It’s Time to Implement Your Affordable Housing Policies

The need for affordable housing is not new. The Growth Management Act ensures that cities and counties have policies that address affordable housing. Although most jurisdictions have the required housing policies, there are still many cities and counties that have never adopted regulations that implement their stated policies.

When affordable housing developers step up to meet this need, they are sometimes frustrated by the disconnect between the adopted policies and inconsistent development regulations. For example, having policies in place that talk about reducing or waiving permitting fees and utility connections fees is encouraging. But the failure to have implementing regulations that actually allow such fee reductions and waivers can be fatal for needed affordable housing.

This post looks at how to get started on implementing regulations that provide fee relief and regulatory incentive programs (this post does not address direct funding of affordable housing projects).

What’s Required?

Jurisdictions planning under GMA must have policies that “encourage the availability of affordable housing to all economic segments of the population.” (RCW 36.70A.020(4).) Comprehensive plan housing elements must identify “sufficient land for housing, including, but not limited to, government-assisted housing, [and] housing for low-income families . . . .” (RCW 36.70A.070(2)(c).) But it’s not enough to have encouraging policies.  Adopted policies must also be implemented by development regulations. (RCW 36.70A.040(3)(d), (4)(d).) How far can a jurisdiction go to encourage affordable housing?

What Do You Have the Authority to Do?

The primary authority allowing Washington cities and counties to assist affordable housing projects is the Washington State Constitution. The “poor and infirm” are exempted from the general rule of “no gift of public funds to private entities.” Article 8, section 7 of the State Constitution provides: “No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm . . . .”  The legislature has created some specific, development-related statutes to help provide housing for low-income families.

Impact Fees. Jurisdictions that utilize impact fees have a couple of options to encourage affordable housing projects. (RCW 82.02.060.) Affordable housing can be totally exempt from impact fees, as long as the impact fees for affordable housing are paid from public funds other than impact fee accounts. A partial exemption (up to 80%) from impact fees, however, would not have to be paid from public funds – they could be paid out of the jurisdiction’s impact fee accounts. With either approach, the developer must record a covenant ensuring the property is used for affordable housing and including price restrictions and household income limits. Also, if the property is converted to a use other than affordable housing, the property owner must pay back the applicable impact fees in effect at the time of conversion.

Look at the codes of King County (KCC 21A.43.080), Kirkland (KMC 112.20(5)), and Bellingham (BMC 19.04.130, 19.06.030, 19.08.080) for examples.

GMA Affordable Housing Incentive Programs. The GMA authorizes the establishment of affordable housing incentive programs. (RCW 36.70A.540.) This provision identifies several approaches to encourage affordable housing, such as density bonuses within urban growth areas, height and bulk bonuses, fee waivers and exemptions, parking reductions, and expedited permitting. (RCW 36.70A.540.)

GMA affordable housing incentive programs must provide for the development of low-income housing units and must include income guidelines “consistent with local housing needs.” (RCW 36.70A.540(2).) The GMA provides income guidelines – for rental units, the family income should be 50% or less of county median family income; for owner occupancy units, the family income should be 80% or less for owner occupancy units. The statute allows some deviation from these income limits if necessary to address local housing market conditions. For rental units, the family income can be as high as 80% of county median family income; for owner occupancy units, the family income can be as high as 100% of county median family income. In addition, the program must include a maximum rent level or sales price for each low-income unit developed under the adopted affordable housing incentive program.

To ensure a long-term commitment to affordable housing, low-income housing units developed under an affordable housing incentive program must be used for affordable housing for at least 50 years, with an option for payments in lieu of continuing affordability. (RCW 36.70A.540(2)(e).) In other words, payments of money or property in lieu of continuing affordability can be allowed if:

• The jurisdiction determines that the payment achieves a result equal to or better than providing the affordable housing unit;
• The required payment does not exceed the approximate cost of the affordable housing unit; and
• The funds or property are used to support the development of low-income housing. This support can be through loans or grants to public or private owners or developers.

Look at the codes of Lakewood (LMC 18A.90.070), and Everett (EMC 16.72.040) for examples.

Water and Sewer Connection Charges. Water and sewer connection charges include system development charges (“SDCs”).  SDCs are intended to recover the cost of system enhancements and expansion necessary to accommodate the population. Property owners are expected to pay their equitable share of the cost of the system. (RCW 35.92.025.)

These connection charges can be substantial, potentially running several thousand dollars for a single-family home – a significant cost for any housing project. But SDCs can be waived, reduced, or deferred for affordable housing. (See RCW 35.92.380.) Any waiver, fee reduction, or deferral must be pursuant to an adopted ordinance.

Look at the codes of Puyallup (PMC 14.10.020), Bellingham (BMC 15.08.230, 15.12.170, 15.16.040), Ephrata (EMC 13.08.050), and Port Townsend (PTMC 13.03.110) for examples.

Practical Considerations

Any fee relief or development incentive program should clearly define what is meant by affordable or low-income housing. State and federal housing grant opportunities should be considered when deciding on the appropriate definition. A dialog with affordable housing advocates can be helpful here.

It’s important to decide who the decision maker will be. Some affordable housing programs include many criteria for a developer to meet to qualify for fee relief or development incentives. Having specific criteria makes it easier to have an administrative determination about whether a particular project qualifies for help. Other affordable housing programs have few criteria and the decision to help rests with the elected officials and is based on whether the project provides substantial benefit to the jurisdiction.

In areas experiencing great development pressure on limited land, development bonuses alone could provide sufficient encouragement to build affordable housing units. In other areas with more available land or less development pressure, fee waivers may be needed.

Implementing regulations should address conversion from affordable housing to other uses. This is important to discourage unnecessary conversion and to ensure cost recovery of fees for market-rate uses.

Final Thoughts

Every jurisdiction is obligated to plan for affordable housing for its low-income residents. Regulations that encourage affordable housing consistent with the needs of your community should be in place. There are many options available to implement your policies. It’s time to do it.