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.

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Stephen is an urban planner with a passion for promoting sustainable, livable, and diverse cities. He advocates for smart policies, regulations, and implementation programs that enhance urban environments by committing to quality design, accommodating growth, providing a diversity of housing choices, and adequately providing public services. Stephen primarily writes about land use and transportation issues.

26 COMMENTS

  1. I’m glad that the legislature is taking a look at this… but I’m concerned that rent control will pass…

    Everything I’ve ever read on rent control has basically said, “Don’t do it. It will backfire.”

    We have a ton of housing construction going on right now, vacancy rates which no longer indicate a housing shortage, and rents are finally under control. I think we should recognize that at least some of our existing policies are working well. We have endured some short term pain, but we are in a very good position for the next few years.

    • The legislature won’t be creating rent control, they’ll just be removing the prohibition of it. That seems fair, putting another tool in the city’s toolbox, even if it’s a heavy sledgehammer.

      Rent control makes sense to me in emergency situations, where demand is vastly outstripping supply in the present and near future, but I agree that it isn’t a sustainable affordability policy. It would have been useful during the Amazon boom as a stopgap against displacement, but if what you say is true then it will (hopefully) not be needed.

      • It’ll be interesting to see whether or not it moves forward. Word on the street from some Dems is that there may not be enough support this year to pass a version of it. Last night, it got pulled from a public hearing on the 18th in the House Community Development, Housing & Tribal Affairs Committee. It’s been reassigned to the Judiciary Committee, but so far no specific public hearing date.

      • New York City imposed rent control in response to an emergency situation called World War II. How’s that going?

        Investors are risk averse. The fact that the city has no authority to impose rent control is one of the reasons why Seattle is considered a good housing market to invest in. Change those rules and watch new apartment construction shut down.

        • If your argument is that rent control in emergency situations leads to rent control forever, that’s quite the slippery slope you’ve got there. Regulations alone won’t generate affordable housing, as the NYC example shows, but well-designed taxation and spending for affordable housing will.

          To your second point, I don’t see why housing should be subject to market speculation, especially from big money investors who can easily make the built environment worse: https://www.strongtowns.org/journal/2018/1/3/comparing-approaches-to-achieving-density

          Small apartment buildings can still create impressive density, and they generate good returns for smaller developers and even middle class families. And again, the city should be investing massively in affordable housing.

          • Like it or not, housing in our society is a capital good created by private investors seeking the highest possible return, and evaluating possible investments based on risks (including the possibility that the Seattle City Council will try to interfere in the market by imposing rent control).

            Building apartments at any size and scale requires a sophistication about finance. Projects large and small require financing by banks or other lenders. Rent control would be the end of apartment construction in Seattle. No more projects would be financed.

            You don’t like the idea that housing is subject to market speculation? Speculators are simply investors who take a chance on their future returns by financing new projects. They could invest in some other city instead, or in stocks or bonds. No speculators, no more housing. Who else is going to build housing?

            Rent control is a bad idea that just won’t die. It’s reassuring that in Washington State, the state government has pre-empted this option by making it impossible for cities to impose rent control.

          • To quote the Rutgers Center for Real Estate:

            “Rent control rarely has the catastrophic effects some early economists suggested, but neither does it deliver effective and targeted relief to households that we would identify as having the strongest housing needs. Once installed, politically rent controls become very hard to modify or remove if they do begin to become more binding on supply.

            Other approaches like housing vouchers and changes in building codes land use and development regulations and the like are likely to have a much more positive impact on housing affordability…”

            https://www.rutgersrealestate.com/blog-re/digging-deeper-on-rent-controls/

            I agree with that analysis, so your apocalyptic scenario of apartment construction drying up isn’t going to happen. I also agree that rent control is not targeted at the most vulnerable, and that it could be politically difficult to remove if written indefinitely. But in a true housing and homelessness crisis where vast swaths of the population are affected, caused by rapidly escalating demand and artificially constrained supply, the city needs to be able to throw a brake down and keep people in their homes while the market catches up.

            Obviously the city should also move heaven and earth to fix the supply (streamline construction, upzone, affordable housing subsidy) and demand (income tax, vouchers), but that process takes time that a lot of people don’t have.

          • Preston, the problem with pushing on the “brake” is that it’s impossible to take the brake off later.

            Think about it. If later you end rent control, then rents will make a huge jump in one year, and there will be mass evictions. Once enacted, even during an emergency, you can’t take back rent control.

            California’s prop 13 has the same problem. It’s very similar to rent control, but for property tax. If you revoked prop 13 today, tons of people who bought their houses 50 years ago would see order of magnitude tax increases, and would be forced to sell their house. Politically it’s not possible, even though people know the negative side effects of prop 13…

          • You seem well versed in this subject, so I am curious if you have any thoughts on the following: I moved to Seattle in 1989; working in low-paid, non-profit orgs at the time, I struggled to afford rent back then in the Microsoft-is-taking-over era – so I had roommates for several years until my income rose and my debts declined. Yeah, it had it issues but that’s what ya did. The current wave of new, young Seattle residents seems obsessed with solitary living – at least the press is giving that impression. Article after article I read with data on rents – which I merely divide by half (one roommate) leaving me to wonder: why don’t more people simply double up. Do you think that attitudes have changed, social norms have changed to make the roommate thing less attractive, exacerbating the situation? There are so many more apps/tools to find everything in life – roommates included – you think more people would employ them. Thank you.

