House Democrats Gut Pro-Renter Backyard Cottage Bill

by Leo Brine

As the legislative session in Olympia ended this week, Democratic lawmakers celebrated the list of historic, progressive bills they passed, such as a capital gains tax, a new clean fuels standard, and police reform.

But as usual, legislators' attempt to increase access to affordable housing by changing outdated zoning rules ended in disappointment.

Earlier this year, Sen. Marko Liias proposed legislation (SB 5235) to loosen restrictions on accessory dwelling units — secondary units, such as backyard cottages, that are "accessory" to single-family homes — in cities and counties that are required to plan under the State Growth Management Act. The bill would have banned local governments from imposing owner occupancy requirements for ADUs, except in limited circumstances.

Many cities and counties require property owners to live on site in order to rent an accessory unit, effectively prohibiting situations in which renters occupy both the primary house and its secondary apartment. Allowing property owners to live elsewhere would have expanded opportunities for renters to live in cities, including in single-family areas that are often prohibitively expensive.

The original bill passed the senate easily on a vote of 43—6. However, by the time the bill made it out back to the State Senate from the House, it included new changes that effectively gutted the legislation. The bill that eventually passed includes a loophole allowing cities to opt out of the new restrictions and impose owner occupancy requirements on a neighborhood-by-neighborhood basis, simply by going through a brief public feedback process. The changes prompted Liias to remark sarcastically, "Sometimes when we pass a bill out of the Senate and send it over to the House, they really transform it into something even better and stronger than it was before. … This is not one of those cases."

In fact, one of the original supporters of the bill, the progressive Sightline think tank, sent a letter to Gov. Jay Inslee this week asking him to veto several sections the House added to Liias' bill, writing that the original bill "would have lifted local prohibitions on renters residing in properties with accessory dwelling units. These rules not only discriminate against renters, but are a major impediment to the addition of ADUs. The final version as amended by the House would solve neither problem, and all told, would likely amount to a step backward on ADU policy for the state."

The changes to the bill began in the House Local Government Committee, whose chair, Rep. Gerry Pollet (D-46, North Seattle), told PubliCola the original bill was "a technical nightmare," and "needed dramatic revision." Calling the bill his committee passed a work-in-progress, Pollet said he expected other legislators to make further amendments before passing the bill.

Pollet's amendments, however, did not seem technical. Nor was the House able to restore the bill to anything resembling its former self before sending it back to the Senate for final passage. In his committee, Pollet scaled back Liias' pro-renter mandate by allowing cities and counties to keep owner occupancy rules as long as they allowed property owners to apply for exemptions, leaving it up to cities to decide whether claims for exemptions were legitimate.

Pollet's version would have also given cities two years after their next required GMA comprehensive plan update to implement the regulations. Washington cities and counties must update their comprehensive plans every eight years; under the current schedule, some jurisdictions would not have to update their owner occupancy rules until 2027.

Reflecting on the committee's amendments, Sen. Liias said: "Cities don't like being told what to do. A lot of cities are deeply suspicious of renters — they treat renters with disdain. I think ultimately the language in the house committee amendment reflected that anti-renter sentiment from cities."

As PubliCola has documented, Pollet has historically opposed ADU reform legislation. One of his ongoing concerns is that property owners will build ADUs and turn them into short-term rentals, driving up rents and increasing displacement. "ADUs are good if they increase permanent affordable housing," Pollet said. During the final House vote, Pollet criticized short-term rentals for inducing "profit tourism."

There are two problems with this argument against Airbnbs. First, studies show that Airbnbs only cause microscopic rent increases. For example, a National Bureau of Economic Research study Pollet himself has cited shows that a 1% increase in Airbnb listings causes rents to go up by 0.018%, meaning there would have to be a major spike in Airbnbs to drive rents up by pennies. And the fact is, newly built ADUs don't make up a significant portion of Airbnbs; a University of California Study found only 8% of newly built ADUs in California were being offered as short-term rentals.

This leads to the real fallacy with Pollet's argument: Warning that some ADUs may become short-term rentals is meaningless because the so-called "loss" only subtracts from housing that didn't previously exist. If a city allows ADUs and 8% of those turn into short-term rentals, that still means the vast majority of new units are long-term rentals, contributing to that city's overall housing supply.

It's also worth noting that any property, from a room in an apartment to an entire home or condo, can be listed on Airbnb — so why target ADUs? By Pollet's reasoning, we should be wary of any new housing because it could be rented out short-term.

Though the House ultimately removed many of Pollet's amendments from Liias' bill, the final bill still eviscerates the Senate's original proposal, thanks to an amendment by Rep. Sharon Shewmake (D-42, Bellingham) that makes it easy for cities to impose owner-occupancy requirements and provides incentives for cities to prohibit short-term rentals.

Shewmake said she opposed owner-occupancy requirements — "I think there's a classist assumption that someone who owns a property is better than someone who rents it and I think that's wrong," she told PubliCola — but added that in order to pass a bill, she had to compromise with cities that want the right to require owner occupancy.

Her revised bill says that a city or county can impose owner-occupancy requirements if an ADU is a short-term rental; during the first year after a unit goes up; or whenever they want to, as long as they hold two public hearings and limit the requirement to certain geographic areas, such as a single neighborhood. The amendment throws open the door for traditionally exclusive neighborhoods to throw around their disproportionate weight to keep their communities renter-free.

To quote the Sightline letter calling for Inslee's line-item veto: "Holding two public meetings and demonstrating 'need' is a low bar for cities or individual neighborhoods that want to retain ADU owner occupancy requirements indefinitely. The places most likely to take such action would be high-cost, exclusionary communities that have the resources and political motivation, but that are also where ADUs are needed most."

Leo Brine is a Seattle-based journalist.

Featured image is courtesy of the Sightline Institute Middle Homes Photo Library and is used under a Creative Commons 2.0 license (CC BY 2.0).