(The Center Square) – Two state bills intended to bolster Spokane’s affordable housing stock received public hearings on Wednesday; approval could cost the region millions of dollars, according to fiscal analyses.
Sen. Marcus Riccelli, D-Spokane, proposed Senate Bill 5884 and Senate Bill 5885 with several majority members ahead of the 2026 session. The first is dubbed the “Pavement to People” bill, which broadens eligibility for underdeveloped land to participate in a sales tax deferral program for affordable housing.
If approved, the definition would expand to include vacant lots, as Spokane also tries to incentivize housing projects by enacting new regulations on vacant lot owners and a 12% parking tax. The latter, SB 5885, would provide tax exemptions to religious nonprofits for building housing on their property.
Fiscal analyses on both bills released Tuesday suggest that their approvals could cost the state about $30 million and local governments upwards of $15 million by 2031. Increased property tax revenue as a result of the housing projects may offset some of that, but the fiscal note deemed it “indeterminate.”
“Spokane is a very determined city to develop our low-income and workforce housing. We’re happy to shave up those round pegs and shove them in square holes if we can get more units,” Councilmember Kitty Klitzke testified. “These proposed changes will lead to more projects providing more housing.”
Only 30 people took a stance on SB 5884 online before the hearing, with 21 in support, four against and five listed as “other.” Meanwhile, 307 did so for SB 5885, with 154 listing pro, 152 con and one as other.
Riccelli cited the state’s anticipated shortage of about 1 million housing units over the next 20 years. He said folks in Spokane are “shovel-ready” for policies like these to expand supply. He said religious nonprofits could receive the sales tax exemptions for new projects if at least half the units built on their properties are affordable housing. Those exemptions would not apply to non-housing facilities.
SB 5884 is a sales tax deferral, rather than an exemption; however, the investors wouldn’t have to pay back any taxes if they reserve at least 20% to 50% of the units for affordable housing for 10 years. Riccelli said it builds on a “successful program” in Spokane and could impact other major cities as well.
Klitzke said Spokane has already approved nine projects totaling 608 units under the existing language.
“I heard very specifically that if we could modify this incentive, there’d be more shovels in the ground and more housing,” Riccelli told the Senate Housing Committee, referencing expansion for vacant land.
The Associated Builders & Contractors Inland Pacific Chapter and the Associated Builders & Contractors of Western Washington both sent representatives to testify against SB 5884. They warned that it could undermine the broader goal by limiting apprenticeship labor to workers from state-approved programs.
“If not for one thing, we would be wholeheartedly supporting SB, 5884,” Carolyn Logue, a lobbyist for ABC Inland Pacific, testified. “It gives local governments the ability to create … community workforce agreements, which put a chilling effect on the ability for your non-union local contractors to bid.”
Paul Jewell, government relations director for the Washington State Association of Counties, testified as “other” on SB 5884. He said WSAC liked the bill, but wants the Senate to expand the language to include counties in addition to urban growth areas, advocating for equal distribution of the program.
While 152 people signed up to oppose SB 5885 before Wednesday, no one verbally testified against it.
Curtis Steinhauer, a policy coordinator for the Association of County and Regional Planning Directors, testified as “other.” He said the organization isn’t opposed to the ideas in SB 5885, but cited concerns about its unfunded mandate on local capital planning departments to update development regulations.
“Planning departments are already resource-constrained,” he testified. “We’d ask that the Legislature appropriate funding or expand grant opportunities at the Department of Commerce to fund this work.”
The committee will decide at a later date whether to take executive action on these bills before sending them to another panel and the Senate floor.
