(The Center Square) – Supporters of Washington state’s new Covenant Home Ownership Program, which offers home buying assistance to minorities who have faced housing discrimination in the past, are backing a follow-up bill that would increase the income threshold for eligibility and allow for loan forgiveness. Opponents question the legislation’s potential legal headaches and the disparate impact of the program.
The Covenant Home Ownership Program is the result of House Bill 1474, which was passed by the Legislature and signed into law by then-Gov. Jay Inslee in 2023. The program, which launched last year, allows qualified homebuyers to apply through their lenders for zero-interest loans to help fund down payments and closing costs.The loans are funded by fees on real estate documents that are recorded with the state.
The program is open to those who lived in or had a parent, grandparent or great-grandparent living in Washington before 1968 and who meet one of the following government-defined racial identities: “Black, Hispanic, Native American, Alaska Native, Native Hawaiian or other Pacific Islander, Korean and Asian Indian.”
Rep. Jamila Taylor, D-Federal Way, sponsored HB 1474. She is also the sponsor of House Bill 1696 this session to modify the Covenant Home Ownership Program.
Specifically, HB 1696 would increase the income threshold for applicants from 100% to 140% of the area median income and allow for loans to be full forgiven after five years of repayment.
It would also change one of the oversight committee membership positions to include a representative from a nonprofit organization that provides housing counseling, replacing the previous requirement for a community-based organization specializing in affordable housing development.
“Allowing folks who’ve been living in the home for five years or more to get equity from that investment, that is the whole purpose of repairing the harm that was done by locking folks out of housing options by racially restrictive covenants,” Taylor told members of the House Housing Committed during Friday’s public hearing on the bill.
Rep. Cyndy Jacobson, R-Puyallup, queried staff, wondering if anyone had asked the attorney general if the loan forgiveness provision of the legislation would be considered a gift of public funds and, therefore, not allowed.
Staff responded to say no one had asked that question of the attorney general.
Rep. Sam Low, R-Lake Stevens, asked staff about any lawsuits related to the Covenant Home Ownership Program.
A staff member noted one lawsuit but didn’t have any details.
As reported by The Center Square, the Foundation Against Intolerance and Racism, or FAIR, a national New York-based nonprofit, brought a case last year against the head of the Washington State Housing Finance Commission concerning the Covenant Home Ownership Program, claiming that the commission has been violating homebuyers’ constitutional rights by limiting who qualifies for the program.
Rep. Jeremie Dufault, R-Selah, asked several questions of Taylor and other HB 1696 supporters.
“Is one of the elements that a person qualifying for this program would need to show that they were affected by a racially restrictive covenant, personally?” Dufault inquired.
“What do you mean affected?” Taylor asked. “If the person was a resident in the state prior to 1968 they were affected because they were part of a racial class.”
Dufault had a follow-up question.
“So, you don’t have to show that you were personally affected like you tried to buy a home prior to 1968 and were prevented from doing so and therefore are eligible for this program. It could just be anybody?” he asked.
Taylor explained that demonstrating how one was discriminated against decades ago would be challenging for people who lack the documentation to back up their claims.
During the hearing, Chair Strom Peterson, D-Everett, stopped Dufault more than once when he asked if the bill being discussed would stand up to constitutional challenges.
“When there’s a bill that I think has issues, my goal is always to make sure that everybody understands what’s being proposed and the impact that it will have on my constituents and on our state,” Dufault told The Center Square after the hearing.
The Covenant Home Ownership Program, according to Dufault, is about reparations and is not helpful.
“We need to be fair and eliminate discrimination in all forms, not trying to reach back 50, 100, 200 or 400 years into history,” he explained.
Dufault said he regretted not getting answers to his questions.
“Everyone basically said we don’t know, and we’ll defer to somebody else, but what that does is basically push it back into the shadows,” he said. “This is a public hearing where you’re supposed to talk about the impact and any potential problems with pieces of legislation. So when a problem gets identified and it’s swept under the carpet, I find that deeply disturbing as a representative and a taxpayer.”
No further action has been scheduled for HB 1696.
