Seattle holds public hearing on sales-tax deferral for office-to-housing conversions

Council President Sarah Nelson opened a public hearing Feb. 4 on council bill 120937, legislation that would create a new sales-and-use tax deferral to encourage conversion of underutilized commercial property into housing and add a new Chapter 5.75 to the Seattle Municipal Code.

The bill implements a program enabled by the state legislature last year (enrolled second substitute Senate Bill 6175). Councilmember Solomon, who will chair the Land Use Committee, described the bill’s purpose: “The intent of this bill is to implement a program in Seattle that would defer sales tax and use tax for projects being converted from commercial uses to residential ones with an affordable housing component.” Nelson said she introduced the bill to put a live text before the council after a committee vacancy delayed work on the topic, and said Solomon will be added as a sponsor after the hearing.

The hearing drew four in-person speakers and two remote speakers. Developers urged prompt approval, saying the deferral would make conversion projects financially feasible. Mark Angelo, managing member of Stream Real Estate, said his firm is “proposing to convert a long vacant 19 eighties vintage office building to much needed residential and affordable residential units” and that the bill “will be the trigger to make our project and many others feasible.” He told the council his project would use the Multifamily Tax Exemption (MFTE) program together with the proposed deferral so “almost 1 third of our project” would be affordable units.

Bill Ledom of Urban Renaissance Group described downtown market conditions and conversion opportunity, saying the value of some CBD office assets has fallen sharply and conversion could create housing and retail activity. Ledom said conversion could “bring as many as 100 units to an important corner in the CBD.” Ray Connell of Holland Partner Group also voiced support, saying he has four floors of office space idle for five years and that, with the bill, his firm hopes “to have residents move in by the end of the year.” Remote speaker Carlin Beasley of Stellar Holdings urged caution and said conversions can present construction and structural risks, describing experience on conversion projects in other cities.

Several public commenters urged rapid action so projects now in permitting can proceed. David Haines and another remote commenter made policy and labor-related suggestions tied to the incentive but did not propose changes to the bill text in record testimony.

Procedurally, Nelson and Solomon said the council intends to consider the bill for final action at the Feb. 11 full council meeting, though Nelson noted a vote could be delayed to address concerns raised in the hearing. No vote on council bill 120937 occurred on Feb. 4.

Why it matters: The legislation uses a new state-authorized tool (SSB 6175) to try to convert vacant or underused commercial buildings into housing that includes affordable units, aiming to speed housing production in downtown Seattle with limited direct city subsidy. Developers said timing matters for projects currently in permitting; the council set a one-week window to act but left open the possibility of delay to resolve objections.

Votes at the hearing: None — public hearing held; vote scheduled for Feb. 11, 2025.

Next steps: Council staff will docket the bill for a final vote, and Councilmember Solomon will be added as a sponsor after today’s hearing.