Housing/Homelessness Policy Brief

Jay Inslee

Washington Governor

www.governor.wa.gov

In recent years, Washington has

taken unprecedented actions to

speed up housing and shelter

construction and combat housing

and homelessness crises across

the state. Gov. Jay Inslee is putting

forward an ambitious housing

plan to fast-track construction

so we can reduce homelessness

and increase the availability of

aordable housing.

Sound Foundations NW builds tiny homes at their ‘Hope Factory’ with volunteer labor. Gov. Jay Inslee

and Seattle Mayor Bruce Harrell take lessons from Sound Foundations NW Director Barb Oliver before

they help build a tiny home. (Oce of the Governor photo, October 2022)

Continued momentum, faster

construction needed to tackle housing

and homelessness crises

Over the past two years, Gov. Jay Inslee and the Legislature have put more

than $2.4 billion toward a wide range of eorts to reduce homelessness and

address the state’s growing housing shortage. Working in partnership with local

communities and organizations, the state has helped nd shelter and support

for thousands of people living outside. The state worked to increase the supply

of aordable housing and provided vital assistance to tens of thousands more

people who were at increased risk of becoming homeless during the pandemic.

But the scale of Washington’s housing shortage and resulting homelessness

can only be solved by speeding up construction of thousands more housing

units — from emergency housing to multifamily developments and aordable

housing.

Policy Brief

December 2022

Washington’s 2022 point-in-time count found

nearly 13,000 individuals live outside and are

unsheltered across the state — up from about

10,800 in 2020. If you include those living in

shelters, the total count of individuals experiencing

homelessness grew from about 22,900 in 2020 to

more than 25,400 in 2022.

Meanwhile, the state faces a signicant shortage

of housing — now and well into the future. Of

the available housing for rent, 157,000 units are

out of reach for low- and extremely low-income

renters. And we need to build more housing to

accommodate the increasing population: various

reports show that the state’s overall housing

construction decit falls somewhere between

80,000-140,000 units, making Washington fth in

the nation for under-production of housing.

Due in large part to the signicant shortage of

housing, the median home price in Washington

increased nearly 14% from 2019 to 2022. The same

has been happening in many other states —

nationally, home prices increased nearly 19% from

early 2021 to early 2022.

As people continue to move to Washington for our

strong economy, temperate climate, natural beauty

and quality of life, we need signicant investments

and policy changes to keep up with housing

demand.

By early 2023, the Department of Commerce, for the

rst time, will publish data on projected housing

needs for each county, including the anticipated

needs for moderate, very low and extremely low-

income households. Preliminary estimates of the

statewide need for new housing development over

the next 20 years suggest that the state will need

more than 1 million additional units to keep pace

with population growth. More than half of this need

is for aordable housing for households under 50%

Sources: Department of Commerce and U.S. Census

Washington needs more than

1 million additional homes by 2044

We need more housing for households of all

incomes, and especially lower-income households.

As of July 2021, Washington had 3.25 million homes. By

2044, Washington will need more than1 million additional

units to accommodate the growing population. That

means 45,900 homes— including state-fundedaordable

housing—will need to be built every year for the next 22

years to achieve this goal.

Types of homes we need

1 million + homes breakdown

116,114 units for extremely

low-income households that

also need support services

(permanent supportive housing)

Need an additional 91,706

units for temporary emergency

housing/shelter

409,472 units for low-income

households at or below 50%

area median income (AMI)

196,074 units for households that

earn greater than 50-100% AMI

379,937 units for households

that earn more than 100% AMI

=10,000 homes

of the area median income.

It will likely require public

funding to be built, maintained and to provide wrap-

around services. This includes over 116,000 units of

housing combined with supportive services and over

91,000 units of emergency housing or shelter.

The state’s aordable housing shortage is more

profound for Black, Indigenous and people of color

(BIPOC). And, overall home ownership among

BIPOC households is much lower than it is for white

households.

Last year, legislators increased funding for the

state’s aordable housing programs to support the

construction and acquisition of an estimated 3,890

aordable housing units across the state, more than

double the amount of past budgets. Legislators also

added $300 million to the rapid capital housing

acquisition program. Local communities are using

these funds to purchase and quickly convert

properties such as hotels or apartment buildings into

supportive shelters or housing.

