Tackling the Housing Crisis Takes Center Stage in Olympia

It’s well known that Washington and the Puget Sound in particular have a housing crisis, especially when it comes to attaining affordable housing. Several housing-related bill have been newly filed in the state legislature. Prominent ones include increasing the minimum density of residential areas in cities and counties planning under the Growth Management Act, eliminating the state prohibition on rent control, and expanding property tax exemptions to preserve and incentivize multifamily housing construction.

It bears mentioning that some of the bills include policy to exempt payment of impact fees, which runs contrary to proper and sustainable planning practice and shows a lack of understanding of land economics. Nevertheless, the new bills on the whole indicate a positive step toward facilitating more housing production and creating affordable housing.

A Dozen New, Key Housing Bills

New bills to watch include:

• HB 2364 would increase the Housing Finance Commission’s debt limit from $6 billion to $8 billion allowing more financing in the state of below-market-rate housing unit construction. Additional types of organizations such as public development authorities would also be eligible for financing under the Nonprofit Facilities Program.
• HB 2382 would modify property surplus policy for state agencies. Through 2029, several state agencies subject to the law would be required to pay 10% of all proceeds from land sales to the Housing Trust Fund, through 2029. All state agencies would be required to notify state, local, federal and tribal entities of any sale of surplus state lands so that the property could be sold to any such entities at a fair price first. The law would also permit state and local agencies to surplus property any entity public or private for at no cost.
• HB 2437 would allow counties and cities to impose additional sales and use taxes up to 0.25% (or 0.5% if the area is considered “distressed“) to fund acquisition, rehabilitation, maintenance, operation, and construction of affordable housing or provide rental assistance. Counties would have the first crack at imposing such taxes, though cities could begin to if their respective county has not by July 1, 2020, or in the case of cities in King County beginning on July 1, 2021. The option to impose the taxes would expire in July 1, 2023 if a city or county has not done so.
• HB 2444 would exempt the sale of qualifying low-income housing developments from Real Estate Excise Taxes. It would also apply retroactively.
• HB 2538 would allow local jurisdictions to exempt low-income housing projects fully from impact fees, including shelters that provide emergency housing for people experiencing homelessness. A similar bill in the Senate, SB 6294, would achieve the same effect but also include emergency shelters for victims of domestic abuse in the exemption.
• HB 2578 would prohibit landlords from engaging in source of income (e.g., Social Security, Supplemental Security Income, and other rental housing assistance) discrimination against prospective or current tenants. It would also give legal recourse to sue in the event of such discrimination and provide a compensation measure by the state for private landlords if certain tenants cause significant damage to a unit. The bill is similar to last year’s HB 1633.
• HB 2583 would fully abolish the state’s ban on local municipalities regulating residential rent.
• HB 2607 would further promote multifamily housing development–in particular affordable housing–in urban centers of cities and unincorporated areas by expanding the option for time-limited property tax exemptions. This would specifically be allowed in such areas located in counties that are trying to promote transit supportive densities and efficient land uses patterns near transit corridors.
• HB 2711 would allow designation of “housing opportunity zones” by the Washington State Department of Commerce upon request of local jurisdictions. To qualify, a local jurisdiction would need to submit a map of land to be designated within a half-mile of a major transit stop (e.g., light rail, commuter rail, intercity rail, or bus rapid transit) and identify no less than 90% of properties within such radius to be subject to the program. By right, all land in such designated areas would be authorized for residential use. In Seattle, minimum building height allowances in such zones would need to be 200 feet within a half-mile and 550 feet within a quarter-mile of the major transit stop. Medium and small sized cities would have substantially lesser minimum height allowance requirements. Additionally, the bill would allow all participating cities to apply a multifamily tax exemption, require that nearly all impact fees and linkage fees be waived, and provide temporary compensation for lost impact fees through 2023.
• SB 6077 would set a minimum density standard of no less than six dwelling units per acre for areas designated as residential in an Urban Growth Area.
• SB 6347 would widely expand the multifamily tax exemption allowed under state to all cities and towns through 2028. Other existing criteria for designating an area eligible for the tax exemption would remain.

Five Key Housing Bills from 2017

Other key bills brought back from the 2017 legislative session now in committee include:

• SHB 1532 would clarify that property tax exemptions given for nonprofit homeownership development must be tied to land being leased for 99 years or longer to low-income households in order to qualify for the exemption.
• ESHB 1570 would make numerous structural changes to homeless housing and assistance planning, reporting, funding, and services.
• HB 1752 would require the Affordable Housing Advisory Board to study and report on how surplus public property could be used for affordable housing development.
• HB 1987 would restrict the ability of cities and counties to discourage affordable housing development on properties owned by religious institutions in urban areas if proposed housing would be provided as affordable. Such institutions could double the density of housing development otherwise allowed under land use codes.
• SB 5182 would allow cities and counties to establish a property tax exemption to preserve existing affordable housing for very low-income households. The exemption could be broadly applied, including to single-family homes and accessory dwelling units, for up to 15 consecutive years to a specific property.

The Washington State Legislature has 60 days in this short legislative session. It’s unlikely that all of these will be adopted, but many of them would go a long way toward lessening the impacts of the housing crisis.