Olympia Passes Housing Bills Advancing Cross Laminated Timber, Homeless Funding, and WSCC Lodging Tax

Housing policy was a big issue during the 2018 legislative session in Olympia. Washington legislators considered dozens of housing-related bills, including bills to end to the state’s ban on residential rent regulation, require additional notice time to terminate a tenant’s lease agreement, and create a property tax exemption for voluntary preservation of existing affordable housing units. Those bills didn’t make it out of the legislature this year. Many others did, however, including the following:

• Senate Bill 5450 directs the State Building Code Council to adopt rules for the use of cross-laminated timber products in residential and commercial development. The direction is general by not prescribing any specific methods, but adoption of such rules will need to be a consideration in promulgating building standards for the state.
• House Bill 1085 allows cities and counties to eliminate or reduce minimum floor space requirements for detached single-family homes. The State Building Code Council prescribes minimums. For instance, the state-adopted 2015 version of the International Residential Code prescribes a minimum of 70 square feet and no dimension less than 7 feet wide for habitable bedrooms.
• House Bill 2015 allows the Washington State Convention Center (WSCC) to apply the King County lodging tax (7% in Seattle, 2.8% elsewhere in the county, in addition to state and local sales and use taxes) on all lodging uses, including hotels and motels with fewer than 60 units, except in four instances. The tax won’t be applicable to lodging uses in a town with less than 300 residents, any hostels, or lodging uses associated with University of Washington Medicine. The tax will also apply to short-term vacation rentals, except in Seattle where a tax was recently imposed. Seattle is allowed to repeal its short-term vacation rental tax and defer to the Washington State Convention Center to impose a tax instead. In exchange for this, the tax collected in the city would be distributed back to the city in full and must be used for the Equitable Development Initiative and affordable housing programs program. King County is also eligible to receive additional funding under the expanded lodging tax. Seemingly this bill closes a funding gap for the WSCC Addition making it full steam ahead for the $1.6 billion-dollar project and its $83 million in public benefits.

• House Bill 1570 addresses housing and assistance for homeless people in several ways. Firstly, it increases the recording fee on documents like deeds and plats from $40 to $62 and makes it permanent. $10 from the document recording fee is dedicated to homeless housing and assistance programs and plans in counties. Counties can also use proceeds from the document recording feet to pay off bonds used for homeless housing. Several other policy changes are addressed by the bill, such as requiring state and local homeless housing plans to be updated every five years instead of every 10 years and establishing more specific analysis, data collection, planning, and implementation methods for the state homeless housing strategic plan and local plans.
• House Bill 2538 makes all buildings and structures that provide emergency shelter for victims of domestic abuse or people experiencing homelessness exempt from impact fees such as parks and road impact mitigation fees.
• Senate Bill 6371 increases the Housing Finance Commission debt limit by $2 billion to a total of $8 billion. Debt from the commission is used to help finance housing construction, particularly lower-income housing throughout the state. The bill also modifies the Nonprofit Facilities Program by expanding eligible organizations for low-cost financing to include public development authorities and local governments, local housing authorities, and federally recognized Indian tribes in the state.
• Senate Bill 5143 modifies statute on property tax exemptions for nonprofit housing entities like community land trusts that sale or lease land to lower-income households. The bill specifies that a property tax exemption may be available to the nonprofit developer prior to development and sale of property that will be developed with single-family dwelling units to be lease for at least 99 years or life of the structure to low-income households. The property tax exemption is available up to 10 years, including a three-year extension. The bill will allow property tax exemption to remain in effect through 2028.
• House Bill 2578 modifies the Residential Landlord-Tenant Act by banning housing discrimination based on a tenant’s source of income (e.g., public rental assistance, veterans benefits, Social Security, Supplemental Security Income, and retirement income sources). The bill also establishes new statute that specifies violations by a landlord (e.g., discouraging lease, expelling an existing tenant, refusing to show a unit, and charge higher rents) that are grounds for lawsuit by a prospective or current tenant using alternative sources of income. Additionally, a new mitigation program will be created for landlords for reimbursement for claims related to damage by certain tenants. The program will be funded by a housing surcharge on recorded documents, which will rise from $10 to $13 with 40% of the additional $3 going to the program.
• House Bill 2444 eliminates the imposition of real estate excise taxes on property sold to bona fide low-income housing developments or where there is a controlling interest in a qualifying low-income housing development through July 2035. Qualifying low-income housing developments are considered to be projects with real property and improvements for which the seller was allocated Low-Income Housing Tax Credits.
• House Bill 2448 similarly eliminates the imposition of real estate excise taxes on property sold by a legal representative of a person with developmental disabilities to a qualified entity that will provide living assistance to people with developmental disabilities. Qualifying entities including nonprofit companies or family homes that will provide living assistance. Properties transferred without imposition of real estate excise taxes must be made available for people with developmental disabilities for at least 50 years. Additionally, required remodeling and improvements for health and safety could be eligible for state Housing Trust Fund grants.
• House Bill 2382 deals with the surplus process of state property. All state agencies will be required to notify state, local, federal, and tribal agencies and governments of any sale of surplus state land. State or local agencies and governments will be allowed to transfer surplus property to any public or private for affordable housing development on any mutually agreeable terms. The Washington Department of Commerce will be required to work several state agencies (e.g., Washington State Parks and Recreation Commission, Washington State Department of Social and Health Services, and Washington State Department of Enterprise Services) to inventory state property that is suitable for development of affordable housing.

By and large, these bills represent positive housing policy changes. Many other worthy bills didn’t make the cut, but there’s always next year.

Cutoff Deadline for State Housing, Transportation, and Environmental Bills Fast Approaching