Within the rst year of the rapid acquisition program,

11 new facilities were opened, serving more than 708

residents. The Department of Commerce has awarded

funding for an additional 21 projects in 12 counties

that will provide another 1,002 housing units.

Another example is the state’s new Right of Way

Safety Initiative, which transitions people living

in encampments along state highways to safer

shelter and housing options. Three state agencies

— Transportation, Commerce and the State Patrol

— are working with cities, counties and nonprot

organizations to identify sites and conduct outreach to

those living in encampments.

Since the $143 million initiative was launched last

spring, about 170 individuals living in encampments in

ve counties were transitioned to housing or shelter.

Median Family Income, or Area Median Income (AMI), is the median household income adjusted for household size, for the county where

the household is located. This standard is developed by The Department of Housing and Urban Development (HUD), which publishes this

income standard for each county on an annual basis.

Most remain housed, thanks to extensive eorts to

connect individuals to appropriate services.

Highlights of Inslee’s 2023–25

housing and homelessness

package

During the pandemic, a large infusion of COVID-19

relief funding from the federal government supported

the state’s eorts to help people living outside and

keep others in their homes. For example, the state

used about $1 billion of that money to provide rent

and utility assistance to more than 92,000 households

and expand shelter services by at least 2,000 units

statewide.

But with the federal COVID-19 funding winding

down and a continued rise in housing prices and

homelessness, the state must nd new ways to

The All-View Motel in Port Angeles was acquired by Peninsula

Behavioral Health with funding from Commerce’s Rapid Capital

Housing Acquisition program. It includes 25 rental units for individuals

experiencing homelessness, with three set aside for families with

children and 23 set aside for people with chronic mental illness.

quickly address its aordable housing shortage and

homelessness crisis. The most crucial aspect to this

work is speed – we need to close existing housing

gaps as soon as possible and get back on pace with

population growth. The governor is proposing a

statewide voter referendum that would enable the

state to raise $4 billion over the next six years by

issuing bonds outside Washington’s debt limit. The

proposal does not include any tax or fee increases.

The new funding provides the cornerstone of the

governor’s 2023–25 housing and homelessness

plan, and would allow the state to continue rapidly

funding and constructing housing projects across the

state. The governor’s proposal calls for investing over

$1.3 billion in state capital and operating funds on a

wide range of housing and homelessness initiatives.

Besides maintaining 2,000 existing shelter beds and

support services that would otherwise be lost, over

the next two years the plan would add an estimated

7,500 aordable housing units and preserve another

2,700 units. This plan also includes assistance for

communities to plan for and accommodate their

unique housing needs for all income levels over

the next 20 years and actions to speed up housing

development statewide.

Capital budget

Increase Housing Trust Fund

investment in aordable housing

supply

The governor continues to look for solutions to

increase our housing supply, particularly for those

at the highest risk for homelessness, and low- and

middle-income households that cannot aord, or

pay a high percentage of their income toward, rents.

The governor’s budget proposes signicant new

funding for the state’s Housing Trust Fund to construct

Permanent housing where long-term leasing or rental assistance is provided in combination with services for households with one member

(adult or child) living with a disability.

aordable housing units that serve and benet

low-income and special needs populations. This

includes people with chronic mental illness, people

with intellectual and/or developmental disabilities,

farmworkers, people experiencing homelessness, and

people in need of permanent supportive housing.

Multifamily rental housing units

There is a big demand for multifamily rental housing

development. Communities are now using sales

tax revenue generated by the 2019 Encouraging

Investments in Aordable and Supportive Housing

Act to support projects. The new revenue source is

generating nearly $50 million annually, but these funds

are insucient for local government to construct

needed projects on their own.

The governor’s proposal, combined with existing funds

and leveraged private market funding, will create

approximately 17,720 multifamily rental housing units

in the next six years, including 4,960 units during the

2023-25 biennium.

