speaks to a general air of uncertainty around Seattle’s home prices; 30 percent of homeowners surveyed said they are “not confident” that their current home, or any home bought today, will be worth more by the end of 2019. 48 percent of Seattle residents don’t consider the current market healthy.

“Experienced homeowners and buyers know we are at the top and are sitting out to avoid buying,” said Valueinsured’s CEO Joe Melendez in a statement on the survey. “Inventory is, therefore, pushed way down, inflating prices for those who are willing to buy high. But for the most part, there are not enough people who are willing to buy high. That’s why sales volume is down. It is not a sustainable picture.”

Overall, Seattle residents were “more pessimistic” than the rest of the United States, with 76 percent believing they could “witness another 2008-style housing crisis again in their lifetime.” (There are huge differences between the market then and the market now, although the prices do gate many out of homeownership.) That increased among millennial, interested first-time buyers to 85 percent.

A more negative outlook among people who aren’t yet homeowners shouldn’t be a shocker; those who already own a home tend to be in a much better economic position than those who don’t. According to data from the Harvard Joint Center for Housing Studies, 45.4 percent of Seattle-area renters were cost-burdened in 2015—meaning their housing costs make up more than 30 percent of their income—as opposed to 25.4 percent of homeowners. That same data found that median owner income in the metro is $96,400, compared to $50,000 for renters.

That means, despite a general uneasiness around the market, current homeowners tend to feel a little more secure in owning a home. Despite many not being willing to move, a whopping 82 percent of current homeowners said they could afford a down payment on their next home, as opposed to 25 percent of first-time, millennial buyers. Among senior homeowners—65-plus and planning on downsizing—20 percent plan to buy a new home without a mortgage.

Regardless, with the coming of spring, inventory could improve when the March numbers roll in. “The arrival of daylight savings triggers a burst in new listings,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, in a statement with the NWMLS numbers. “More listings lead to more sales.”

An inventory crunch, as many argue, isn’t the only thing driving up home prices in Seattle, and it’s not like we’re adding new homes for sale at the same rate as we’re bringing rental homes on the market—or new people to the region—anyway. But shrinking inventory certainly isn’t helping.

By Sarah Anne Lloyd

Go fish! Google and Facebook sites in Seattle will rank among world’s most salmon-friendly buildings

November 8, 2017 by Kathy Reichle Leave a Comment

Next year, Facebook will move into Vulcan Real Estate’s Arbor Blocks in South Lake Union. The two-building development is certified as Salmon-Safe and includes features to clean and control polluted rainwater runoff that can kill fish. (GeekWire Photo / Kurt Schlosser)

One needn’t be a card-carrying environmentalist to know that it’s a bad thing for salmon to go belly up before spawning their eggs. But that’s just what’s happeningto many fish returning to some of the urban streams in Puget Sound.

Toxic chemicals are flushed with rainwater runoff from city roads, parking lots and rooftops directly into streams and creeks. The chemicals are poisoning coho salmon that return to have babies. Multiple local salmon runs are at risk of extinction.

And as Seattle continues its epic building boom, there’s a risk that things could get worse for fish and other native creatures as the number of roofs, cars and people increase.

Vulcan Real Estate, one of Microsoft co-founder Paul Allen’s companies, is trying instead to use the development as an opportunity to make the built environment more fish friendly and undo some of the damage caused by past construction. The company is pursuing projects that will clean the polluted runoff and reduce the surge of water unleashed with rainstorms. That includes developments in South Lake Union that will be leased by Facebook and Google.

“Our only salvation — as we increase in population and everything that goes with it — our only salvation is that we do it better than they did in the past,” said Rich Horner, a leading storm water expert who advises Salmon-Safe, a nonprofit that promotes land use that protects fish.

Earlier this year, Vulcan became the world’s first accredited Salmon-Safe developer— a designation akin to LEED certification for green construction, but with a specific focus on fish and storm water runoff. The contractors working with Vulcan must likewise be Salmon-Safe accredited.

