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2021 Housing and Planning-Related Legislative Outcomes

This blog post summarizes several housing and planning-related bills that were passed during the most recent Washington State legislative session and signed into law by the governor. All of the bills took effect on July 25, 2021.

Housing Unit Inventory — Removing Limits

The intent of ESSB 5235 is to remove barriers that limit housing options. To accomplish this, cities, towns, code cities, and counties are prohibited from regulating or limiting the number of unrelated people who may occupy a house or other dwelling unit.

Exceptions include occupant limits on group living arrangements regulated under state law or on short-term rentals and any lawful limits on occupant load per square foot or generally applicable health and safety provisions as established by applicable building code or city ordinance. Many jurisdictions include limits on unrelated people in their family definitions within their zoning codes, so checking these definitions is a good place to start when assessing your code for compliance.

The accessory dwelling unit (ADU) provisions associated with the bill, except for a section related to definitions, were vetoed.

Emergency Shelters and Housing — Local Planning and Development

E2SHB 1220 updates the minimum requirements for the housing goal that guides comprehensive plans and development regulations. The bill requires jurisdictions that plan under the Growth Management Act (GMA) to include planning for and accommodating housing that is affordable to all economic segments of the population. To implement this goal, the following actions are now required as part of the housing element of comprehensive plans:

  • Include a statement of goals, policies, objectives, and mandatory provisions for moderate density housing options (e.g., duplexes, triplexes, and townhomes) within urban growth areas (UGAs).
  • Identify sufficient land capacity for housing, including housing for moderate-, low-, very low- and extremely low-income households; emergency housing, emergency shelters, and permanent supportive housing; and, within UGAs, consideration of duplexes, triplexes, and townhomes.
  • Make adequate provisions for existing and projected needs of all economic segments of the community, including:
    • Incorporating consideration for moderate-, low-, very low- and extremely low-income households.
    • Documenting programs and actions needed to achieve housing availability.
    • Considering housing locations in relation to employment location.
    • Considering the role of ADUs in meeting housing needs.
  • Identify local policies and regulations that result in racially disparate impacts, displacement, and exclusion in housing (e.g., disinvestment, zoning that may have a discriminatory effect, and infrastructure availability).
  • Identify and implement policies and regulations to address and begin to undo racially disparate impacts, displacement, and exclusion in housing caused by prior and current local policies, plans, and actions.
  • Identify areas at higher risk of displacement from market forces that occur with changes to development regulations and capital investments.
  • Establish anti-displacement policies, with consideration given to strategies such as the preservation of historical and cultural communities, equitable development initiatives, inclusionary zoning, and tenant protections.

Additionally, the Department of Commerce (Commerce) is required to provide an inventory and analysis of existing and projected housing needs that identifies the number of housing units necessary to manage projected growth as required in the housing element, including units for moderate- to extremely low-income households, as well as emergency housing and shelters and permanent supportive housing.

The bill also expands provisions for shelters and housing for people experiencing homelessness, as discussed in our blog post: Changing Your Zoning Code to Accommodate Housing and Shelters for the Homeless. Beginning September 30, 2021, local governments cannot prohibit emergency shelters and housing for people experiencing homelessness in certain zones, with exceptions. Optional reasonable occupancy, spacing, and intensity-of-use requirements for these uses are permitted. If you are considering including occupancy standards, you will want to make sure they also comply with ESSB 5235, which prohibits limiting the number of unrelated people who may occupy a house or other dwelling unit, with exceptions.

New ADU policies and examples designed to consider affordable housing goals were vetoed by the governor.

