This week’s Newsmaker Interview is with regional community leader Kevin Wallace. As President of Wallace Properties and a former two-term Bellevue City Councilmember, Kevin works on a variety of issues that impact the Eastside and the region. In his interview with Shift, Kevin shares with us his impressions from his recent visit to CHAZ, the protest/riot in Bellevue, Seattle’s attack on employers, homelessness on the Eastside, and his future political plans.
Last weekend you visited the CHOP (formally the CHAZ). What impressions were you left with following this experience?
It’s appalling the city allowed the takeover to happen, and it needs to come to an end. The intentional breakdown of the government’s ability to maintain order is going to burn an indelible memory into the minds of Seattle’s residents, employers, employees, visitors, police and criminals. The impacts of the decision to handcuff the police will be long lasting, and I’m concerned about the morale at SPD and the City’s ability to maintain law and order going forward.
At the same time, from what I saw during my afternoon visit, it’s closer to the Durkan “summer of love” version than the version presented by the national media. It’s more hippie commune than Antifa. Volunteers are working like crazy to make it all happen, staffing co-ops and making food to give away. For the thousands of people, there’s very little garbage on the ground. The volunteers are picking it up and the Parks Department is hauling it away and have also provided portable toilets. SPD is now undercover instead of in uniform. So, it’s not a complete breakdown, and not more unsafe than Capitol Hill is normally, at least for a daytime visit where you just observe and don’t provoke. I encourage people to go down and take a look. Media, especially the national media, present a distorted view of the world, and where possible it’s better to go see it for yourself.
Regional events have raised the rhetoric towards employers even higher in Seattle. Do you believe this will impact the region’s economy and will there be any benefits for Bellevue, or will the impact be felt throughout the Puget Sound area?
The actions of the Seattle City Council toward Amazon should be concerning to everyone. Our region is not bullet-proof, and it’s a lot easier for Amazon to relocate than Boeing. Bellevue has already been blessed with the fallout of the Seattle head-tax debacle. Amazon now plans to create 15,000 jobs in Bellevue. This would make Amazon’s headcount in Bellevue triple the size of the next-largest Bellevue company, T-Mobile, and Amazon didn’t have a single employee in Bellevue three years ago. But Bellevue is not large enough to handle the 50,000 jobs that exist in Seattle, and if Amazon were to relocate its Seattle headquarters it would be crippling for the entire region. This is a key reason why the Governor and Legislature need to standardize business regulation and taxation state-wide, and provide more highway infrastructure in the Puget Sound region.
Bellevue Square was significantly vandalized during the protests/riots that took place a few weeks ago. How will this impact the city?
The riots and looting on May 31 were a loss of innocence for Bellevue. Nothing like that happened in our city before, and the people of Bellevue need to work together to make sure it never happens again. After conversations with the Mayor and the Chief of Police, I believe the police were overwhelmed because Mutual Aid and the National Guard did not arrive until it was too late, and in one case did not arrive at all. Bellevue’s on-duty police force maxes out at around 100. There were thousands of protesters, and intermixed with them were hundreds of looters, some of which were organized and trained. Outmanned, BPD had to make choices, and the choice to protect lives over property was the right decision. I believe that even though one of my family’s properties was looted. Things could have gone much worse, and we’re all fortunate that the damage was limited to destroyed property, nothing burned, and there was no loss of life. I’m not trying to absolve the Police Department, but rather to explain what I believe was the key failure. BPD needs to examine why it was unable to summon help in a timely manner, and put measures in place to prevent that failure from happening again.
Going forward this can be a positive learning experience for Bellevue, where our police force gets stronger, and the City becomes even safer than before. It can also be a negative, where businesses and residents feel less safe, we have a loss of morale at the Police Department, and we have an increase in crime. Things are not heading in a great direction right now. Rather than focusing on how to make BPD stronger, the Council has chosen to focus on re-examining police procedures, creating the implication that the Bellevue Police are enforcing the law in a racist manner. This implication is unwarranted. BPD takes racial issues very seriously, and has for many years. The Council needs to tread carefully, to stand with the men and women of the Bellevue Police Department, and to ensure that public safety remains the highest priority of city government in Bellevue. In addition, City leadership, BPD, Downtown businesses, residents and property owners need to work together to make the Downtown even more safe than it was before. We need to put measures in place to prevent the rioting and looting from happening again, and plan for the possibility that it does so we’re better prepared to respond.
