4 New Washington Bills Affecting Common Interest Communities That Developers Should Be Aware Of

Washington’s legislators had their eye on common interest communities (CICs) during the 2023 regular session, which ended on April 23, 2023. Three bills relating to or affecting CICs become effective on July 23, 2023. One became effective immediately. Here is a brief summary of the new laws.

HB 1337 – Accessory Dwelling Units. This bill amends the Growth Management Act to require cities and counties to allow accessory dwelling units (ADUs) within urban growth areas. It contains numerous requirements and exceptions. From a CIC developer’s perspective, the following requirements are important.

• The city or county must allow at least two ADUs in any zone where single-family homes are allowed.
• The city or county may not require the owner of the lot to reside in or occupy any unit on the lot.
• The city or county may not prohibit the sale or conveyance of a condominium unit independently of a principal unit solely on the ground that the condominium unit was originally built as an ADU.

Many local ADU ordinances require the owner of the property to reside in one of the units. Some require common ownership of the units. Even without such restrictions, some have questioned the legality of separately selling an ADU and a principal residence since it would convert the “accessory” unit into a “principal” unit under the land use ordinance. This bill eliminates those issues by prohibiting cities or counties from requiring owner occupancy and by forcing cities and counties to allow the sale of ADU condominium units. The new law prohibits developers and homeowners from imposing any prohibition or restriction on ADUs that the city or county would be prohibited from imposing. (This does not invalidate existing CCRS.)

HB 1110 – “Middle Housing” in Single-Family Zones. HB1110 is the most significant development bill from the legislature this year. In short, it requires cities planning under the Growth Management Act to allow multiple units on every lot zoned predominantly for residential use.

• Cities over 75,000 population must allow at least four units per lot. This rises to six units per lot if the lot is within a quarter mile walking distance of a major transit stop or if at least two of the six units are affordable (60% of median income for rental housing; 80% of median income for ownership housing).
• Cities with population between 25,000 and 75,000 must allow at least two units per lot and four units per lot if the lot is within a quarter mile of a major transit stop or if at least one unit is affordable.
• Cities with a population below 25,000 that are adjacent to certain urban growth areas must allow at least two units per lot.

To meet these density requirements, a city must (i) allow six of nine types of “middle housing.” Middle housing is buildings that are compatible with single-family houses and that contain two or more attached, stacked or clustered homes, including duplexes, triplexes, fourplexes, fiveplexes, sixplexes, townhouses, stacked flats, courtyard apartments, and cottage housing. A city must also allow zero-lot line subdivisions where the number of lots equals the required unit density. A city may allow ADUs to achieve the required density. Cities must comply within six months after their next comprehensive plan update. Certain extensions are allowed.

Like HB 1337, this new law prohibits developers and homeowners from imposing any prohibition or restriction that “actively or effectively” prohibit the construction, development, or use of the additional housing required by the bill. (This does not invalidate existing CCRS.) Interestingly, this provision applies to declarations of pre-2018 condominiums, the declaration and governing documents for post-2017 communities, and the governing documents of all other communities. It is unclear why the legislature made these distinctions.

HB 1119 – Allowing Licensed Child Care in Common Interest Communities. This bill makes it illegal for any community association to adopt or enforce any provision of any governing document that directly or indirectly prohibits, unreasonably restricts, or limits the use of a unit as a licensed child day care center. Simply put, no association can prevent the operation of a day care center in a condominium, subdivision, or cooperative. The bill declares impediments to day cares as an emergency, so the law became effective on May 1, 2023.

The bill severely limits the ability of an association to deal with the impacts of a day care facility.

• The association may impose reasonable regulations on a day care center but only if the regulations are “identical” to those applied to “all other” units. Thus, it appears that associations may not adopt regulations that address issues specific to the impacts of a day care center since those rules would not be identical to the rules applicable to residential units.
• The association may require that the apartment have “direct access” (presumably to a public street) either from outside the building or through “publicly accessible” common areas. The bill does not define “publicly accessible.” We can expect litigation over whether private streets, private courtyards, lobbies, and hallways are publicly accessible.
• The association can require the operator to have insurance, but it can’t require insurance as to claims arising in areas that the association maintains. The association must suffer claims caused by the day care operator or its clients.
• The association can require the parents or guardians to release it from liability directly related to the operation of the day care center but not to the operation, maintenance, or condition of the community.

Whether one agrees this is good policy, this bill will be profoundly upsetting to many associations and unit owners. It will also be a wonderland for lawyers squabbling over the ambiguities in the bill. However, the most important question raised by this bill seems to be whether there is a limit to the legislature’s ability to force a private community to allow commercial enterprises to operate in the community. What distinguishes day care centers from medical clinics, social service agencies, or schools?

SB 5258 – Increasing the Supply of Condominiums and Townhomes. This bill is a grab bag of things intended to spur development of condominiums and townhouses. The following items are of interest to CIC developers.

• The bill corrects recent changes to the earnest money provisions of WUCIOA. The legislature recently allowed developers to use earnest money deposits to build a project. However, the legislature capped any deposit under WUCIOA at 5% of the purchase price. This bill makes it clear that the 5% cap only applies to the portion of the earnest money that is used to construct the project.
• The bill requires local jurisdictions to adopt proportionally lower impact fees for smaller housing units based on area, bedroom count, and trip generation. The lower fees must be enacted within six months after the jurisdiction’s next comprehensive plan update.
• The bill requires all cities and counties to adopt unit lot subdivision ordinances.
• The bill amends 64 RCW Chapter 50 (so-called “Notice and Cure”). Under Chapter 50, before bringing a construction defect claim, a condominium association must notify the condominium developer of the alleged construction defects and offer the developer the option to propose a repair. The developer, however, has no right to make a repair. Thus, the statute is largely a waste of time. This bill modifies the notice requirements to require the condominium association to include a written report from a qualified inspector. The developer can now request a meeting with the association and the inspector to discuss the report.

If you have any questions regarding these new laws and recommended action, please contact one of us.