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Mayor, city finance, and Seattle Social Housing present $2 million bridge loan plan; city to intercept future tax revenues for repayment
Summary
City finance staff presented a proposed loan of up to $2 million to Seattle Social Housing to bridge startup operations until a new employer tax begins flowing; the loan would be repaid from future initiative-driven tax receipts and carry standard interest tied to the city's cash pool rate.
City Finance, the mayor’s office and Seattle Social Housing presented the council’s Finance committee on June 18 with a proposed bridge loan of up to $2 million to sustain the social housing developer’s startup operations until new tax revenues begin to flow.
The Social Housing Developer was created by voter-approved Initiative 135; a later voter measure (Initiative 137) established a dedicated employer tax on compensation above $1 million to fund the developer. Staff told the committee the Initiative 137 tax revenues are expected to be significant—staff referenced an early projection of roughly $50,000,000 per year—but the first collections will not arrive until early 2026. The developer needs interim funding to continue minimal operations and to prepare for full-scale development and program work.
Jamie Carnell, Director of City Finance, explained the proposed mechanism: the city would loan up to $2,000,000 from its consolidated cash pool to the Public Development Authority (PDA), with interest at the city’s consolidated cash flow rate (stated as approximately 3.65 percent at the briefing). The loan would be drawn in disbursements and the city would intercept Initiative 137 tax receipts as they are collected to repay principal and interest. The loan maturity date in the draft agreement is Dec. 1, 2026 to allow a cushion after first-quarter 2026 receipts begin.
Jen Lebrecht of Council Central Staff said her analysis found the PDA will need bridge funding to maintain even a minimal operation through the second half of 2025 and prepare for expanded operations in 2026. Council President Nelson said she supports the loan and emphasized the need to set the PDA up for success. Roberto Jimenez, CEO of Seattle Social Housing, said he welcomed the city’s support and noted planned development opportunities and coordination with council offices.
Central staff and the administration said the legislation authorizing the loan agreement was transmitted to the committee on June 18; the committee planned to take up the request again on July 2 for a vote, pending follow-up questions and any additional materials councilmembers request.
Key terms presented to the committee included a not-to-exceed loan amount of $2,000,000, interest charged at the city’s consolidated cash flow rate (approximately 3.65% at the briefing), disbursed in draws, automatic repayment by intercepting Initiative 137 tax proceeds when collected, and a loan maturity of Dec. 1, 2026. Staff characterized the city loan as the most efficient interim financial mechanism to bridge startup operations until dedicated tax revenues are collected.
Committee members asked about financial mechanics and governance; members asked to meet one-on-one with Seattle Social Housing leadership and requested additional information. No vote was taken June 18; the committee scheduled the loan ordinance and agreement for consideration at a follow-up meeting after members review materials and meet with administration and PDA staff.
The committee emphasized the goal of minimizing risk to city finances while enabling the PDA to stand up operations consistent with voter-approved initiatives. Staff said they will return with any additional answers and the finalized loan agreement as legislation moves forward.
