New Bill Provides Incentives for Washington Cities to Increase Residential Capacity

Most people would agree that affordable housing is a major issue throughout the state of Washington. There is much less agreement, however, on what is needed to address this problem. Recognizing this quandary, the Washington Legislature passed a bill (E2SHB 1923) to help address the affordable housing issue, which was signed by the Governor and takes effect on July 28, 2019 (with one provision that became effective on July 1, 2019).

While it doesn’t have the mandates included in the original version, E2SHB 1923 is intended to encourage more residential development capacity and increase local governments’ emphasis on affordable housing by providing both monetary and non-monetary incentives to do so. The bill focuses primarily on cities with populations of more than 20,000, with those cities needing to take formal action — as outlined in the bill — by April 1, 2021, in order to participate.

Why Your City Should Participate

E2SHB 1923 outlines two major incentives to induce cities to participate; funding and protection against State Environmental Policy Act (SEPA) and/or Growth Management Act (GMA) appeals in certain cases.

Planning grants

Eligible cities may receive up to $100,000 in grant funds from the Washington Department of Commerce if they commit to adopting at least two actions that are intended to increase local residential capacity (which are summarized in this blog post) or if they develop a Housing Action Plan. Again, cities will need to act by April 1, 2021. Applications for the grant funds will be available in mid-August and right now are expected to be due by September 30, 2019!

Protection against SEPA and GMA appeals in certain cases

Cities adopting the actions specified in the new law (except for adoption of a subarea plan) will not be subject to SEPA appeal. The same protection applies to GMA-related appeals to the Growth Management Hearings Boards for any comprehensive plan amendments or development regulations related to the 12 regulatory actions listed in E2SHB 1923. Both provisions apply to relevant actions taken between July 28, 2019 and April 1, 2021.

What Your City Must Do to Participate

Cities are eligible for the planning grants and “safe harbor” appeal provisions described above if they adopt two or more of twelve actions listed in the legislation, and which can be broken into Local Regulatory Changes (nine total) and/or SEPA-Related Changes (three total).

Local regulatory changes

1. Increase development capacity to 50 units per acre or more near commuter or light rail stations (for a designated area of at least 500 acres).
2. Increase development capacity to 25 units per acre or more near high frequency bus stops (for a designated area of either: 250+ acres for cities with less than 40,000 population or 500+ acres for cities with populations over 40,000).
3. Allow a duplex, triplex, or courtyard apartment on all parcels in a zoning district where single-family homes are permitted.
4. Allow cluster zoning or lot size averaging in all zoning districts where single-family homes are permitted.
5. Expand allowances for accessory dwelling units (ADUs) with specific code provisions that extend beyond what is currently required by Washington State law.
6. Establish a form-based code.
7. Allow a duplex on all corner lots in single-family zones.
8. Establish the optional maximum thresholds under the short subdivision process.
9. Establish a minimum net density of six dwelling units per acre.

SEPA-related changes

1. Develop and adopt a subarea plan, using the “planned action” provisions, for an area that is designed as a mixed-use or urban center or leverages proximity to a major transit stop, transit infrastructure, or regional center.
2. Develop and adopt a SEPA planned action that includes residential or mixed-use development.
3. Use the SEPA infill exemption authority to increase categorical exemption thresholds for residential, mixed-use, or commercial development in areas that do not meet the planned density.

A local government needs to commit to adopting at least two of the items listed above by April 1, 2021 in order to participate in the grant program.

Housing Action Plan: Another Eligible Activity

A city that that develops and adopts a Housing Action Plan may also apply for a state grant. Such a plan must “encourage construction of additional affordable and market rate housing in a greater variety of housing types and at prices that are accessible to a greater variety of incomes” and should undertake the following tasks:

• Quantify existing and project housing needs for all income levels;
• Develop strategies to increase the supply of housing and variety of housing types;
• Analyze population and employment trends, with documentation of projections;
• Consider strategies to minimize displacement of low-income residents;
• Review and evaluate the current element adopted pursuant to RCW 36.70A.070;
• Provide for broad participation and input from all interested parties; and
• Include a schedule of implementation programs and actions.

Other Notable Aspects of the Bill

The bill provides several useful definitions related to housing costs. The term “affordable housing” is clearly defined as “residential housing whose monthly costs, including utilities other than telephone, do not exceed 30% of the monthly income of a household,” and then it draws clear distinctions between renters and homeowners. For rental housing, the targeted monthly income level is defined as 60% of the county median household income, adjusted for household size. For owner-occupied housing, the level is 80% of the county median household income once adjusted for household size.

In addition, there are specific percentages for what constitutes low, very low, and extremely low-income households, as the table below demonstrates:

E2SHB 1923 also contains a number of other provisions, including:

• A reduction in local residential parking requirements for developments with good transit service that house very low-income or extremely low-income households, seniors, or people with disabilities;
• An exemption from SEPA appeals related to transportation impacts for residential and mixed-use developments;
• A ban on prohibiting “permanent supportive housing” in areas where multi-family housing is allowed; and
• For cities with a population greater than 5,000, a SEPA appeal exemption for developments that sets aside or requires the low-income household occupancy of at least 10% of its dwelling units.

For more details about E2SHB 1923 and the associated state grant program, please read the Increasing Residential Building Capacity - E2SHB 1923 Grant Opportunity Overview, which was prepared by the Washington State Department of Commerce’s Growth Management Services-Local Government Division.