($440 million, bonds)

Permanent supportive housing

In 2022, the Apple Health and Homes Act codied that

medical providers need the ability to refer people to

housing. Foundational Community Supports, a state

program that is one of the rst in the nation of its

kind, helps those experiencing chronic homelessness.

New investments in these programs will help address

future demand and produce improved public health

outcomes. These will also increase eective hospital

capacity by allowing more patients to be successfully

discharged from their treatment and into stable

housing.

The governor’s proposed investments in permanent

supportive housing

will acquire, rehabilitate or

construct approximately 750 permanent supportive

housing units in the 2023-25 biennium and 2,900 units

over the next six years. It also helps close the existing

gap of aordable permanent supportive housing in

Washington, estimated at over 17,000 units, according

to Corporation for Supportive Housing data.

($100 million, bonds)

Homeownership opportunities

The Homeownership program within the Housing

Trust Fund program assists low-income (under 80%

of the area median income) rst-time homebuyers.

Assistance can include help with down payments

and closing costs, community land trust models,

sweat-equity models, funding for new construction,

acquisition, and/or rehabilitation, manufactured home

community models and homeowner cooperative

models.

The governor’s proposed investment recognizes

there is a signicant gap in homeownership

assistance to socially disadvantaged communities

and to organizations that provide housing to socially

disadvantaged communities. This funding will help

approximately 1,100 rst-time homebuyers in 2023-25

biennium and 4,600 total in over six years. The funding

will support socially disadvantaged households with

incomes at or below 100% of the area median income,

and covenants placed on the property will ensure

aordability for 25 years or more.

($75 million, bonds)

Housing for people with developmental

disabilities

There are only 1,400 Housing Trust Fund units available

for the estimated 37,000 people with intellectual and/

or developmental disabilities who need housing. Most

of these individuals rely primarily on Supplemental

Security Income, which places them below 30% of

the area median income. At those income levels, rent

revenue from these units is insucient to spur housing

development. The governor’s proposed investment

in housing for people with intellectual and/or

developmental disabilities will create an estimated

275 aordable housing units in 2023-25 biennium

and over 1,000 units over the next six years. As part

of this proposal, the Department of Commerce will

coordinate with the Department of Social and Health

Services on any needed supportive services.

($25 million, bonds)

Housing aordability preservation

Over the last three decades, Washington has invested

over $1.5 billion in aordable housing, some of which

requires renovation to continue being safe and

livable. The governor’s proposed investment will be

distributed through the Housing Trust Fund’s Portfolio

Preservation program and the Continuing Aordability

program. This will help us maintain these critical

investments across the state.

Nearly 1,500 apartments buildings with approximately

9,850 units will receive health and safety capital

upgrades through the Housing Trust Fund Portfolio

Preservation funding. Approximately 150 units will

be preserved through the Continuing Aordability

program. Funding will also help maintain

approximately 36 manufactured or mobile home

communities operated by nonprot cooperative

organizations or housing authorities that benet

people and households at or below 80% of the area

median income.

($58 million, bonds)

Encampment Resolution program rapid

capital housing

Proposed funding will help acquire real property for

rapid conversion into enhanced emergency shelters,

transitional housing and permanent supportive

housing. The new housing will transition people

experiencing unsheltered homelessness — including

individuals residing on state-owned rights of way —

into safer and more stable housing. This additional

investment builds on the state’s Rights of Way

Initiative, which the governor and the Legislature

funded this year. This new investment will create

approximately 400 units.

($60 million, bonds)

Investments to accelerate

creating aordable housing units

The governor’s housing and homelessness plan takes

a holistic approach that focuses on reinvesting in

existing programs to increase housing aordability

and availability and addresses some of the root causes

of the housing supply crisis. It makes investments

to address local planning, streamline regulatory

environments, assist local governments and private

developers, and to create new pathways and

incentives to increase housing development.

Aordable housing connections to

basic infrastructure

Communities face signicant pressure to identify

appropriate locations for aordable housing

and ways to support it. The governor’s proposed

funding will help leverage those eorts and assist

local governments with one-time costs associated

with infrastructure. It will also oer utility providers

reimbursement for aordable housing-supportive

fee waivers. This funding will reduce the cost of

approximately 10,000 aordable housing connections

to regional water, sewer and stormwater systems.

