Urban Politics #192: Seattle’s Homeland Security Costs

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By City Councilmember Nick Licata.

Urban Politics (UP) blends my insights and information on current public policy developments and personal experiences with the intent of helping citizens shape Seattle’s future.


Seattle’s Homeland Security Costs
A Tax Abatement Subsidy


Seattle’s Homeland Security Costs

Last year I requested that the City Auditor, with assistance from the Department of Finance, prepare the City’s first comprehensive attempt to calculate the full costs of its homeland security efforts to date (covering from September 2001 to December 2005). During that time the City of Seattle will have spent $85.5 million on homeland security activities.

City taxpayers and ratepayers funded over half total costs at $45.5 million, or 53% of the total homeland security funding. Consequently, the City relied on significant contributions from its General, Operating, and Capital Improvement (CIP) funds for these security activities. The balance of approximately 47% of the total funding for homeland security activities came from grant sources.

What is becoming obvious is that homeland security is evolving into a core City function that is a federally unfunded mandate that is impacting our overall ability to provide other city services.

This mandate has come at a time when Seattle’s General Fund (which supports general government and public safety functions), has suffered from the recession in the Puget Sound region that began in 2001. The regional recession led to declines in sales tax and solid waste utility tax revenues, as well as a significant slow-down in the growth of Business and Occupation Tax revenues. Taxes comprise approximately 86% of the revenue in the City’s General Fund, and consequently, since 2002, the City has sustained about $122 million in cuts to its General Fund, including some reductions in public safety.

The Auditor’s report identified three factors that contribute to the large share of new homeland security costs that the City has had to absorb:

1) The City’s efforts to achieve compliance with post-9/11 guidelines from the federal government, regulatory agencies, and professional organizations.

2) The costs of additional ongoing staffing for homeland security, for which there is no federal grant support.

3) The costs of physical security enhancements that have been recommended as a result of the City’s vulnerability assessments but are not funded by grants.

Meanwhile the City must also recognize the need to address sustainability issues related to its homeland security efforts including staffing costs and equipment maintenance and replacement that go beyond 2005.

The funding gap between what the Federal Government is requiring and what Seattle and other large municipalities are paying is a national problem. Urban centers, such as Seattle, face the greatest risk of terrorist attack. The federal government uses the following criteria to distribute grant funding: current threat estimates, critical assets within the urban area, and population density. These conditions are all present in major urban cities.

I will be going back to Washington D.C. this weekend to a national conference of the National League of Cities to share this information and to ask that other cities join us in lobbying Congress. The Federal Government must recognize that obtaining national security must begin by adequately funding homeland security within our largest cities, which as the government recognizes, are this nations most vulnerable targets for terrorist attacks.


A Tax Abatement Subsidy

Last year the Council passed legislation that renewed the Tax Abatement Program to encourage the construction of more low-income housing in Seattle by providing 10-year tax abatement to certain housing projects. Those projects had to be located in certain neighborhoods, provide a minimum number of low-income housing units, and be approved by the City Council.

Since then a handful of projects have been approved. The most controversial one came before the Full City Council today. It was the Alley24 Project proposed by the Vulcan Corporation on the site of the former Lillian Apartment building. Vulcan demolished the Lillian with City approval, before the current tax abatement program was approved.

The demolition of the Lillian was protested by a number of community activists because it provided 33 un-subsidized low-income rental units, occupied primarily by people working at low wages in the art and music industries. The Seattle Displacement Coalition unsuccessfully opposed the demolition on legal grounds.

The Alley24 Project will provide a total of 175 housing units in the South Lake Union (SLU) neighborhood. Thirty-five of those units will be subsidized to provide low-income housing.

First let me say that it is good that there is more housing going into SLU. More housing in the city is good. And SLU is a great location for it to go.

That said, the question is who pays for it? The City has a policy of subsidizing low-income housing, through the Housing Levy and a Tax Abatement Program. The principle is to use tax dollars to build low-income housing, not market rate housing. Government cannot do everything. So it is best to limit our subsidy to those projects that produce housing for those most in need of housing.

The first Tax Abatement Program did not extend to SLU because it was and is not an economically distressed community. But the renewal did include it. And so any developer can participate in the program, as Vulcan has in this instance. The Council would then approve a contract between a developer and the City’s Office of Housing.

If that were the end of the story on this project, I would go along and approve the contract with Vulcan.

However, there is more to the story.

The former Lillian Apartments provided 33 units, all of them with rents $500 or less. The new project would provide 35 low-income units. So one would think that is an improvement. But it is not. Because of the formula the City uses to define affordable housing, the cheapest low-income unit will be going for over $700. And the City will be subsidizing this project to the tune of a $1 million over the next 10 years.

Something is wrong with this picture. This is not a wise use of public funds and it is an example of government overextending its largess.

Vulcan’s Alley24 is a nice project. I’m glad it is being built. I just don’t want to help pay for it nor do I believe that homeowners and tenants around the City would want to subsidize it through the Tax Abatement program.

The bottom line is that there is not sufficient public benefit from this project, particularly in light of the fact that it eliminated low-income units with rents that were far lower than the publicly subsidized units being built.

Consequently, I could not support the proposed city contract with Vulcan unless the project provided greater public benefits, such as lowering the rents on their subsidized units. I was the only Council Member to make that request. Since there was no support for this change I voted against approving the contract. The vote to approve was 8 to 1.

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