Dan Kent, Salmon-Safe’s co-founder and executive director, and Lori Mason Curran, Vulcan’s investment strategy director, pose with Sal the salmon at a tour this month of Vulcan’s Salmon-Safe projects. (GeekWire Photo / Lisa Stiffler)

The company has started or completed 11 Salmon-Safe projects with five more “on the horizon,” said Lori Mason Curran, Vulcan’s investment strategy director. Allen, a co-founder of Microsoft, has focused some of his philanthropic work on marine and ocean health, including Puget Sound.

“Salmon have long been the lifeblood of our region,” Mason Curran said during a recent tour of Vulcan properties. “Nothing so drastically threatens salmon as urbanization.”

In a natural environment, when the rain falls most of it soaks into the ground or is captured by plant and tree vegetation. In urban settings, the rain hits roads, roofs and lawns or other less-absorbent landscaping. The water streams off these surfaces, picking up pesticides, oil and grease leaked by cars, dog poop and other pollutants. Much of the water flows untreated, straight into streams, lakes and sea water. The volume of storm water also causes problems, as the fast-moving water erodes and damages streams.

Green development tries to reduce this harm. Rain gardens help water soak into the ground where it falls. Green roofs catch and absorb water. Sustainable projects are also starting to “harvest” the rain water, collecting it in tanks for irrigation or even to flush toilets.

The Salmon-Safe buildings that will be occupied by Facebook are located at 8th Avenue North between Harrison and Thomas streets. The two six-story buildings will be topped with green roofs, one measuring 12,000 square feet, the other 11,000. While green roof plantings historically featured rugged, drought-tolerant sedums, the new roofs will have more diverse vegetation providing better habitat for birds and bugs.

At ground level, the so-called Arbor Blocks site will implement “woonerf” design, a Dutch approach to construction. It will include a winding street to slow traffic, large plantings that will help treat storm water runoff, outdoor public seating and retail space.

“This beautiful new meandering street will come into effect,” said Ellen Southard, outreach lead for Salmon-Safe. “It’s a great place for creation of habitat in an urban neighborhood.”

The project totals 384,000 square feet and is expected to be completed later next year.

The Vulcan buildings to be occupied by Facebook will include “woonerf” designs that incorporate street-side plantings, outdoor seating and a winding roadway. (GeekWire Photo / Lisa Stiffler)

Vulcan’s South Lake Union project that will be leased by Google is awaiting Salmon-Safe certification. It will span two blocks, including about 600,000 square feet of office space and a residential tower on each block. Work began in May 2017 and should be complete in 2019.

Other Salmon-Safe projects by Vulcan include Sitka, a 384-unit apartment also in South Lake Union, and a multifamily project called Batik, in the Yesler Terrace area.

Southard called Salmon-Safe’s partnership with Vulcan, which began more than four years ago, “a major tipping point in the success of our program.”

Horner, an emeritus research associate professor with the University of Washington, has for decades studied and preached the importance of controlling urban storm water. He’s pleased at last to see the idea catching on with developers and contractors.

“You keep yakking at them,” he said, “and they begin to see some advantage.”

BY LISA STIFFLER

Amazon’s hiring….Reshaping Seattle’s economy

October 25, 2016 by Kathy Reichle Leave a Comment

Think there are too many Amazonians in Seattle?

Well, brace yourself.

Washington’s Employment Security Department says that between May and August, Amazon.com posted 11,042 job openings online in King County, double the number from the same period last year.

The runner-up was the University of Washington, with 2,757. Microsoft had 1,611.

The numbers mean that the tech and retail giant’s Pantagruelian appetite for workers dwarfs that of every other employer in Seattle’s red-hot market for tech skills.

At the end of the second quarter, Amazon had 268,900 employees worldwide, a 47 percent jump from the previous year, putting it on track to surpass every other Fortune 500 company except Wal-Mart in a couple of years.

Most of the job growth is in lower-paying fields such as warehouse operations. But the local online job postings show that there are plenty of high-paying new jobs at its Seattle headquarters, too.

To be sure, every job opening doesn’t necessarily mean one extra person commuting to South Lake Union. The number of postings includes many jobs left open by Amazonians moving on to new pastures.

But of the 8,000 or so jobs currently open in Seattle, about two-thirds are newly created positions. It’s a good example of the transformative impact of Amazon in the Puget Sound region, where median salaries are being pushed up by frenzied demand for tech talent.

