Seattle: Construction Phase Economics#

The Summit cost $1.9 billion to build (some sources report $2 billion). This page tracks where that money went — not as a line item on the PFD’s balance sheet (see Finance), but as economic activity flowing through multiple jurisdictions during 2018–2023.

Project Summary#

Major Subcontractors#

Workforce#

Labor Cost Estimate#

Industry typical labor share for complex commercial construction: 35–40% of hard costs.

Blended annual compensation of ~$165K reflects prevailing wage total package (base wage + health/welfare + pension + vacation + training fund) at ~$75–85/hr across all trades, at 2,080 hours/year. Cross-check: 3,400–4,600 worker-years over 5 years = 700–900 average FTEs, with turnover producing 6,000+ unique workers. Consistent with reported peak staffing.

Prevailing Wage Rates (King County, Building Construction)#

Washington’s prevailing wage (RCW 39.12) is set from collective bargaining agreements. In King County, prevailing wage ≈ union scale. Approximate journeyman total package rates (2022–2023):

Note: Total package is typically 1.5–2x base hourly wage due to fringe benefits. Prevailing wage in King County shows minimal premium over union market rates, but represents a 20–30% premium over non-union base wages, with a larger gap in benefits.

• Retrieve exact historical rates from LNI wage lookup (JavaScript app, requires manual browser access)
• File public records request with WSCC PFD for prevailing wage intent/affidavit filings showing actual hours and rates by trade

Diversity and Local Hire#

Community Benefits#

• ~$93M in total community benefits (EMMA/bond docs figure; wsccaddition.com reported $39.3M in direct contributions — discrepancy may reflect different scopes of what’s counted)
• $30M for affordable housing (described as largest such payment from a single project)
• Workforce development partners: ANEW, PACE, Youthbuild, What’s Next Washington, Ethnic Chamber Coalition, Tabor 100, NAMC, The Black Collective, NAWIC

Economic Impact Claims and Methodology#

Who Produced the Studies#

WSCC’s Published Claims (Operations Phase)#

• 3,900–4,000 direct and indirect permanent jobs
• $240–260M annually in new visitor spending
• $19M in annual sales tax revenue to state and local governments

Source: WSCC Economic Benefits page, ECONorthwest analysis

What’s Not Published#

• No methodology disclosed. WSCC does not publicly identify what model was used (IMPLAN, RIMS II, or other), what multipliers were applied, or what study area boundary was used (“Greater Seattle region” is the only geographic reference).
• No construction-phase multiplier analysis is publicly available. The 6,000+ jobs figure appears to be a count of unique workers, not a modeled economic impact.
• No post-construction actuals comparison. Nobody has published a study comparing the projected economic impact to what actually happened. This is typical — construction impact claims are essentially unfalsifiable because no one goes back to measure.

Published Multiplier Benchmarks#

Applied to the Summit at county-level multipliers (1.5–2.0x): $1.9B in direct spending would generate $2.85B–$3.8B in total economic activity.

At the national multiplier (2.95x): $5.6B — but this overstates county-level impact because it counts recirculation that leaks outside the region.

Criticism of the Methodology#

Heywood Sanders, Brookings Institution (2005): Convention center feasibility studies are “consistently flawed and misleading.” Reviewed 30+ cities. “Getting half the business [projected] is about the norm.”

Key methodological limitations of IMPLAN for construction:

• No supply constraints — assumes unlimited labor and materials. During Summit construction (2018–2022), Seattle construction labor was severely constrained.
• No opportunity cost — does not ask what else $1.9B could have funded.
• No displacement — does not account for the Summit bidding up wages and pulling workers from other projects.
• Fixed prices — no wage inflation from labor competition. Construction costs rose dramatically during this period.
• Boundary choice is political — a Seattle-only study shows massive leakage; a state study captures most activity. The multiplier number changes with the line you draw.

Sources: Brookings — Space Available (2005), John Locke Foundation — Economic Impact Studies: The Missing Ingredient Is Economics, IMPLAN Key Assumptions

Direct Spending: Materials and Supply Chain#

Industry typical materials share: 45–55% of construction cost. For a $1.6B hard cost, approximately $720M–$880M in materials. Local retention varies significantly by category — concrete stays local, steel and specialty systems do not.

