Atrómitos Consulting Done Fearlessly
CAREERS

Menu

Washington Keeps Losing Ground

Michealle Gady

·

Paying for the Last Link: A Six-Part Series on Housing Finance in Washington, Part 4 of 6

In this series, I have argued that Washington can identify people who need housing but too often cannot provide the last link in the chain of care I described in July: a home. Part 3 showed that the state funds buildings more reliably than it helps people pay rent. Even on the building side, though, Washington keeps losing ground.

The Washington State Department of Commerce’s 2025 annual report on homelessness is blunt about supply: Washington needs 1.1 million new homes by 2044, and the report describes “construction falling behind.” In Commerce’s 2025 round for the Housing Trust Fund and two federal programs, Commerce had $212.4 million to award, and applicants asked for more than $538 million. At the same time, the state is losing affordable homes it already has.

Two proposals could help Washington hold its ground: lending money that comes back, and giving local governments a chance to buy affordable housing before an owner sells it. Another state or county has already tried each one, and Washington has authorized the first without funding it. Neither is fully proven, and I will be candid about where the evidence is thin and about the risks the state would need to manage.

1. Fund the Revolving Loan Program Washington Already Created

Washington already has a tool to stretch its capital but has not yet paid for it. In 2024, the Legislature unanimously passed the Workforce Housing Accelerator Revolving Loan Fund Program. Lawmakers did not fund it that year, and I have found no capital budget appropriation for it since. The state’s Affordable Housing Advisory Board asked lawmakers to fund it in the 2026 supplemental budget.

The law spells out how the program would work. Commerce would contract with the Washington State Housing Finance Commission to run it. Nonprofit and for-profit developers and housing authorities could borrow up to $20 million or 20% of a project’s cost, whichever is less, at interest rates above 1% and no higher than 2.5% for the first 20 years. Each project would have to serve households earning 50% to 80% of median income and stay affordable for at least 99 years. Developers would repay the loans from the buildings’ cash flow, and the commission would lend the repaid money again.

Montgomery County, Maryland, shows how such a fund can work. The county committed $100 million to a Housing Production Fund, which finances mixed-income buildings with low-cost construction loans. In each project, the fund requires that at least 30% of the units be income-restricted, including 20% for households at or below 50% of area median income, while the remaining units can rent at market rates. The fund’s first project, a 268-unit building, opened in 2023, and the county’s housing agency has more than 3,000 units in its pipeline. Washington’s program would work differently. It would require financed housing to serve households earning 50% to 80% of median income, with no requirement for households below 50%, while the county fund mainly finances its housing agency’s own mixed-income buildings. The county fund is also too new to show how quickly repaid loans are lent again.

The main benefit is that the money keeps working. The state can spend a grant only once, while a revolving fund lets the commission lend the same appropriation again and again as borrowers repay. As Part 2 described, households toward the upper end of the low-income range can often pay enough rent for a building to repay a low-cost loan. Moving those projects from grants to loans would leave more Housing Trust Fund grants for housing that serves people with the lowest incomes, where rents generally cannot repay a loan. Projects serving households near the program’s 50% floor may still need other subsidy alongside a loan.

The risks are real but manageable. A revolving fund works only for projects that can repay, so on its own it will not house people leaving shelters. If a project fails, the public absorbs the loss, and even when projects succeed, repayments take years to come back. Careful underwriting by a commission that already finances affordable housing can limit those losses, and continued Housing Trust Fund grants can keep serving the households a loan cannot reach. With capital requests at more than twice the money available, the benefits outweigh the risks, and Washington should fund the program it created.

2. Give Local Governments a Right to Buy Affordable Housing Before It’s Lost

Washington is also losing affordable housing it already has. In 2026, Commerce received requests for $97.7 million to preserve more than 3,200 affordable units and had $34.1 million to award. After adjusting for inflation, the number of Washington rentals priced between $600 and $999 a month fell from more than 346,000 in 2013 to about 141,000 in 2023.