Now is the time for bold leadership by the Council, the City Manager and the Chief of Police, and for the people of Bellevue to support them and encourage them to be bold. We need to stand together to ensure that the events of May 31 never happen again in Bellevue. If we do, the City will maintain its reputation as a safe place to live, work and visit, and the men and women of the Bellevue Police Department will continue to be proud to protect us, and even better equipped, trained and prepared to do so.
You have been involved in providing shelter for Eastside homeless individuals. What is the status of the Congregation for the Homeless shelter?
CFH provides the only overnight shelter for men in East King County, and until six months ago they only operated it during the winter. On May 1 of each year they would close their doors to the men they were serving at the time. There was no help to get the men relocated, and many of them were likely moving into the woods on the Eastside.
CFH is a well-run organization that is focused on getting homeless men back on their feet, as opposed to enabling them to be homeless. As homelessness continued to grow throughout the County and in Bellevue it became clear to me that CFH needed to get to year-round operation. In addition, the Ninth Circuit court issued a decision that cities can’t arrest or fine people for sleeping on sidewalks or in parks unless the cities can point to a shelter where those people can go.
Last year I led a group of businesses to raise $800,000 to get the shelter to year-round operation. It was a collaboration between private business, the city of Bellevue and Congregations for the Homeless. The facility opened to year-round operation within weeks of the Covid outbreak, and had we not done the work we would have had a hundred homeless men with no place to go during the pandemic.
Going forward I’m still working with CFH to design and build a new facility that will do an even better job of getting men out of homelessness, and I’m working on a plan to unite Eastside cities, businesses and service providers in an effort to achieve functional zero homelessness on the Eastside. I believe we can do it if we work together.
In 2019, the Washington Legislature passed the highest tax in the country on the Real Estate Excise Tax (REET) that came into effect on January 1, 2020. In the first four months of 2020 there has been a significant reduction in the number of sales that have taken place compared to last year (from $5.6 billion in 2019 in the Puget Sound region to $2.0 billion this year). The COVID-19 outbreak has caused part of the decline, but 2020 sales were down considerably even before the economy shut down. From your perspective, how has REET increase impacted the real estate market and has it impacted the revenue cities collect from real estate transactions?
Covid makes it impossible to isolate the negative impacts of the tax increase on apartments and other types of commercial real estate (CRE), but through the first four months of this year, the drop off in sales, and REET revenue, has been severe. As compared to the same period last year, there has been a 64% reduction in sales of CRE by dollar amount, but only a 27% drop in the number of transactions. This means lower priced properties are selling, and lower priced properties are less impacted by the graduated REET. Cities in the Puget Sound region collect a flat 1/2% REET. They are required to apply half of the tax to parks and half to transportation. Due to the drastic drop in sales volume the Puget Sound cities have lost $18 million in REET through only four months. We’ll need more time and data to understand the severity of the impacts of the state’s tax increase, but so far it looks like things are playing out predictably: an unwarranted financial burden on affordable housing, city parks, roads and sidewalks.
Since your retirement from the Bellevue City Council, your name often gets mentioned as a possible candidate for higher office. Can you see yourself ever jumping back into public service?
The eight years I spent on the Bellevue City Council were incredibly valuable to me. I was able to play a meaningful role in helping the City dig out of the Great Recession without raising taxes, to fund hundreds of millions in new infrastructure without raising taxes and to negotiate a deal with Sound Transit that protected Bellevue’s residents and businesses from the impacts of the light rail train, while at the same time providing a light rail system that worked well for the region. I left the City in great shape. We had laid the foundation for the entry of Amazon, and our City property taxes were the lowest of any major city in the State. While Covid has caused financial stress, the City is still in great shape today, and poised to recover and become even stronger. In addition to the homelessness effort discussed above, I still work with the City through the Bellevue Chamber, and I enjoy that a lot. We’ve aligned the Bellevue Chamber and the City on transportation plans, and are working together to improve the ability to build affordable housing and other buildings in Bellevue.
A key reason for taking a break from politics was my kids. When I left the Council they were 11 and 16. Now I have one in college and one heading to high school. It won’t be long before my wife and I are empty-nesters, and at that point I’d love to take another look at elected office. Until then I enjoy helping other business-minded people run for office and win, so if you’re interested in making a run please look me up.