          • I’m a young-ish person that moved to Seattle in my 20s. I’ve never lived alone. In fact, I don’t know anyone that has lived alone with a salary below the city’s median.

            The housing crisis isn’t just some character flaw of young people refusing to split accommodation. In fact many people my age have chosen to continue living with their parents because of housing costs.

            Rent’s are actually higher compared to many people’s incomes.

          • . The current wave of new, young Seattle residents seems obsessed with solitary living – at least the press is giving that impression.

            Never a good idea to let anecdote-driven generational commentary from journalists play much of a role in forming your sense of what’s going on. It’s probably the most useless genre of non-opinion journalism there is. (In this case it’s got you all turned around.)

          • Never a good idea to let anecdote-driven generational commentary from journalists play much of a role in forming your sense of what’s going on.
            **********
            Ain’t that the truth? Add onto that tribal, social-media group think…. Hence my query to a person that might know a thing about aggregate data.

          • I am about a half a generation older than you, and I had the same experience as a graduate student (in economics) in the 1970s and 80s. In those days, everybody lived in group situations.

            Housing statistics show that the size of homes and the amount of residential space per individual and per family have steadily risen since the Great Depression and World War II era, at the same time that more people have chosen to live alone. Perhaps some of our housing shortage reflects changing attitudes and tastes, but that’s not the fault of people who have become more affluent and now desire more and better housing. If people want more housing, why shouldn’t markets be able to provide for them?

            The real problem is a regulatory environment that prevents developers from building housing that is affordable for most Americans. Much of the fault can be placed on restrictive zoning. But I am disappointed that many new urbanists fail to recognize that part of the cause of our housing failure is a legal environment that pushes out small landlords and the businesses they could be building as well as lower income tenants.

            We have effectively banned poor people from cities by destroying the types of housing they can afford (rooming houses, SRO hotels with shared bathrooms, aPodments). In Seattle, we’ve done so partly by creating a regulatory environment that makes it impossible for the small landlord to rent profitably to tenants with poor credit, for example by legislating about security deposits and move-in fees.

            When we limit move-in fees (effectively a form of rent control), landlords charge higher rents to make up for expected losses, and many of them simply re-deploy their assets to appeal to more qualified tenants. Across Capitol Hill, I am seeing a wave of upgrades to the older apartment buildings built from the 1940s to the 1980s, as landlords modify properties to appeal to higher income tenants.

            We have pushed the poor out of Seattle, but many of them are simply living next door. Seattle like most American cities has some nearby suburbs and unincorporated areas with lax regulatory regimes. Seasoned Seattle residents often know where these places are and avoid them.

            Old motels, since they provide housing under a different regulatory regime, are another refuge of those who can’t afford an apartment. Highway 99 from Canada to Mexico is lined with such low-cost housing.

            In emerging ethnic communities, housing regulations are often quietly ignored, creating homes for new arrivals with what we normatively regard as substandard conditions. In this respect, it may be easier for a poor family from a third world country to move to Seattle than it is for a poor family from eastern Kentucky.

      • Removing its prohibition in seattle is equivalent to implementing it. There is 0 chance of it not passing here.

        • I don’t see enough slam dunk votes on the council to make it a sure thing, akin to the HOMES Tax. Sawant and O’Brien would probably go for it, but every other councilor is 50/50 or worse. It’d be a limited emergency stabilization ordinance at best, though that is still useful.

          • I think you’re really quite wrong about that. Herbold is a yes for sure, and enough of the rest would be frightened of electoral backlash if they don’t go along. I don’t claim to be able to predict what the particulars would be, but the chances of some kind of rent control passing in Seattle should the state law change are definitely north of 75%.

  2. HB 2711 is fascinating, creating a mechanism for the State to intervene in local zoning. Looking at the upcoming UDistrict Link stop, it could totally remake the neighborhood south of 47th with the 500 foot limit, and of course beyond with the 200 foot limit. It seems like decent urbanist policy, other than the ban on linkage fees.

    The bill cites the long-term infrastructure gain from transit oriented development to justify the linkage fee ban, but one could also say that transit oriented development derives an unearned benefit from transit infrastructure. Allowing a land-value tax would be a great way to recoup that benefit, but removing the linkage fee ban would be a good start.

      • Right, building the transit and submitting the application aren’t politically negligible, but it would be a bureaucratic way to avoid neighborhood activist protectionism.

  3. The housing “crisis” has already been solved in Seattle with the massive building of apartments. We are seeing the first large rent decrease with more to follow. The crisis really wasn’t a crisis – it was just taking time to get all the new developments built. Drive any street in Seattle and you will see a for rent sign. Rentals are available everywhere now. But watch out, banks will not want to risk loans for multi family buildings in Seattle when the landlords cannot decide to rent to the best applicant. Why finance a building here when you can go up to Shoreline or Edmonds and finance a building that will be much less risky to manage because you can choose the best applicant to rent to.

      • More landlord concern trolling than developer. The “if landlords aren’t allowed to discriminate they won’t bother” nonsense is more about mom-and-pop landlords anyway. Most of the bigger, corporate-run apartment buildings were already going with a de facto “first qualified applicant gets it” policy anyway.

  4. “In Seattle, minimum building heights in such zones would need to be 550 feet within a quarter-mile and 200 feet within a half-mile of the major transit stop”

    Poorly phrased. That implies that buildings less than 550 would not be permitted. This is changing the zoning to 550.

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