A House bill that would create financial incentives for local governments to zone more “missing middle” housing options has so far enjoyed strong support among legislators. SSHB 1157, sponsored by Rep. Jessica Bateman (D-22), cleared the House on March 28 in a 93-4 vote. Testimony offered at an April 5 public hearing in the Senate Ways and Means Committee, all in favor, also reflected its popularity.
Complicating efforts to improve the housing supply and affordability in the state are competing interests and priorities among various stakeholders, particularly regarding planning mandates under the state Growth Management Act (GMA). Builders and realtors have favored density requirements, while city and county government advocates have argued against what they view as a top-down approach to local planning.
SSHB 1157 seeks to span that divide by creating what supporters say are strong incentives for local governments to incorporate those additional housing types, including duplexes, triplexes, and townhouses in the housing element of their GMA comprehensive plan updates which are performed every eight years.
Under the bill, counties and cities would be able to create real estate excise tax (REET) density incentive zones within their urban growth areas (UGAs). Those zones must achieve more net housing than would have been permitted otherwise. When created, the local government receives some of the state’s REET revenue from the sale of qualified housing inside the zone.
Although the proposal is expected to cost the state $7 million annually in REET revenue, Washington REALTORS Policy Director Bill Clarke told the Ways and Means Committee that he anticipates residential sales will actually prevent any loss. He added that the state has enjoyed a surge in REET revenue since the legislature voted to create a graduated rate placing a higher tax burden on high-value residential and commercial real estate.
“From a fiscal perspective as well as a housing perspective, I think it’s an excellent bill,” he said.
Association of Washington Cities Government Relations Advocate Carl Schroeder said “we think it’s a really great model.” Citing HB 1923 enacted in 2019, he said that “cities are receptive to incentives. This bill builds on that success.”
Also in favor of the bill was Alex Hurr, a lobbyist for the Master Builders Association for King and Snohomish counties, who said the bill will make it easier for builders to work with local governments to add more housing types to the market and create “smart density in desirable areas.”
No further action is yet scheduled for SSHB 1157.
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