WA doesn’t doesn’t need more apartments and ADUs — it needs affordable starter homes | Opinion

Many point to the success of Washington’s Growth Management Act, or “Smart Growth,” in preventing “sprawl” and helping to manage the growth in our communities, hence the name “Growth Management Act,” or GMA.

You hear the mantra of building “affordable housing” and “missing middle housing,” but then you pull back the curtain to see that what that means in practice is subsidized apartments or accessory dwelling units, not single-family homes or condo ownership.

Homeownership is a hedge against inflation and the primary wealth builder for working families. So why can’t we build an affordable starter home?

If we start with the purpose of the Growth Management Act, we can get an indication as to how this legislation adds considerable costs to building affordable homes. The way the GMA works is by drawing a box around cities and designated growth areas in counties. The boundary line is called the Urban Growth Boundary. The object is to fill the box up first before making the box bigger, with the goal of making efficient use of infrastructure, water, sewer, roads, etc.

The GMA also allows for the imposition of impact fees to cover the cost associated with new growth on area schools, roads, utilities and the like. When the fees are paid by the builder, they are the same as the cost of lumber or concrete. The cost to build plus profit markup results in the sale price of the home.

In addition to these direct costs, government at all levels is artificially restricting the amount of land, resulting in rapidly escalating costs for land as the available land decreases — simple supply and demand. Often, land that is left for development is less desirable to build on and more costly due to issues of topography or other infrastructure needs to make it buildable.

Now look at permitting. Processing time for permits — whether it be for a single-family home, a townhouse or an apartment complex — can be lengthy and costly. In one jurisdiction, according to a Building Industry of Washington report, there is an 18-month permit delay. According to the same report, the average permit delay is over six months, resulting in carrying costs of over $30,000. All of this adds to the cost of the new home, and you haven’t even picked out cabinets yet.

So, what does that mean for a prospective homeowner? They could be paying as much as $600 per month according to some calculations just to cover the costs imposed by government fees and regulations. That’s bad news for working families. Consider that for each $1,000 added to the cost of a newly built home in the state, approximately 2,200 families are priced out of the opportunity to own a home, according to a National Association of Home Builders estimate.

A solution to put entry-level homes on the market for first-time homebuyers is my proposal, Senate Bill 5027, known as the American Dream Home Act. This self-imposed cost problem can be directly solved by limiting the impacts of government to keep the cost as low as possible and incentivizing builders to construct starter homes.

My proposal limits building permits to $1,250, prohibits impact fees, lets the local jurisdiction keep the state portion of the sales tax on materials, gives a builder a 4% business and occupation tax credit as an incentive, and gives this potential homeowner a property tax exemption for up to 7 years, similar to the property-tax exemption for low-income multi-family projects. It also allows construction outside the urban growth area, similar to provisions that allow school construction outside that artificial boundary.

This approach could lower the cost of a starter home by as much as $100,000, making thousands of additional families eligible to own a home.

Sen. Phil Fortunato is an Auburn Republican and represents the 31st Legislative District., which includes parts of Pierce and King counties.

This story was originally published February 8, 2023 at 7:00 AM with the headline "WA doesn’t doesn’t need more apartments and ADUs — it needs affordable starter homes | Opinion."