Washington affordable housing law could be expanded under proposed bill

OLYMPIA – The road from parking lot to affordable housing complex could get smoother under a new law proposed in the Legislature and heard before the Senate Housing Committee on Wednesday.

A bill, introduced by Marcus Riccelli, D-Spokane, would expand a 2022 law that incentivized the sale of open parking lots and gave tax deferrals to companies that flip it into affordable housing.

The law allows cities to give sales and use tax deferrals to companies that convert parking lots into affordable housing in cities with a population between 135,000 to 250,000. The proposal would lift the maximum to 275,000.

Riccelli’s bill would also lower the requirement for including affordable housing.

In the current law, contractors need to set aside at least 50% of the units for affordable housing to get the tax break. The proposal would set an alternative to the requirement. At least 20% of a housing complex would have affordable housing if it is located in an area with great housing need, as determined by the city.

“We took a lot of feedback, and we think we’ve put forward something that can really be another great tool in the toolbox for developing housing in the community, which is sorely needed,” Riccelli said.

Spokane, Tacoma, Bellevue, Vancouver and Kent would meet the population guidelines based on the state’s population estimates, but Spokane Valley, Seattle, Everett, Yakima and other cities would not.

Bellingham City Council member Michael Lilliquist supported the measure, but took issue with the population threshold. Bellingham, with a population of around 95,000, would not qualify for the proposed incentives or deferrals. Lilliquist recommended revising the bill to lower the threshold so Bellingham could participate.

“I’ve sent communications to a few elected representatives of similar -sized cities, and I’ve not heard any concerns or objections to this change,” Lilliquist said.

Riccelli said due to state budget shortfalls, he wants to keep the threshold as is, but did not rule out future amendments.

“The only concern there is, as we bring in more cities, the potential costs in the state budget go up,” Riccelli said.

The bill would cost the state an estimated $12.5 million over two years.

Spokane used the current program in 2023, becoming the first city in the state to do so. According to a 2025 land capacity study done by the city of Spokane, using open parking lots in downtown Spokane would provide the city over 2,800 new units, accommodating nearly 4,500 people.

Religious organization housing bill

Another bill heard before the Senate Housing Committee would help religious organizations, such as churches, build affordable housing.

The bill would give religious organizations the ability to build housing larger and more populated than usual. The builder must then set aside at least 20% of the development for low-income housing.

The organizations would have to work with local transit to ensure public transportation is accessible from the apartments.