($50 million, bonds)

Transit-oriented housing development

housing partnership

This proposal establishes a new public-private

partnership focused on increasing supply, encouraging

aordability, and stimulating the overall production

of transit-oriented housing development. State and

46,400

48,100

50,800

53,400

57,600

65,700

73,200

81,100

88,800

92,400

Est. number of

units available

as of July 1,

2012

2013-15 2015-17 2017-19 2019-21 2021-23 2023-25 2025-27 2027-29 2029-31

Expanding Washington's supply of affordable housing

Gov. Inslee’s plan would add an estimated 7,400 state-funded affordable housing units during the 2023-25 biennium,

and 26,600 units over the next four biennia

Data source: Office of Financial Management

Estimated number of units available after 2012

Expanding Washington’s supply of aordable housing

Gov. Inslee’s plan would add an estimated 7,500 state-funded aordable housing units

during the 2023-25 biennium, and 26,700 units over the next four biennia

Source: Oce of Financial Management

Estimates

private investment funding will provide grants to for-

prot and nonprot housing developers, and public

entities to carry out projects and to address funding

gaps that prevent ongoing construction from being

completed.

($75 million, bonds and other funds)

Aordable Workforce Housing

Accelerator pilot program

This proposal creates a new low-interest revolving

loan program administered by the Washington

State Housing Finance Commission. This program

accelerates aordable housing development for

households at 50-80% of the area median income.

And, it will remain aordable for at least 60 years.

Funding may be awarded to for-prot and nonprot

developers, public housing authorities, public

development authorities and others.

($50 million, bonds)

Land acquisition for aordable housing

Provides one-time funding to support the Housing

Finance Commission Land Acquisition program,

which helps developers purchase land for aordable

housing (rental or homeownership) developments.

By increasing funding for this revolving loan program,

the commission can help more community-based

organizations — including by-and-for organizations

— develop approximately 1,750 critically needed

aordable housing units across the state.

($35 million, bonds)

Expedite permitting and increase

capacity

The governor is requesting legislation to provide

grants to local governments so they can scale up

their permitting departments and streamline permit

approval processes to get housing built faster.

Additional grant dollars will allow local jurisdictions to

upgrade outdated permitting software and convene

a work group to improve permitting processes

statewide. The policy requires local governments to

exempt project permits for simple interior alterations

to relieve pressure on already strained permitting

departments.

($15 million, bonds)

Aordable housing predevelopment

and preconstruction assistance

The Department of Commerce will provide grants

for project design, architectural and engineering,

bid documents, environmental and archeological

studies, and other preliminary phases of development

necessary to accelerate the completion of aordable

multifamily housing and homeownership projects.

($10 million, bonds)

Aordable housing cleanup grant

program

The Department of Ecology currently oers grants to

public, nonprot and private entities that remediate

brownelds to develop aordable housing. Additional

funding for the program will support cleanup on

enough properties to make space for approximately

395 aordable housing units.

($12.3 million, Model Toxics Control Capital Account)

Operating budget

Maintain current levels of housing

and homelessness services

Emergency housing and shelter

Before the COVID-19 pandemic, there were not

enough shelter beds in the state to accommodate

everyone living outside or in places unt for habitation.

Since then, rents have risen signicantly, increasing the

need for traditional congregate and non-congregate

shelter and other emergency housing options. The

governor’s proposed investment includes funding to

ensure that 2,000 shelter beds and other emergency

housing units statewide are not lost due to the lapsing

of one-time resources.

($153 million, General Fund – State, Coronavirus State

Fiscal Recovery Fund – State)

Encampment Resolution program

In 2022, the governor proposed and the Legislature

funded a state Rights of Way Initiative to help move

individuals residing on state rights of way into safer

and better places to live. Since last spring, about 170

individuals obtained housing through the initiative,

the majority of whom remain housed. Proposed

funding will continue this eort. The Department

of Commerce — in partnership with the state

Department of Transportation, Washington State

Patrol, local governments and nonprots — will

provide grants for the cost of outreach, temporary

shelter, move-in costs, transportation, accessing IDs,

housing application costs and other housing-related

needs for individuals who reside on state rights

of way and other encampments. The Department

of Transportation will use funding to remediate

encampment sites after housing is secured.