Tax Capture by Jurisdiction#

Each level of government takes a different slice. Total estimated capture: ~$267M — roughly 14% of the $1.9B project cost.

Critical Finding: No Sales Tax Exemption#

PFDs in Washington are not exempt from sales tax on construction. And Washington taxes construction on the entire contract price — labor, materials, profit, overhead, subcontractor charges. No deduction for labor. This is fundamentally different from many other states and makes the tax capture much larger than a materials-only calculation would suggest.

(The only PFD sales tax deferral in Washington law — RCW 36.100.090 — was written exclusively for retractable-roof baseball stadiums. It does not apply to convention centers.)

Sales Tax (~$193M)#

Combined Seattle rate during construction: ~10.1–10.25% (weighted average ~10.15%).

WSCC’s own claim of “$100M+ in construction sales tax” likely referred to the local share only, or used an earlier, lower cost estimate.

B&O Tax (~$17M)#

The prime contractor pays WA State B&O (Retailing classification, 0.471%) on the full gross contract price. Seattle levies its own city B&O (0.427%). Subcontractor stacking adds additional B&O across all tiers.

Note: Government Contracting B&O rate (0.484%) does not apply — that classification is limited to federal and housing authority projects.

L&I / Workers’ Compensation (~$48M)#

Washington has a monopolistic state fund (no private carriers). Rates are per hour worked, varying by trade risk class.

Split roughly 50/50 between employer and employee portions. Entire amount flows to WA State L&I.

Seattle Permits and Fees (~$9M)#

Summary by Level of Government#

Washington has no income tax. The largest channel — construction workers’ earnings (~$665M) — generates zero direct state/local tax revenue. Benefits flow into consumption taxes wherever workers spend.

Sources: DOR Construction Tax Matrix, MRSC — Sales Taxes in Public Works Contracts, Seattle Tax Rates

Geographic Distribution#

The construction multiplier distributes benefits regionally:

• Seattle: hosts the building, bears the debt (7% lodging tax), absorbs operating losses, collects permit fees and city sales tax share during construction
• King County: construction workers live here (South King, Eastside), collects county sales tax share, receives 2.8% extended lodging tax — no operating cost exposure
• WA State: collects B&O and sales tax during construction, provides backstop guarantee (expires 2029)

The costs concentrate in one institution (WSCC PFD) funded primarily by one tax (Seattle 7% lodging). The benefits distributed across the region during the construction phase.

• Where do construction workers live? Commute pattern data for King County building trades

The $300M Overrun#

The Summit came in ~$300M over its $1.6B budget. Contributing factors:

• COVID-19 (2020–2021): lodging tax revenue dropped 60%, nearly stalling the project mid-construction. Required $342M in additional bonds (spring 2021) and a proposed $100M King County loan.
• American Bridge steel dispute: federal court found American Bridge “solely responsible” for months of delay
• 2022 concrete strike (Teamsters): ~200 worker layoffs, further delays

Construction Disruptions Timeline#

Key Documents (for manual retrieval)#

Sources#

• Clark Construction — WSCC Addition
• Lease Crutcher Lewis — Summit Addition
• LMN Architects — WSCC Addition
• MacDonald-Miller — Summit Building
• Enclos — Summit Building
• DJC — Reimagining Jobsite Diversity at Summit
• wsccaddition.com — Community Benefits (archived)
• wsccaddition.com — Economic Benefits (archived)
• wsccaddition.com — Diversity & Inclusion (archived)
• SCC — Our Impact
• WSCC PFD 2018 Bond Official Statement — EMMA
• WSCC PFD Audited Financial Statements FY2024 — seattlecc.com
• Washington L&I Prevailing Wage Rates — lni.wa.gov
• RCW 39.12 — Prevailing Wages on Public Works
• NAIOP — Economic Impacts of CRE 2025
• Brookings — Space Available (Sanders, 2005)
• Pioneer Institute — Flawed Forecasts (1999)
• IMPLAN Key Assumptions
• Seattle Times — $2B Convention Center Opens
• AGC/PNWRCC 2021–2024 Agreement

Page created 2026-03-31. Research in progress — checklist items track what’s needed.