Today the Senate Law and Justice Committee heard testimony on Senate Bill 5024, a measure to help increase the supply of affordable housing by removing barriers to condominium construction. The bill is sponsored by Sen. Mike Padden, R-Spokane Valley and the lead Republican on the committee.
“The committee has long had a concern about the lack of access into the housing market, especially the condominium market,” said Padden. “We normally think it is a positive thing to give people a chance to be homeowners and be part of a community.
“Right now, you take the cost of a condominium unit, and it can be as much as 200,000 dollars more than the cost of an identical unit that happens to be a townhome, due to all of the extra inspection costs tied to condominiums. And there has not been a big difference in the problems between condominiums and townhouses.
“The bill will allow for more construction financing of condo projects, which is a great thing for both homebuilders and those looking for more affordable homeownership.”
Under SB 5024, condominiums with ten or fewer units and with no more than two stories would be exempt from the costly requirement to submit building enclosure design documents and obtain periodic inspections throughout the course of construction.
If approved, it would also allow funds deposited for the purchase of a unit to be used for construction costs, under certain conditions.
The measure is the result of years of work, which originated with a 2018 work session held by the committee to address the state’s inadequate supply of new condominiums. That discussion examined some of the barriers that hindered construction at a time when many areas of the state were experiencing an affordable housing crisis. Since that time, the problems of affordable housing, homelessness, and a lack of new construction have only been exacerbated by the COVID-19 pandemic.
Several members of the public appeared via video to testify on the bill. Spokane homebuilder Jim Frank testified that he has been focused on working within the community to provide more affordable housing options for families in need.
“The costs can be prohibitive if you are trying to provide affordable housing,” said Frank. “What this bill does is small incremental steps in the right direction. …This does not affect the warranty… It removes one small barrier to the costs associated with developing affordable, middle-density housing.”
Eddie Chang, a realtor, explained to the committee the problem faced by many in the condo construction industry, and its impact on those looking for entry-level housing.
“The home pricing for first-time homebuyers is out of reach for most people in Washington State. The cost of land has increased to a point where even the most basic run-down home is unaffordable for a first-time homebuyer,” Chang testified.
“The only way to create enough inventory is to allow small wood-framed condo buildings to create affordable units.
“One of the biggest issues we have right now is the financial viability of these small projects. Currently the deposits that able, willing buyers are putting into escrow just sit there for two to three years while the building is under construction and it’s dead money – where neither the developers nor the buyers have access to them. Allowing the builders to access these deposits for construction purposes, while still protecting the buyers with a surety bond, would reduce the financial burdens, making more projects work.
“Senate Bill 5024 would help create more housing opportunities for everyone.”
Also testifying in support of the bill was Jan Himebaugh on behalf of the Building Industry Association of Washington, which represents 8,000 member companies involved with various aspects of the residential construction industry.
“Home ownership is the American Dream and condos can and should be a path to achieving that dream,” said Himebaugh. “This bill takes aim at those condo projects that specifically can help address our middle housing crisis across our state. At ten or fewer units, and two or fewer stories, these can be built affordably if some of those mid-work plan reviews requirements weren’t required.
“Senate Bill 5024 removes some of those requirements in the mid-work, but also continues the consumer protection of still having a warranty at the end of the process. The warranty is still there. The consumer protection is still there. The accountability for the construction is still there.
“By streamlining this process for these types of condo projects, we will enable more access to housing for Washington’s middle class.”
In addition to the South Sound Chamber of Commerce, the following cities signed-in supporting the legislation at this morning’s hearing: Burien, Covington, Everett, Pasco, Redmond, Renton, Sea-Tac, Spokane, and Spokane Valley.