($68 million, – GF-S)

Homeless youth programs

Each night, thousands of youth sleep without the

safety or stability of a family or home. The Oce

of Homeless Youth within the Department of

Commerce leads the state’s eort to prevent and

reduce youth and young adult homelessness through

several grant programs and partnerships. Without

additional funding, two of the grant programs would

be required to reduce services in the 2023-2025

biennium. These grants allow licensed youth shelters

to provide behavioral health services and help prevent

youth exiting public systems of care from entering

homelessness.

($6.5 million, GF-S)

Homeless service contracts: accounting

for ination

Grants issued through the Department of Commerce’s

Housing Division do not adjust over time to keep up

with the increased cost of rent, goods and services.

This results in fewer people being served over time,

and higher rates of turnover among homeless service

providers. The governor proposes an across-the-board

5% increase to homeless service contracts so grantees

can achieve the same performance outcomes that the

department expects.

($6.3 million, – GF-S)

Landlord Mitigation program

The Landlord Mitigation program within the

Department of Commerce provides incentive funding

to landlords to work with renters receiving rental

assistance. The program will pay landlords up to $5,000

to repair damages to rental units or funding to cover

up to 14 days’ rent loss. The program is currently at

capacity and approximately 1,300 claims have been

approved, but the department lacks the funds to make

payments. Funding will address these approved claims.

($8 million, GF-S)

Document recording fee

Homelessness services in Washington mainly rely on

revenues generated by a certain document fee. This

fee comes from document assessments that counties

record for mortgage originations and renances,

referred to as the “document recording fee.” Likely

a result of increasing interest rates, the number of

mortgage originations and renances have declined

signicantly in the last year, leading to a decrease in

document recording fee revenues. We don’t know if or

how this downward trend may continue throughout

the 2023-25 biennium. The governor proposes adding

funding to the Home Security Fund Account to oset

lost revenue so homeless response activities can

continue without a service reduction.

($40 million, GF-S)

Housing and Essential Needs

The Housing and Essential Needs program (HEN)

provides temporary rental assistance, services

connected to housing stability and limited

essential needs items such as personal hygiene and

transportation for individuals who cannot work

due to a disability. Unfortunately, people eligible

for HEN assistance are being turned away because

there isn’t enough program funding. This increased

homelessness for this vulnerable population. An

additional investment means HEN can serve more

people. Additionally, the Department of Commerce

will analyze the program to identify improvements,

and determine the amount of funding it needs so that

no person who is eligible for HEN is turned away.

($15 million, GF-S)

Plan for housing supply

Plan for and accommodate housing

needs

Approximately 70% of the housing in Washington is

single-family housing, the majority of which tends

to be out of reach for many low and moderate-

income households. In January 2023, the Department

of Commerce will publish projections of housing

needs for each income segment in each county

statewide. Cities will soon be required to plan for

and accommodate housing needs for each income

segment, including low- and extremely low-income

households. To accommodate the housing needs for

all income levels, many local jurisdictions will need

to begin planning for higher density development,

development along transit lines, allowing smaller and

multiunit housing and planning for added emergency

shelter, transitional housing and permanent

supportive housing. This will require examining plans

and regulations, updating zoning codes, assessing

environmental impacts and implementing new

programs. The governor proposes grant funding

to local jurisdictions to complete this work, along

with funding for state agencies to provide technical

assistance and support. Funding is also proposed to

support legislation that will encourage more middle

housing production.

($17.4 million, GF-S)

Streamline permitting

In recent years, a backlog of processing building

permits have slowed building eorts. The governor is

requesting legislation to reduce permit timelines by

requiring local governments to exempt permit review

for simple home interior alterations, providing grants

to local governments to implement consolidated

permit review processes and a grant that enables

local governments to receive permit applications

electronically. The governor proposes funding to

implement this bill in both the operating and capital

budgets.