Affordable rental housing is most at risk at two moments: when the rent limits attached to public financing expire, and when a building sells. In 2024, Enterprise Community Partners told a U.S. Senate subcommittee that “older properties are at risk of being acquired and upgraded above the point of affordability.” A local government that wants to keep the rents affordable may not be able to move as fast as a private buyer, because it may need public approvals and financing before it can make an offer. A purchase right closes that gap by requiring the owner to notify the local government of a sale in advance and to give it time to make an offer.

Colorado’s 2024 law shows how a purchase right works. It creates two rights for cities and counties:

  • A right of first refusal for rental buildings of five or more units that carry recorded affordability requirements. When the owner lists the building or takes certain other steps toward a sale, the owner must notify the local government within 14 days. The local government then has 14 days to say it intends to buy and 30 days to match the offer.
  • A right of first offer for rental buildings without recorded affordability requirements that are at least 30 years old and have 15 to 100 units. Before listing the building, an owner who intends to sell must notify the local government. The local government then has 7 days to respond and 14 days to make an offer the owner can accept or reject.

A local government can assign either right to a housing authority or the state housing finance authority, and it can waive its rights entirely. If it buys, it must keep the property affordable for at least 40 years, and current tenants can stay through their leases. The rights end in 2029 unless Colorado lawmakers extend them.

Depending on the repairs needed, preservation can be faster and less expensive than building new, and it keeps current tenants in their homes. Washington, D.C., gives tenants the first chance to buy their building when the owner sells it. Its tenant purchase law and the laws that preceded it helped develop or preserve 16,224 affordable units between 1975 and 2021.

The risks fall on owners and on the governments that hold the rights. The Colorado Association of Home Builders warned of a “chilling effect on capital and the markets,” and the Colorado Apartment Association worried about the law’s “stigmatizing effect” on housing investment. The timelines are tight for governments that need council votes and financing. According to a Colorado Lawyer analysis, several Colorado jurisdictions, including El Paso County and Colorado Springs, have waived their rights. I have found no public report of a completed purchase under Colorado’s law. The D.C. Policy Center reported one estimate that sales in D.C. took an average of 5.3 months longer when a registered tenant association was involved and it noted that “there is no comprehensive data that tracks” the law’s outcomes.

Washington has no comparable statewide right to buy rental apartments. Owners of federally assisted housing must notify tenants, local governments, and the state at least 12 months before a federal rental assistance contract expires or the owner prepays a federally assisted mortgage. Owners of manufactured home communities must notify residents, local governments, housing authorities, and the state of an opportunity to compete to buy the community, a rule lawmakers adopted after citing closures and “the extremely high cost of moving homes”. Residents and eligible organizations, which include local governments and housing authorities, can then make offers. Neither law requires an owner to sell, and neither applies to ordinary apartment buildings.

In the 2026 session, lawmakers gave cities and the state authority to back social housing under public ownership, which could add more public owners able to buy and run apartment buildings. Commerce’s 2025–2030 local homeless housing plan guidance already asks counties to set criteria for homeless housing capital projects, which can include preservation. Still, nothing gives local governments a way to step in before an owner sells an apartment building.

On balance, the benefits outweigh the risks, provided lawmakers design the law to address them. Washington should build on the principle behind its manufactured home law and go a step beyond it, giving local governments a right to match offers on affordable apartment buildings, as Colorado does. To limit delays for owners, the law should keep timelines short and let local governments assign their rights to housing authorities that may be able to act more quickly. And because a purchase right is useful only if buyers can pay, the state should fund preservation, including the repairs older buildings often need.

What These Two Proposals Would Do

Together, these proposals could make Washington’s capital go further and keep more of the affordable housing the state already has. The revolving fund could also leave more grant money for homes that serve people with the lowest incomes. Both would need an evaluation designed from the start with the people they affect, so the state can assess whether they are working. Even then, a building is only part of the answer for households with the lowest incomes. They also need help paying rent, which is where the next article turns.

Next in this series: three ways Washington could help households with the lowest incomes afford and keep their homes, what the evidence shows for each, and the risks the state would need to manage.

Sources