More regulations and taxes = affordable home ownership?

house model with building papers
Lawmakers should be working to reform the state’s Growth Management Act (GMA) and State Environmental Policy Act (SEPA) to help land use and environmental policies work together instead of against each other. Photo: Freepik

Legislators kicked off this year’s session in promising fashion, declaring they would take our state’s housing affordability crisis head on, as they should.  A study by the University of Washington’s Center for Real Estate Research reports that first-time buyers in King, Kittitas, Pierce and Snohomish counties are facing a housing market where home prices are nearly double what they can afford.

Over the last 25 years, the housing supply in Washington has been restricted. Experts say housing supply in Washington now lags 20 percent behind what’s needed for our population.  This lack of supply drives up the cost of all types of housing, including rental units.

However, at the half-way point of session, lawmakers have lost sight of the path to affordable homeownership and seem intent on driving home prices even higher with additional regulation, taxes and fees.

Among the proposals in front of legislators that will only increase the price of homes are:  increasing the B&O tax on services, including those related to construction, and the establishment of a new capital gains income tax.

But wait, there is more.  They’ve proposed creating an “environmental justice” task force (HB 2009 & SB 5489), composed of activists, that would circumvent existing law and allow a committee with a very skewed perspective to dictate how agencies grant land use permits and implement rules to ensure that no one, now or in the future, could possibly be “harmed” by the development.

They’ve proposed a graduated REET tax (HB 1921) and are unable to address the impact of substantially increasing the cost of land acquisition for housing. Such increases could push the dream of home ownership out of reach of many Washingtonians.

They are considering measures to allow local jurisdictions the authority to exceed the state energy codes (SB 5293), which would create a patchwork of new rules across the state and add unnecessary costs to the price of homes.  Currently the state code is reviewed every three years, and we estimate that it alone adds $4,000-$6,000 on to the final price of a home.

Last but not least, they’ve proposed “direct contractor liability” (HB 1395), which would require a direct or general contractor to be responsible for the unpaid wages and benefits of subcontractors’ employees.

Despite a well-intentioned goal of addressing wage theft, SHB 1395 is the wrong approach. Not only is it against the law to not pay your employees, it’s unnecessary, as Labor and Industries already has the authority to enforce wage payment laws.  If it needs more resources to carry out these responsibilities, it should let the Legislature know. It will raise the cost of housing and harm our state’s small entrepreneurs – subcontractors will be paid slower while general contractors pour over their payroll books, and new subcontractors will not be able to provide historical evidence of good business practices, making general contractors hesitant to work with new upcoming businesses. This is bad for Washington and bad for housing.

None of these proposals does a thing to add inventory to our housing market or bring a single option to the table to help make affordable homeownership a reality.  Instead, each of them would add significant costs to the prices of new homes.  We know that for every $1,000 the price of a new house increases, 2,393 Washingtonians are priced out of the new home market.

Lawmakers should instead be working to reform the state’s Growth Management Act (GMA) and State Environmental Policy Act (SEPA) to help land use and environmental policies work together instead of against each other.   All too often, these regulations are used to delay new housing projects, adding to the price of each home or, even worse, stopping new housing options for Washingtonians.

The Legislature should also streamline planning and require local jurisdictions to do the right thing: promote housing ownership for everyone. Increased condos, multi-family, and single-family housing supply is the only path to affordability. Washingtonians want options and need affordability.

To that end, BIAW is proud to be part of “Unlock the Door,” a coalition of non-profit and business associations formed to help educate key leaders in our communities, working together to find home ownership opportunities for everyone in Washington state.  To learn more about our efforts, visit:  www.unlockthedoorwa.com.

Jan Himebaugh has worked for the Government Affairs Director for the Building Industry Association of Washington since 2012, and advocates for the advancement of affordable homeowners opportunities for Washington State. 

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