($4 million, GF-S)

Address homeownership disparities

BIPOC homeownership

In the 2021-23 operating budget, the Legislature

directed the Department of Commerce to

convene a diverse stakeholder work group

to assess homeownership disparities among

BIPOC in Washington. The work group recently

released its ndings, which contain 12 ready and

actionable priority recommendations, some that

the governor proposes addressing through capital

budget appropriations. In the operating budget,

the governor specically proposes addressing

the recommendation to “fund culturally specic

organizations for outreach to increase the visibility of

and access to homeownership assistance programs

for BIPOC communities” (Improving Homeownership

Rates for Black, Indigenous and People of Color in

Washington, 2022). This means nonprot entities will

receive funding to build capacity so they can better

develop aordable homeownership units and assist

prospective buyers.

($5 million, – GF-S)

Behavioral health housing supports

Address chronic homelessness

Homelessness often interferes with individuals’

ability to obtain behavioral services and interferes

with recovery. The governor proposes a series of

interventions to individuals with behavioral health

needs to help them obtain and maintain housing. This

includes a pilot program in one rural and one urban

area to connect individuals in shelters or behavioral

health clinics to housing through the Housing

Assistance through Peer Services (HARPS) program,

services to help seniors escape chronic homelessness

and funding enhancements to newly created

programs in the 2022 supplemental budget.

($8.6 million – GF-S)

Permanent supportive housing

Permanent supportive housing pairs long-term rental

assistance with case management and supportive

services. This is a highly eective housing solution for

the most vulnerable, chronically homeless people.

As we build more permanent supportive housing

units, there will be costs for wrap-around services to

keep people inside. The governor proposes additional

funding for grants to support the building operation,

maintenance and service costs of permanent

supportive housing projects funded through the

Housing Trust Fund.

($15 million – GF-S)

Housing and homelessness strategic agenda

Summary of investments, 2023-25 Biennial

Focus Area Items Agency Amount

Increase Housing Trust Fund

investment in aordable housing

Multi-family rental housing Commerce $440,000,000

Permanent supportive housing Commerce $100,000,000

Homeownership opportunities Commerce $75,000,000

Housing for people with

developmental disabilities

Commerce $25,000,000

Housing aordability preservation Commerce $50,000,000

Acquisition and preservation of

mobile homes

Commerce $8,000,000

Total $698,000,000

Accelerate creation of aordable

housing

Aordable Housing Connections to

Basic Infrastructure (CHIP)

Commerce $50,000,000

Transit-oriented housing

development partnership

Commerce $75,000,000

Rapid acquisition of housing for

unsheltered people

Commerce $60,000,000

Aordable workforce housing

accelerator pilot program

Commerce $50,000,000

Land acquisition for aordable

housing

Commerce $35,000,000

Total $270,000,000

Expedite permitting and increase

capacity

Consolidated permit review Commerce $15,000,000

Aordable housing predevelopment

and preconstruction

Commerce $10,000,000

Aordable housing cleanup grant

program

Ecology $12,259,000

Total $37,259,000

Focus Area Items Agency Amount

Maintain current levels of

housing and homelessness

services

Emergency housing and shelter Commerce $153,000,000

Encampment Resolution Program Commerce,

WSDOT

$68,000,000

Homeless Youth Programs Commerce $6,500,000

Homeless services contracts Commerce $6,300,000

Landlord Mitigation Program Commerce $8,000,000

Document recording fee Commerce $40,000,000

Housing and Essential Needs Commerce $15,000,000

Total $296,800,000

Planning for Housing Supply Plan for and accommodate housing

needs

Commerce/local

governments

$17,400,000

Streamline permitting Commerce $4,000,000

Total $21,400,000

Address homeownership

disparities

BIPOC homeownership organizations Commerce $5,000,000

Total $5,000,000

Behavioral health housing

supports

Address chronic homelessness Health Care

Authority

$8,600,000

Permanent supportive housing

operations & maintenance

Commerce $15,000,000

Total $23,600,000

Grand Total $1,352,059,000