The 2023 Washington legislative session concluded on Sunday, with Washington lawmakers showing clear support for stakeholders in the housing industry by making it easier to build homes and apartments across the state.
Setting clearer timelines for permitting review, loosening zoning restrictions, and easing review restrictions under the State Environmental Policy Act (SEPA) are just some of the ways the Washington Legislature is trying to combat a severe housing crisis and make it easier for developers and contractors to more efficiently and economically increase available housing. Governor Jay Inslee is expected to sign those bills into law and, while his proposed $4 billion for housing funding measures was not ultimately included in the budget, the capital budget did include significant funds earmarked for housing construction. Gov. Inslee praised this in a statement as being the "year that we needed to go big on housing, and that's exactly what legislators did."
Developers and contractors in the housing industry will be particularly interested in the following bills:
House Bill 1110
House Bill 1110 looks to require cities to modify their existing zoning restrictions to increase density by authorizing more of what is known as "middle housing" in areas traditionally dedicated to single-family housing. "Middle housing" refers to "buildings that are compatible in scale, form, and character with single-family houses and contain two or more attached, stacked, or clustered homes." This bill includes duplexes through sixplexes, townhomes, courtyard apartments, and cottage housing. The bill bases the type of housing that is required on the population size of the city at issue (i.e. smaller cities may only need to allow duplexes while larger cities may need to allow fourplexes). Most notably, Cities of at least 75,000 citizens must allow fourplexes in predominantly residential zones and must allow sixplexes within a half mile of major transit stops. There is one important requirement, however, for development applicants to qualify for the increased density: the proposed project must commit a certain number of units within the proposed development as affordable housing units for at least fifty years.
The goal of House Bill 1110 is to encourage development and to increase housing throughout the State via increased housing density. It will also allow developers more flexibility in how they use their property.
Senate Bill 5290
Senate Bill 5290 is a welcome one for builders, as it establishes permit review time periods, provides additional resources to local governments to be used on supplementing permit review staff and updating permitting systems from paper review systems to electronic systems, and requires partial refunds of permitting fees if jurisdictions do not meet specified timelines. Permitting delays are one of the biggest hurdles builders and developers face and in some circumstances they may drag on for months or longer. These delays are often the result of insufficient staffing of our outdated systems, making the permit review process difficult and time-intensive. Senate Bill 5290 seeks to modernize permitting systems, providing grants to update the systems from paper to electronic, provides grants to augment permit review staff, and sets deadlines on when permits must be reviewed by, to be enforced by partial refunds on permitting fees if these deadlines are not met. While it is unlikely this will resolve the issues with timely permit review throughout the State, if enacted, Senate Bill 5290 may be a strong first step in speeding up the process.
Senate Bill 5412
Going along with the other bills promoting ease of housing development, Senate Bill 5412 categorically exempts from State Environmental Policy Act ("SEPA") review certain proposed housing projects. The exemption applies to housing projects proposed within the incorporated areas of urban growth areas and "middle housing" within the unincorporated areas of urban growth areas. Consistent with House Bill 1110 and Senate Bill 5290, Senate Bill 5412 seeks to remove hurdles from development, and specifically residential development. However, Senate Bill 5412 still requires that the local jurisdiction perform environmental analysis on such proposed projects to ensure that the categorical exemption applies.
House Bill 1534
House Bill 1534 provides certain amendments to the contractor registration statutes, RCW 18.27, et seq. While many of the amendments are relatively minor amendments related to registration procedures, this Bill increases required statutory registration bonds, increasing the General Contractor registration bond from $12,000 to $30,000 and increasing the Specialty Contractor registration bond from $6,000 to $15,000.
House Bill 1534 also creates a "homeowner recovery program" to be administered by L&I. Beginning on July 1, 2026, a homeowner claimant may recover from the homeowner recovery program if (1) the claimant has a final judgment against a registered contractor under RCW 18.27.040 (the contractor registration bond statute) for work done on his primary residence; (2) the judgment specified the actual damages; (3) the claimant has proceeded against the contractor's bond; (4) the judgment has not been satisfied in full; and (5) an application for recovery is made within 90 days of the conclusion of the civil action. Payment from the account is in addition to amounts received from the bond but cannot exceed $25,000 per claim. When a claimant is paid, he assigns his right, title, and interest in any final judgment of his claim against the contractor to L&I. L&I can pursue reimbursement to the account from the contractor for the full amount paid from the account and interest. The homeowner recovery program is funded via fines and penalties collected under the terms of the contractor registration statutes.
While the ultimate effect of these bills remains to be seen—and likely won't start to make a significant impact until late 2024 or early 2025—developers and contractors can take comfort in the fact that Washington lawmakers have at least taken these affirmative steps to try and ease the housing development and construction burdens.
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