By The Herald Editorial Board
With less than a week remaining in its regular session, the state Legislature has work remaining to deliver on what was to have been a major focus on affordable housing this year.
Among legislation that has failed to advance were bills that would have capped rent increases at the rate of inflation or 3 percent, including for tenants of mobile home parks, and another that would have allowed larger apartment buildings near transit lines and also would have required developers of certain projects to set aside 20 percent of units for affordable housing.
Still under consideration are policy and budget proposals that could meet a formidable need to increase the supply of housing — especially affordable housing — throughout the state.
The state will need an additional 1.1 million new residences in the next 20 years, of which nearly 800,000 units will need to be either apartment complexes or multi-plex housing, according to the state Department of Commerce.
In Snohomish County, in the ten years between 2010 and 2019, the population grew by more than 106,000 residents, but at the same time saw less than 34,000 owner-occupied homes and 12,600 rental units built; by 2035, the county could add another 120,000 residents to its current population of 833,500. Over roughly the same 10-year period median household income has increased 8 percent, while the costs for rent have increased 32 percent and home prices by 52 percent, according to figures from the Housing Authority of Snohomish County.
To address the most immediate needs, the state Senate’s capital budget would allocate $625 million toward affordable housing projects, including $400 million for grants and loans through the state’s Housing Trust Fund, a substantial amount, but not enough for the housing supply necessary.
Among longer-term proposals still under consideration are:
House Bill 1110, which would allow for greater density for new construction in residential neighborhoods, based on the size of a city. Cities with populations between 25,000 and 75,000 would be required to allow up to two units per lot and four if at least one is for affordable housing or within a quarter mile of a transit line; while cities of 75,000 or more would have to authorize density of at least four units per lot, or six if two or more units are affordable housing or within a quarter-mile of a transit line.
House Bill 1337 which would allow authorization of up to two accessory dwelling units on a lot and would apply to unincorporated areas as well as cities.
Gov. Jay Inslee’s proposal, which seeks to place a referendum before voters to issue $4 billion in bonds for affordable housing projects, as well as for expansion of mental health and addiction services housing and provision of permanent supportive housing.
House Bill 1628, which, possibly as an alternative to the bonding proposal, would increase the real estate excise tax — known as REET — for homes selling for more than $3,025,000. Some could see a reduction in the excise tax under the current proposal. The lowest tax rate of 1.1 percent currently applies to housing with a selling price of up to $525,000; that lower tax for the first tier, under HB 1628, would rise to apply to homes up to $750,000; while the fourth and highest tier — at $3,025,000 and above, would increase to 3.5 percent from its current 3 percent.
As well, there’s a provision that would allow counties or cities to add a 0.25 percent increase locally to the REET for affordable housing efforts.
Funds raised by the increase, estimated at about $250 million a year by 2027, would go toward affordable housing for families earning 60 percent or less than an area’s median income, as well as supportive housing, housing for those with intellectual and developmental disabilities, seniors, and home-ownership programs for families earning 80 percent or less of an area’s median income.
Opponents have claimed that the House legislation would increase housing sales costs — and ultimately rents — for the very housing that it seeks to help fund, and have made that claim in a $400,000 advertising campaign, but state Rep. April Berg, D-Mill Creek, chair of the House Finance Committee, has said the bill exempts multi-family housing.
On the policy legislation, provisions for increased density are necessary if enough housing supply is to be created while avoiding the sprawl that has over recent decades encroached on rural and agricultural land and driven workers farther from their jobs. Too many employees with family-wage jobs have been forced to outlying areas to find homes within their budgets. Increased density can begin to address that problem and also help to keep seniors in their homes and open good neighborhoods to young families.
It does seem as if lawmakers will have to choose between either the governor’s bonding proposal or an increase in the real estate excise tax for homes and commercial developments of more than $3 million.
The problem — or opportunity — in seeking $4 billion in bonds, is the requirement of going to the voters for that authority. It risks losing that funding opportunity to a rejection by voters, but would offer voters a chance to put the proof of their confidence behind an investment in a statewide effort to improve housing supply and access.
What a limited and targeted increase in the excise tax allows is a sustainable and longer-term source of funding for housing programs and investments, one whose direct impact appears more finely tuned to better balance tax fairness across the economic spectrum of families and individuals in the state.
The option of doing neither can only delay needed investments, discouraging supply and accessibility and leaving more families struggling to pay rents or mortgage payments that are not affordable.
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