Affordable Housing — Tax Incentives

E2SSB 5287 makes several changes to the multi-family property tax exemption (MFTE) program to incentivize the development of multi-unit housing, including the following:

  • Creating a new 20-year property tax exemption for the creation of permanently affordable homes.
  • Creating a new 20-year property tax exemption for properties in certain cities that commit to renting at least 20% of their units to low-income households for at least 99 years if certain transit requirements are met.
  • Extending by an additional 12 years the existing eight and 12-year MFTEs that are currently set to expire if they meet certain affordability requirements.
  • Expanding eligibility to certain cities that meet statutory requirements and extending the time by which those cities may offer the 12-year exemption (until December 31, 2026).
  • Expanding eligibility to smaller counties by decreasing the required unincorporated population for qualifying counties to 170,000.

The bill also makes several administrative modifications to the MTFE program, including changes to reporting requirements.

Closed and Converted Manufactured/Mobile Home Parks — Relocation Assistance

E2SHB 1083 increases the maximum amount eligible tenants may receive in relocation assistance under Commerce’s Manufactured/Mobile Home Relocation Assistance Program. It requires tenants who receive initial cash assistance under the program to transfer title of the home to the park owner, relocate the home, or demolish and dispose of the home within 90 days in order to receive the remainder of relocation assistance. It also authorizes park owners to seek reimbursement for costs incurred for demolition and disposal of the homes when tenants do not relocate or demolish and dispose of their homes within 90 days.

Providing for an Additional Revenue Source for Eviction Prevention and Housing Stability Services

 HB 1277 establishes a $100.00 surcharge on certain recorded documents to fund various housing services. It also creates the Eviction Prevention Rental Assistance Program and requires Commerce to develop performance metrics for each county receiving funding from the surcharge and to dedicate a portion of funding to performance-based allocations.

Reducing Barriers to Condominium Construction

ESSB 5024 helps builders access more financing for condominium construction and develop condominiums at a more affordable price by allowing funds deposited for the purchase of a unit to be used for construction costs, under certain conditions. It also relieves the party holding escrow funds from the obligation to monitor the expenditure of funds and from liability to any purchaser for the release of funds for construction.

Impact Fees — Early Learning Facilities

SHB 1331 includes restrictions on early learning facility impact fees. Per the bill, which references the definition in RCW 43.31.565, early learning facilities provide regularly scheduled care for a group of children one month of age through 12 years of age for periods of less than 24 hours. Impact fees imposed on these facilities cannot exceed fees for similar commercial retail or commercial office development that generates a similar number, type, and duration of vehicle trips. Local governments may not recoup lost revenue by increasing impact fees on other developments.

The bill also allows a local government to exempt an early learning facility from up to 80% of impact fees without the local government needing to replace the impact fees from public funds other than the impact fee account. If the facility has more than one use, the property owner can only apply for exemption from the portion that is assessed as an early learning facility. A local government may also exempt an early learning facility from the full amount of impact fees without needing to replace the impact fees from public funds other than the impact fee account if the developer does the following:

  • Records a covenant requiring that at least 25% of children and families using the facility will qualify for state-subsidized childcare.
  • Provides for payment of at least a portion of an applicable impact fee if the covenant is violated or if the facility is converted to another use. Property owners must pay 20% of the impact fee and any remaining fee will be placed as a lien on the property.

Author’s note: I’d like to thank public policy interns Nick Fisher and Justin Sharer for their assistance with this post.

MRSC is a private nonprofit organization serving local governments in Washington State. Eligible government agencies in Washington State may use our free, one-on-one Ask MRSC service to get answers to legal, policy, or financial questions.

Photo of Lisa Pool

About Lisa Pool

Lisa Pool joined MRSC in June 2021. Most recently, she served as a senior planner for Bellingham. In this role, she primarily focused on long-range planning projects, including the city’s comprehensive plan and new housing regulations. Prior to moving to Bellingham, she worked on regional sustainability and transportation issues for a metropolitan planning organization and conducted development review for cities and counties in the Midwest.

Lisa holds a Bachelor of Arts in environmental policy and a Master of Urban Planning, both from the University of Kansas in Lawrence. She has been a member of the American Institute of Certified Planners since 2009.