Affordable Housing Legislative Round-Up

During the 2018-2019 session the legislature passed several bills addressing affordable housing issues, ranging from revenue-generating opportunities for local governments to encouraging higher residential densities in urban areas. This activity, in addition to legislation passed last year, signals lawmakers’ continued interest in addressing the problem of housing affordability in Washington State. This blog post will briefly summarize these bills.

Revenue Opportunities

The legislature passed two bills and made a greater investment in the Housing Trust Fund, which will provide more opportunities for local governments to address affordable housing issues.

SHB 1406: State/Local Sales Tax Revenue Sharing

HB 1406 creates a sales tax revenue sharing program that allows cities and counties to access a portion of state sales tax revenue to make local investments in affordable housing. Over a 20-year commitment, the state will be sharing more than $500 million with local governments. To take advantage of this funding source, cities and counties must pass a resolution of intent by January 31, 2020 and adopt a tax ordinance by July 27, 2020. See this article by Carl Schroeder and Shannon McClelland from the Association of Washington Cities (AWC) for more information on the actions required by local governments.

There is broad discretion in how these funds can be expended as long as actions target housing and programs serving those below 60% median income.

EHB 1219: Use of REET 2 Revenues for Affordable Housing and Homelessness

EHB 1219 authorizes counties and cities to use certain real estate excise tax (REET 2) revenue for facilities serving the homeless and for affordable housing projects until January 1, 2026. For more information on this bill, see this blog post by MRSC Finance Consultant Toni Nelson.

Significant Investment in Housing Trust Fund

The legislature invested $175 million in the Housing Trust Fund. Local governments are eligible recipients of money from this fund.

Planning Opportunities

The legislature passed three bills that should impact the overall make-up of the housing stock in the state, as well as a bill related to affordable housing development on property owned by religious organizations.

E2SHB 1923: Incentives to Increase Residential Density in Cities

HB 1923 is intended to incentivize cities to take actions to increase the variety of housing types available and to increase urban residential density. Cities can obtain planning grants from the state if they commit to taking specified planning actions or developing Housing Action Plans consistent with the legislation.

The law exempts certain non-project actions taken pursuant to the new law from appeal under the State Environmental Policy Act (SEPA) or the Growth Management Act (GMA) but only if completed prior to April 1, 2021. For more details on the new law and timelines associated with it, see this AWC article.

ESSB 5383: Authorizing Tiny House Communities

Through ESSB 5383, the legislature authorized tiny house communities throughout the state. I recently wrote this blog post providing an overview of the tiny house bill and suggesting next steps for local governments.

In summary, the legislation directs the state building code council to adopt building code standards for tiny houses. The new law amends the binding site plan provisions in Chapter 58.17 RCW to allow the use of binding site plans for tiny house communities. The bill also defines tiny houses on wheels so they do not need to be lumped into the category of a recreational vehicle, which typically cannot be used for permanent dwellings. The new law also gives local governments the option of adopting an ordinance to regulate the siting of tiny house communities.

SB 5334: Condominium Act Reform

While SB 5334 is not so much planning related, amendments to the 1989 Condominium Act should significantly change market conditions for condominium development. Condominium construction had slowed to a trickle in many areas throughout the state due to the prevalence of construction defect lawsuits under the old law.

The new legislation changes the implied warranties associated with condominium development, so there should be fewer lawsuits and it should become more economically viable for developers to construct condos. See this article from The Columbian for a good overview of how the new law should impact the condominium market.

SB 1377: Density Bonuses for Affordable Housing on Religious Organization Property

Under SB 1377, certain cities and all cities and counties planning under the GMA must allow an increased density bonus for affordable housing development (either single-family or multifamily) on property owned or controlled by a religious organization, provided certain conditions are met. The housing must be affordable to households earning less than 80% of the area median income and must remain affordable for at least 50 years—regardless of whether the religious organization continues to own the property.

Conclusion

Local governments can play an important role in both planning for and providing affordable housing. These new laws add to the tools in the toolbox. For more information, check out the following resources:

• Affordable Housing, MRSC
• Homelessness and Housing Toolkit for Cities, MRSC & AWC
• HOME Program, Washington State Department of Commerce
• Washington Low Income Housing Alliance
• Housing and Urbanism, Sightline Institute
• Vision 2050 Housing Background Paper, Puget Sound Regional Council