“I’ve been in this market for 17 years and I’ve never seen anything like this,” said Megan Slabisnki, district president in Seattle of Robert Half Technology, a unit of a global human-resources firm that does staffing and recruiting.

Slabinski said the candidate shortage in Seattle parallels that of the San Francisco Bay Area, and is among the highest worldwide.

In such an environment, a large employer like Amazon “is going to have a ripple effect,” she said.

Recent census data showed that median household incomes in Seattle topped $80,000, a nearly $10,000 jump in one year, the biggest leap among the largest U.S. cities.

Burning Glass Technologies, a recruiting consultancy, says that of the nearly 63,000 jobs open in the Seattle metro area during the past 60 days, about a fifth are in the professional-services and information fields, areas in which Amazon is a top recruiter.

Amazon’s impact goes well beyond the tech-job market.

Jacob Vigdor, a professor of public policy at the University of Washington, said that when Amazon brings new workers into Seattle, it “creates lots of cascading effects.”

“These newcomers need housing: They are part of the reason why housing prices have escalated, and why King County added over 8,000 construction jobs between 2014 and 2015,” Vigdor said. “Of course, these housing-market trends also escalate concerns about affordability and the ability of workers in lower-paid occupations to earn a living here.”

Amazon, with more than 25,000 local workers, is still far from being the largest employer in the area. Boeing employs some 75,000 people in the Puget Sound region. Microsoft employs about 44,000 here.

But a look at the cranes around downtown Seattle will show you that Amazon is indeed growing rapidly. Once all those buildings are done by the end of the decade, there will be room for a total of 55,000 people.

“We love being in the heart of Seattle — a city with exceptional technical talent,” Amazon spokeswoman Teal Pennebaker said. “We have thousands of employees who are energized by this vibrant city, empowered to think big on behalf of customers and are always looking for ways to get involved in the community, and we’re excited to hire even more talent in Seattle.”

Amazon is also making some moves that show its long-term thinking about talent acquisition.

The company on Thursday announced a $10 million donation toward the building of a new computer-science building at the University of Washington, a structure expected to help double the enrollment of UW computer science graduates. David Zapolsky, Amazon’s general counsel, told reporters that the donation was geared to helping relieve a bottleneck in the availability of talent flooding into the field.

Also, the company has lined up enough office space in Bellevue to accommodate some 2,000 employees, a location that could give it access to Eastsiders reluctant to deal with bridge traffic.

Meanwhile, as of Wednesday morning, there were 8,343 Seattle job openings listed on Amazon’s site.

That’s not even the highest on record. In June, the company was looking for 10,100 new recruits, according to the Employment Security Department’s numbers. That month the department recorded 75,374 online postings in the entire state of Washington.

A quick scan of the jobs posted yielded 185 open positions for designers, 322 in finance and accounting, 635 in technical project management and 747 in nontechnical project management. The latter included a “rule writer,” to draw up compliance rules for restricted products

Amazon was also looking for 31 economists and 3,336 software developers. To serve this ballooning army, which grows larger by the week, the company also needs 363 human-resources specialists, including dozens of recruiters.

There’s the question of who gets to fill those jobs: newcomers adding to the city’s growth or those already in the local workforce.

Brian Surratt, director of the Seattle Office of Economic Development, said in a statement that local skilled workers “are in a competitive position for jobs like those at Amazon.”

But, he added, the city acknowledges that “some people need help to prepare themselves for these opportunities,” and that’s why it’s part of a White House initiative known as TechHire, which trains and places people in tech jobs, and in which Amazon also participates.

In 2016, TechHire is expected to train and place 350 people, a number expected to grow to 2,000 people by 2020.

That’s probably not enough to satisfy Amazon’s appetite.

But it brings to light other advantages of having Amazon as a hometown giant: Its high salaries, cool factor and relocation packages help draw talent from other parts of the country that other companies here can later poach from.

That growing pool has attracted San Francisco Bay Area behemoths such as Google and Facebook to step up their presence in the region.

“Amazon is really good for the area in terms of attracting talent,” says Chris Bloomquist, a partner with local recruiting firm Viri Technology. “Many of us out here know to contact Amazonians one or two years after their start.”