BILL REQ. #:  H-1780.3 

READ FIRST TIME 02/17/11.   

     AN ACT Relating to promoting residential infrastructure development in urban growth areas; and adding a new chapter to Title 43 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature recognizes that one goal of the growth management act is to encourage development in urban areas where adequate public facilities and services exist or can be provided in an efficient manner.
     A second goal of the growth management act is to encourage the availability of affordable housing to all economic segments of the population, to promote a variety of residential densities and housing types, and to encourage the preservation of existing housing stock.
     The legislature recognizes also that these goals can be promoted through efforts to thoughtfully and efficiently foster residential infrastructure development in urban growth areas, the locally designated population and activity centers to which local governments are encouraged to direct growth. The legislature, therefore, intends to establish new policies for promoting residential infrastructure in urban growth areas designated under the growth management act.

NEW SECTION.  Sec. 2   (1) "Affordable residential development" means:
     (a) For ownership housing, sales price affordable to a household up to one hundred twenty percent of median income adjusted by the household size presumed to occupy the unit based on the number of bedrooms, using conventional or federal housing administration lending standards, and taking into account mortgage principal and interest, property taxes, homeowner's insurance, and condominium dues, if applicable.
     (b) For rental housing, housing costs, including rent and basic utilities, do not exceed thirty percent of eighty percent of median income for the average size household presumed to occupy the unit based on the number of bedrooms using United States department of housing and urban development guidelines.
     (2) "Comparable replacement housing" means any dwelling that is (a) decent, safe, and sanitary; (b) adequate in size to accommodate the occupants; (c) within the financial means of the displaced person; (d) functionally equivalent; (e) in an area not subject to unreasonably adverse environmental conditions; and (f) in a location generally not less desirable than the location of the displaced person's dwelling with respect to public utilities, facilities, services, and the displaced person's place of employment.
     (3) "Consumer price index" means, for any calendar year, that year's annual average consumer price index, for Washington state, for wage earners and clerical workers, all items, compiled by the bureau of labor and statistics, United States department of labor.
     (4) "Dense" means the same as transit-supportive density.
     (5) "Department" means the department of commerce.
     (6) "Director" means the director of the department of commerce.
     (7) "Eligible jurisdiction" means a county or city planning under RCW 36.70A.040 or a federally recognized Indian tribe in the state of Washington.
     (8) "High capacity transit station" means a stop or station for public transportation that operates on a fixed guideway rail system or designated bus rapid transit line.
     (9) "Low-income household" means a single person, family, or unrelated persons living together whose income, adjusted for household size, is no more than eighty percent of median income.
     (10) "Major transit stop" means a stop for a bus or other transit mode providing fixed route service in intervals of at least every thirty minutes during peak hours of operation.
     (11) "Market rate" means the current average market interest rate that is determined at the time an individual loan is closed upon, or grant is awarded, using a widely recognized current market interest rate measurement to be selected for use by the department. This interest rate must be noted in an attachment to the closing documents for any loan and in any grant contract for reference if the loan or grant must be repaid with interest.
     (12) "Median income" has the same meaning as determined annually by the United States department of housing and urban development for the metropolitan area or county in which an individual resides.
     (13) "Nonprofit organization" means an organization that is tax exempt, or not required to apply for an exemption, under section 501(c)(3) of the federal internal revenue code, or similar successor provisions.
     (14) "Residential development" means a unit of housing that is contained within a single, multifamily, or mixed use development.
(15) "Rural and resource land transfer of development rights" or "transfer of development rights" includes methods for protecting land from development by voluntarily removing the development rights from a transfer of development rights sending site and transferring them to a transfer of development receiving site for the purpose of increasing development density in the receiving site. Methods for protecting sending sites and increasing the development density in receiving sites include awarding bonuses or regulatory flexibility to receiving sites when persons within a receiving site purchase development rights from a sending site through a transfer of development rights bank or from a landowner who is a willing development rights seller. Bonuses include, but are not limited to, increased height, density, or floor area ratio. Options for regulations on which a jurisdiction could award increased flexibility include, but are not limited to, parking requirements, impervious surface limits, or setbacks.
     (16) "Transfer of development rights receiving site" or "transfer of development rights sending site" means an area that a city or county has designated as either a receiving site or sending site in accordance with a rural and resource land transfer of development rights program.
     (17) "Transit-proximate" means within one-half mile walking distance of a high capacity transit station or within one-quarter mile of another major transit stop.
     (18) "Transit-supportive density" means a minimum average of fifty units of development for each acre of land within one-half mile walking distance of a high capacity transit station, and a minimum of ten development units for each acre of land within one-quarter mile of another major transit stop.
     (19) "Very low-income household" means a single person, family, or unrelated persons living together whose income, adjusted for household size, is no more than fifty percent of median income.

