Washington Prepares To Pass Bill To Allow More Housing in Commercial Areas

Washington is preparing to pass a bill that would require cities to allow residential development in some commercial areas, a priority for Gov. Bob Ferguson.

Washington's Senate Bill 6026 would require cities with more than 30,000 residents to allow residential uses in areas zoned for commercial and mixed-use development.

The bill passed the House on Thursday by a vote of 69-27 and was approved by the Senate last month, 36-12. Once the Legislature gives its final approval, Ferguson will be able to sign it into law.

The bill, introduced at Ferguson's request earlier this year, has evolved significantly in the past few months as it has been debated in Olympia. Ferguson said in January that the goal was to allow for more housing and incorporate more mixed-use development in areas that had previously been reserved for commercial use.

"This is one way to increase access to affordable housing," Ferguson said. "For example, an abandoned strip mall or shuttered big-box store could be turned into housing without having to go through the process of changing its zoning to residential."

The Realtor.com® state-by-state housing affordability report card gives Washington a C-.

'Delicately negotiated' residential rules

SB 6026 takes aim at restrictions blocking residential development in commercial zones. It blocked ground-floor commercial requirements as a condition for permitting residential development within designated Urban Growth Areas.

The bill originally prevented cities from requiring ground-floor retail in buildings. But lawmakers amended the bill with more carve-outs after cities expressed concern that it would complicate the development of mixed-use neighborhoods.

Now, many sites targeted for transit-oriented development have exceptions—as do business improvement districts that aim to enliven commercial areas. Rural areas remain unaffected.

The bill is "delicately negotiated," said Rep. Strom Peterson, a Democrat, at a final hearing this week. Cities were worried about how the bill could affect their local planning and comprehensive plans. Olympia has produced a set of other changes to local zoning in recent years aimed at helping the state produce the 1.1 million housing units it needs over the next 20 years.

"This is a well-thought-out and tricky but well-negotiated supply bill to get more housing, especially into our urban cores," Peterson said. The bill "will give developers and cities an opportunity to still create walkable neighborhoods" with affordable housing.

Changes to the bill have required the state to provide ways for cities to seek exceptions or opt-outs, which could water down the impact of the bill. But Democratic Rep. Gerry Pollet said at the hearing that the bill doesn't force developers to reapply for permits.

The Puget Sound Regional Council found Seattle alone has about 4,000 eligible parcels. Spokane, Vancouver, and Tacoma have more than 2,000 parcels each. Only a fraction of those sites could be considered "under-developed," where it might be financially appealing to redevelop the land.

That analysis found relatively few parcels affected by the outright ban on residential development. But almost 71% of them restrict residential development with requirements for ground-floor retail.

Continued worries

Realtors® in the state backed the bill. The Washington Trust for Historic Preservation says it is generally supportive, but it's concerned the bill might damage the historic character of older downtowns and hamstring architectural reviews.

Rep. April Connors, a Republican who is the ranking minority member of the House Appropriations Committee, said there is some resistance among Republicans who want more tweaking.

"We're going to be talking about housing supply for many, many, many years to come in Washington state due to the lack of housing we have now," said Connors, who herself supported the bill. "We think that we want to work on the policy, talk about the policy a little bit more."

Some amendments failed, including a loophole that would have let apartment communities count amenity space as ground-floor retail.