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Interview with Washington Lieutenant Governor Denny Heck

December 9, 2022
Authors: Interviewed by HFO broker Aaron Kirk Douglas
Publishers: HFO Apartment Investor Newsletter | 2022

Denny Heck official.jpgThe latest report on Washington’s housing needs said between 2012 and 2019, the underproduction in the state totaled 140,000 units. Are there other numbers you’ve heard?
It’s a hard area to count. But to the degree that our science and our methodology are getting better, we know it’s at least 140,000 to 150,000 households who do not have housing of their own that would like to have it. That’s pretty significant, even in a state the size of Washington, which is closing in on eight million people.

Industry experts see challenges in addressing the shortfall, and they’re hoping to make some of those changes in zoning codes. Is that happening in Washington?
No, but there have been multiple efforts to do so, and that element of increasing supply will definitely be a part of the debate that will rage in the January 2023 session of the Washington legislature.

Do you know what some of those efforts might entail?
To distill it down, most of these efforts are known by the moniker of Missing Middle Housing. And what they attempt to do is either incent or compel local municipalities to in effect, sometimes with certain conditions, move away from single-family zoning to allow for more density to increase supply. And this can take a whole bunch of forms, from more liberal laws relating to the addition of accessory dwelling units (ADUs) [to] creating duplexes, triplexes, or quadplexes in certain areas.
But look, we have a serious housing supply problem. In fact, I would characterize it as a housing crisis in this country, definitely in Washington state, which, by the way, has the worst housing supply problem in the country. If you take the average number of housing units per household, in the country, it’s 1.14. In Washington state it’s 1.06. That is the lowest in the United States. We’re really feeling this in Washington state. And of course, because God has not repealed the law of supply and demand, that means home prices are up, up, up, up. 

Is there anything that the state can do about permit times and inspection lags?
Should, and I hope, will. There will be several permitting reform proposals in the January 2023 session. The Greater Seattle/Central Puget Sound is the fourth most regulated in the country in terms of gaining permits. We know the time it takes to get permits adds cost to construction and housing units, sometimes so much time that construction isn’t undertaken. We know that permitting reform is an important part of this. But here’s the deal: the provision of housing units is a complex, three-dimensional ecosystem. And we can point to any one of these things, but we have to understand we probably need to do all of these things. We need zoning reform, we need permitting reform, we need to make sure we have available land on which to build, we need to be paying attention to the available supply of labor. Because we know that homebuilders in particular are having a hard time finding people to drive hammers and pound nails. It’s all of these things that have to be looked at. And you can’t look at just one without looking at the other. 

Is there anything that can be done to educate the public at large to get them to accept the fact that everyone needs to have more housing shelter in their neighborhoods?
I think the good news here is that we’re really beginning to make some progress. There is a considerable NIMBY movement afoot on a decentralized basis. But you know what else is being stood up? Beginning to get some fuel in the gas tank? YIMBYism: Yes, In My Backyard – people who see it just the opposite ... And one of the things I think is important to point out here is that a lot of NIMBYism is based on the ill-conceived premise that if you “change the character of my neighborhood,” then my home value is going to be hurt. That’s not what the research says, at all. And as more people become more aware of that, I think we knock out one of the legs under the stool of people who are just obstructing progress.

What is the state of Washington doing to encourage more housing development? 
Our most recent legislature appropriated $825 million to attack this issue. It was for all manner of things, mostly focused on the affordable housing side of the income strata ... And included in that $825 million was sufficient funds to build 2,000 affordable units. It was a great step forward, a higher commitment than ever. But, as I pointed out to them, to their chagrin, if we did that every year, for 70 years, we might get even, because at 2,000 units a year, we’re not beginning to touch it. That’s why this is going to require an all-of-the-above effort by local, state, and federal governments and the private sector. 
The public sector cannot appropriate sufficient supplies for us to build our way out of this ... The reality is, we need to build more homes of all kinds for all our neighbors, because, as I said earlier, this is an ecosystem. We’re not building very many starter homes. There’s a lot of competition for what we have, and Boomers like me are downsizing. And you have some people that want to buy that first home, get that first rung on the ladder, and we’re not building them. So what does that cause to happen? 

Because people stay renting, occupancies go up. If occupancies go up, rents go up, if rents go up, more people become cost-burdened. And what happens? You have more homelessness. So, this is an ecosystem, and we need to look at it in terms of overall supply, but with our highest emphasis, I think, on affordable housing.

Do you know of any specific housing bills that will be brought to the forefront in the next legislative session?
Yes. And the line forms around the corner. I’ve been around this process for 50 years now. For the first time in a half-century, I can say with relative confidence that the issue of housing writ large will be a top-tier issue before the legislature. They will act. They will act along a variety of fronts. Whether or not it will make a material difference and an impact is to be determined.

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