NEW SECTION.  Sec. 3   (1) Subject to the availability of amounts appropriated for this specific purpose, the residential infrastructure program is created in the department to provide loans to eligible jurisdictions and grants to nonprofit organizations for public infrastructure that supports increased capacity for dense, affordable residential development in transit-proximate areas.
     (2) The department may provide direct loans to eligible jurisdictions for projects meeting the requirements of subsection (3) of this section or provide grants to nonprofit organizations for projects meeting the requirements of subsection (4) of this section. Funds appropriated through the program must be used to pay for the cost of public infrastructure projects that support increased capacity for dense, affordable residential development in transit-proximate areas, including the planning, construction, repair, reconstruction, replacement, rehabilitation, or improvement of sidewalks, streets and roads, bridges, publicly owned utilities, drinking water systems, and storm and sanitary sewage systems. The department may also provide loans to eligible jurisdictions or grants to nonprofit organizations for the acquisition of real property when the acquisition is directly related to the development of public infrastructure projects to support dense, affordable residential development in transit-proximate areas.
     (3) An eligible jurisdiction seeking funding from the residential infrastructure program must:
     (a) Designate a project area within its urban growth area designated under RCW 36.70A.110 and demonstrate with official plans that overall development within the project area will increase the supply of dense, affordable residential development units and that the project area currently, or will within eight years of the loan award, meets the definitions of transit-proximate and will achieve minimum transit-supportive density;
     (b) Demonstrate that designated infrastructure projects, for which an eligible jurisdiction seeks funding:
     (i) Are contained in the eligible jurisdictions' capital facilities element of the comprehensive plan under RCW 36.70A.070;
     (ii) Maximize the use of existing infrastructure; and
     (iii) Will increase existing system capacity to accommodate projected population growth in a manner that supports infill and redevelopment of existing urban areas;
     (c) Demonstrate a commitment to promoting affordable residential development within the designated project area through:
     (i) Local funding commitments to affordable residential housing projects in the proposed project area; or
     (ii) The official adoption and implementation of policies and ordinances that include affordable housing incentive initiatives, such as those outlined within RCW 36.70A.540, or other policies and programs intended to promote the creation of affordable housing;
     (d) Include a plan to construct, or pay for the construction of, comparable replacement housing within the eligible jurisdiction when housing units are lost as a direct result of the public infrastructure projects funded under this program. The plan must include the following:
     (i) A residential unit lost as a result of the infrastructure project must be replaced one-for-one with a unit at an equal or better affordability rate;
     (ii) Households that are displaced must receive priority for obtaining replacement units, by being provided with a forty-five day option to obtain a replacement unit prior to the unit being made available to nondisplaced households. If a household rejects a unit prior to the forty-fifth day, the priority option period will conclude for that household. All displaced households interested in the replacement units must be given priority before any such units are made available to non-displaced households;
     (iii) Relocation assistance must be paid to any displaced households; and
     (iv) Projects receiving financing from the residential infrastructure program must comply with any relocation standards and requirements and real property acquisition policies established by the department as a condition of residential infrastructure program assistance; and
     (e) Commit to complying with the provisions of chapter 39.12 RCW.
     (4) A nonprofit organization seeking funding from the residential infrastructure program must:
     (a) Demonstrate that the funding will support public infrastructure projects or the acquisition of property related to the development of infrastructure projects, as described in subsection (2) of this section, related to a specific affordable residential development that has also received a commitment of funding from the Washington housing trust fund under chapter 43.185 or 43.185A RCW or the Washington state housing finance commission under chapter 43.180 RCW;
     (b) Demonstrate that the area in which the infrastructure project will take place is within an urban growth area designated by a local jurisdiction under RCW 36.70A.110, and demonstrate with official plans from the jurisdiction that overall development within the project area will increase the supply of dense, affordable residential development and that the project area currently, or will within eight years of the grant award, meets the definitions of transit-proximate and will achieve minimum transit-supportive density;
     (c) Demonstrate that the specific affordable housing development described in (a) of this subsection will, within eight years of the grant award, contribute to an increase in the supply of dense, affordable residential development within the area referenced in (b) of this subsection; and
     (d) Comply with the requirements of subsection (3)(d) of this section, related to the provision of comparable replacement housing and relocation standards and requirements.
     (5) The department must determine each year the total amount of funding available in loans and grants and must establish the total amount of financial assistance to be awarded to eligible jurisdiction and nonprofit organization applicants based on (a) the total amount of money appropriated to the program; (b) the quality of applications received; and (c) the best available projections of total revenue likely to be available for the program for the subsequent three years. The total amount of financial assistance allocated must not exceed ten million dollars per project for eligible jurisdictions and not exceed one million dollars per project for nonprofit organizations. The maximum project funding limits established in this section must be adjusted for inflation by the office of financial management every other year beginning July 1, 2012, based upon changes in the consumer price index during the time period since the last adjustment. If the bureau of labor and statistics develops more than one consumer price index for areas within the state, the index covering the greatest number of people, covering areas exclusively within the boundaries of the state, and including all items shall be used for the adjustments for inflation in this section. The office of financial management must calculate the new maximum project funding limits and transmit those new limits to the department.
