Beginning on page 1, line 3, strike all of sections 1 and 2 and insert the following:

Sec. 1. "RCW 36.70A.697 and 2020 c 217 s 3 are each amended to read as follows:

(1)(a) Cities must adopt or amend by ordinance, and incorporate into their development regulations, zoning regulations, and other official controls the requirements of RCW 36.70A.698(1) to take effect by July 1, ((2021))2022.

(((2)))(b) Beginning July 1, ((2021))2022, the requirements of RCW 36.70A.698(1):

(((a)))(i) Apply and take effect in any city that has not adopted or amended ordinances, regulations, or other official controls as required under this section; and

(((b)))(ii) Supersede, preempt, and invalidate any local development regulations that conflict with RCW 36.70A.698(1).

(2)(a) Cities and counties must adopt or amend by ordinance, and incorporate into their development regulations, zoning regulations, and other official controls the requirements of RCW 36.70A.698(2) within two years of the next applicable deadline for its comprehensive plan to be reviewed under RCW 36.70A.130 after July 1, 2022.

(b) Beginning two years after the next applicable deadline for the review of a county's or city's comprehensive plan under RCW 36.70A.130 after July 1, 2022, the requirements of RCW 36.70A.698(2) apply and take effect in any city or county that has not adopted or amended ordinances, regulations, or other official controls as required under this section, and preempt any conflicting development regulations.

Sec. 2. RCW 36.70A.698 and 2020 c 217 s 4 are each amended to read as follows:

(1)(a) Except as provided in ((subsection[s] (2) and (3) of this section))(b) and (c) of this subsection, through ordinances, development regulations, zoning regulations, and other official controls as required under RCW 36.70A.697(1)(a), cities may not require the provision of off-street parking for accessory dwelling units within one-quarter mile of a major transit stop.

(((2)))(b) A city may require the provision of off-street parking for an accessory dwelling unit located within one-quarter mile of a major transit stop if the city has determined that the accessory dwelling unit is in an area with a lack of access to street parking capacity, physical space impediments, or other reasons supported by evidence that would make on-street parking infeasible for the accessory dwelling unit.

(((3)))(c) A city that has adopted or substantively amended accessory dwelling unit regulations within the four years previous to June 11, 2020, is not subject to the requirements of this ((section))subsection (1).

(2) Through ordinances, development regulations, and other official controls adopted or amended as required under RCW 36.70A.697(2):

(a) Cities and counties may not impose or enforce an owner occupancy requirement on any housing or dwelling unit on a lot containing an accessory dwelling unit, unless an accessory dwelling unit on the lot is being offered or used for short-term rental, except that:

(i) Cities and counties may impose and enforce an owner occupancy requirement for the first year after initial occupation of the unit or primary residence following permitting; and

(ii) Cities and counties may impose an owner occupancy requirement for an additional period if such a requirement is supported by findings of the need for such an increased requirement adopted by the city or county after at least two public hearings are held on the proposal, and any ordinance, development regulations, and other official controls finally adopted directly address feedback from the community. Such an additional period of owner occupancy restrictions must be geographically limited, and may not apply to all of the residential zones within the city or county.

(b) Cities and counties may adopt ordinances, development regulations, and other official controls, including the imposition of fees, impact fees, or taxes, or the waiver of taxes, fees, or specific regulations, to encourage use of accessory dwelling units for long-term housing. Cities and counties may only offer such reduced impact fees, deferral of taxes, or other incentives for the development or construction of accessory dwelling units if such units are subject to effective binding commitments or covenants that the units will not be regularly offered for short-term rental and the city or county has a program to audit compliance with such commitments or covenants.

(c) Cities and counties that impose owner occupancy requirements on lots containing accessory dwelling units must provide for a hardship exemption from any owner occupancy requirements applicable to a housing or dwelling unit on the same lot as an accessory dwelling unit. Such an exemption must allow an owner to offer for rental for periods of 30 days or longer a dwelling unit or housing unit as if a dwelling or housing unit on the property was owner occupied, when the owner no longer occupies the primary residence due to age, illness, financial hardship due to the death of a spouse, domestic partner, or co-owner of the property, disability status, the deployment, activation, mobilization, or temporary duty, as those terms are defined in RCW 26.09.004, of a service member of the armed forces, or other such reason that would make the owner occupancy requirement an undue hardship on the owner. A city or county shall develop and implement a process for the review of hardship applications. Any city or county that imposes an owner occupancy requirement on lots containing accessory dwelling units and has not provided a hardship exemption from the requirement through ordinances, development regulations, or other official controls as required by this subsection may not impose or enforce an owner occupancy requirement on any lot containing an accessory dwelling unit until such time as the city or county has adopted the required hardship exemption, except that an owner-occupancy requirement pursuant to (a) of this subsection (2) may be imposed and enforced if the owner of the lot offers an accessory dwelling unit for short-term rental within the county or if the owner of the lot owns more than three accessory dwelling units within the county."