At a work session during the Senate Housing Committee's first meeting of the 2025 legislative session, a series of developers, nonprofit housing providers and architects described how long timelines, rising input costs and capital constraints are limiting new housing production across Washington.

The presenters told committee members the supply side of housing — land sourcing, entitlements, permitting, financing and construction — can take four to seven years and that the combination of higher interest rates, rising construction and insurance costs, and higher local fees is making many projects financially infeasible.

Why it matters: Lawmakers said the state needs more housing across price points. Witnesses linked housing scarcity to specific, changeable policy levers: zoning and upzoning to increase developable land, permit-review reforms to shorten timelines, tax and fee policies (including multifamily tax exemptions and local impact fees), and targeted capital programs for nonprofits.

Highlights from presenters

- Development lifecycle and economics: Carl Charette, a multifamily developer with AvalonBay Communities, walked the committee through the typical life cycle from land acquisition to stabilization, noting projects commonly take "a little bit over 5 years" from concept to completion. Charette said "real estate development is a is a formula. It's a math equation," and warned that rising interest rates and construction costs have squeezed yield-on-cost metrics. He offered a representative mid-rise case study (podium-style, 5'8 stories) in Redmond showing a development yield below the threshold institutional capital requires.

- Affordability and nonprofit production: Ryan Donahue and Ethan Robinson of Habitat for Humanity of Seattle and Kittitas Counties described nonprofit homeownership production and the scarcity of starter homes. Donahue said Habitat's vision is "to build a world where everyone has a safe, decent, and affordable place to call home." They asked the state to expand homeownership funding in the housing trust fund, create a revolving construction loan fund (low-interest) for nonprofits, and extend a sales-and-use tax exemption to nonprofit homeownership projects similar to exemptions that exist for rental or shelter projects.

- Small-scale development barriers: Architect-developer Tessa Bradley (Artisan Group) described developing a six-unit, high-performance mixed-use building in Tumwater and called small-scale development "death by a thousand cuts." Bradley said long permitting timelines increased her project's costs by roughly 30% from initial pro forma to construction, described expensive local utility moves (Puget Sound Energy undergrounding) and noted commercial lenders required a debt-service coverage ratio the project could not meet without favorable terms from a banking partner; her team had to pledge their architecture company as collateral.

- Mixed-use/multifamily and risk/cap rates: Angela Rosman and Robert Pantley of Natural and Built Environments presented pro forma analyses for a 100-unit Redmond project. They said per-unit costs and cap-rate expectations mean a typical sale at stabilization could produce negative net proceeds under current conditions. Rosman and Pantley argued that reducing risk (shorter timelines, predictable permitting, lower soft costs) would lower cap rates and make projects bankable for institutional buyers.

- Building homes in Eastern Washington: Jay Roberts of Cascade Custom Homes and past BIAW president described cost drivers for single-family construction outside Puget Sound, noting local impact fees, building-code-driven increases (energy systems, insulation, windows) and permitting costs. He urged aligning Washington's energy-code specifics with national practice and improving fee transparency to lower starter-home costs.

Policy proposals and recurring themes

- Zoning and supply: Multiple presenters said expanded zoning and predictable upzoning reduce land costs and are a necessary condition for more housing.

- Permit review and staffing: Speakers recommended state-level support to speed permit review, particularly in smaller cities that lack staffing capacity.

- Targeted finance for nonprofits: Habitat asked for a revolving low-interest construction loan fund, plus a larger share of the housing trust fund devoted to homeownership production. They also suggested expanding existing land-acquisition programs (LAP, CHIP).

- Tax and fee tools: Presenters supported multifamily tax exemptions, sales-and-use tax relief for nonprofit homeownership construction, and scrutiny of local impact fees that vary widely between jurisdictions.

- Small-scale developer support: Witnesses urged policy choices that reduce fixed, per-project costs (utility relocation, unpredictable local fees) so owner-developers can build smaller projects without needing deep institutional capital.

Quotes from the hearing

"To build apartments in today's world... costs upwards of $500,000 per apartment," Carl Charette said. "We're sourcing so much outside capital and there is so much risk in the timelines..." Tessa Bradley said of small-scale development: "Small scale development is death by a thousand cuts." Ryan Donahue said Habitat's role is to create permanently affordable homeownership opportunities for households shut out of the market.

Ending

Witnesses told the committee that no single policy will solve the shortage and urged coordinated action on zoning, permitting, fees and targeted capital programs. Committee members asked clarifying questions and were offered follow-up materials and detailed pro formas by presenters.