     (6) Loan interest rates must not exceed one-half of one percent a year. The department shall establish policies, priorities, and procedures by which all or part of a loan may be forgiven if an eligible jurisdiction:
     (a) Creates a significantly greater number of affordable residential housing units within the project area than the number agreed to during loan contract negotiations;
     (b) Creates a significant number of residential units that are available and affordable to households of income levels significantly below the maximum income levels allowable under the program; or
     (c) Significantly exceeds program expectations in other ways to be identified by the department.
     (7) During each fiscal year in which funds are available for use by the department for the residential infrastructure program, the department shall announce to all known interested parties a competitive application period of at least ninety days' duration. This announcement must be made as often as the director deems appropriate for proper utilization of resources.
     (8) The department shall establish a competitive process for loan and grant awards and shall review and prioritize proposals in consultation with the public works board and the transportation improvement board or designees selected by those boards to represent them.
     (a) Priority must be awarded to projects that include plans to:
     (i) Maximize capacity to accommodate growth;
     (ii) Maximize residential density;
     (iii) Maximize the number of affordable housing units;
     (iv) Maintain the affordability of the housing for the longest period of time;
     (v) Maximize affordability to low-income households and very low-income households;
     (vi) Maximize access to public transit; and
     (vii) Demonstrate readiness to proceed.
     (b) In awarding loans and grants from the program established in subsection (1) of this section, the department must consider whether the jurisdiction has completed a Washington state quality award program assessment of management systems.
     (c) The department shall give additional consideration to jurisdictions that demonstrate a commitment to creating receiving areas for rural and resource land transfer of development rights, which may be demonstrated through one of the following actions, listed in order of highest value and priority:
     (i) The jurisdiction has in place at the time of application, within the area specified by the application or in other areas within the jurisdiction, designated receiving sites for rural and resource land transfer of development rights established through an ordinance by the jurisdiction and an interlocal agreement with a sending site jurisdiction that enables transfers from rural and resource lands;
     (ii) The jurisdiction has in place at the time of application, within the area specified by the application or in other areas within the jurisdiction, designated receiving sites for rural and resource land transfer of development rights established through an ordinance by the jurisdiction; or
     (iii) The jurisdiction states in its comprehensive plan at the time of application a commitment to consider the development and implementation of a rural and resource land transfer of development rights program.
     (9) Eligible jurisdictions and nonprofit organizations that receive support from the residential infrastructure program must report to the department annually by December 31st of each year following the date of the receipt of the loan or grant until ten years after the completion of the infrastructure project.
     (a) Reporting before and during the construction of the infrastructure project must include information on the status of the project, the estimated completion date, and any variations from the approved proposal.
     (b) Reporting after completion of the project must include a description of how the project area is transit-proximate and has achieved transit-supportive density requirements or how the eligible jurisdiction or nonprofit organization is working toward complying with those requirements. The report must also include information about the status of the residential development occurring within the project area, including:
     (i) The total number of residential units developed or under construction; and
     (ii) The total number of residential units meeting the definition of affordable residential development.
     (10)(a) If an infrastructure project funded by the residential infrastructure program is not completed by the agreed upon date or varies substantially from the approved proposal in a way that will result in the creation of less affordable residential development than that agreed to at the time of the project funding award as a condition of the funding, the eligible jurisdiction or nonprofit organization associated with the project shall make the necessary project adjustments as determined by the department or refund all or a portion of the loan or grant amount.
     (b) If an eligible jurisdiction rescinds its public commitment to promoting affordable residential development within the designated project area by changing officially adopted policies and ordinances or failing to implement these policies and ordinances, eligible jurisdictions may be required to refund all or a portion of the principal loan amount plus compounded interest calculated at the current market rate.
     (c) If a nonprofit organization fails to produce the agreed upon number of affordable residential units within its designated project, the nonprofit organizations may be required to refund all or a portion of its grant amount plus compounded interest calculated at the current market rate.
     (d) The department may grant a partial or total exemption from the repayment requirement under this section if the department determines that a project is substantially complete or that the property has been substantially used in keeping with the original affordable residential housing purpose of the loan or grant.
     (11)(a) Jurisdictions and nonprofit organizations that receive more than two hundred fifty thousand dollars in total loans or grants in a calendar year from the program established in subsection (1) of this section or other state housing-related funding sources, including the housing trust fund, programs of the housing finance commission, and surcharges established in RCW 36.22.178 and 36.22.179, must apply to the Washington state quality award program for an assessment of management systems.
     (b) Jurisdictions and nonprofit organizations that receive more than two hundred fifty thousand dollars in total loans or grants in a calendar year from the program established in subsection (1) of this section or other state housing-related funding sources, including the housing trust fund, programs of the housing finance commission, and surcharges established in RCW 36.22.178 and 36.22.179, for three or more consecutive calendar years must apply to the Washington state quality award program for an assessment of management systems every three years.

NEW SECTION.  Sec. 4   Sections 1 through 3 of this act constitute a new chapter in Title 43 RCW.