Mercer Island planners briefed on Growth Management Hearings Board remand, July 31 compliance deadline

Mercer Island planners were briefed March 25 on a Growth Management Hearings Board decision that remanded parts of the city’s 2024 comprehensive-plan periodic review and ordered the city to address shortfalls in affordable‑housing capacity and related policies by July 31.

Principal Planner Adam Zack said the hearings board considered five issues in the appeal and remanded four of them for city action: the residential land‑capacity analysis, adequate provisions to increase affordable housing, adoption of a transit‑station subarea plan, and a narrow anti‑displacement policy element. "The hearings board set a July 31 deadline that the hearings board set for the city," Zack said, urging commissioners to treat the work as substantial and time‑sensitive.

Why it matters: the board assigned Mercer Island a 20‑year housing target totaling 1,239 units, broken into affordability bands (for example, about 339 units in the 0–30% AMI band and 178 units of permanent supportive housing). Zack said the city must demonstrate sufficient development capacity at each affordability level or adopt code and policy changes that close any gaps.

Staff outlined a two‑phase approach. Phase 1, which staff recommended for this project, focuses on the town center and immediately adjacent multifamily zones; staff proposed increasing maximum building heights in the town center to eight stories and to six stories in surrounding multifamily areas. "We're expecting that to add about 1,000 units in that area," Zack said. City council directed staff to limit zoning changes for this project to that phase‑1 geography; broader station‑area and single‑family‑zone issues will be part of a later phase.

To address shortfalls at lower affordability levels, staff proposed two "adequate provisions" the council asked them to accelerate: an inclusionary‑zoning requirement and a fee‑in‑lieu option for developers who opt not to build required affordable units. Zack described the inclusionary proposal as a citywide requirement layered on top of added capacity in the town center, saying the draft approach likely would "require probably 10% of units to be affordable at that 30 to 80% AMI" in zones where capacity is added. The fee‑in‑lieu rate will be set after consultant analysis and council direction.

Staff emphasized that some funding sources are limited. A staff speaker noted the city participates in one optional sales‑tax credit (identified in the presentation as HB 1406) that yields roughly $40,000 a year and is currently used for emergency housing supports; other optional sales‑tax revenues in King County are administered by the county and not directly available to Mercer Island. Commissioners asked whether fee‑in‑lieu funds given to Arch (the regional housing intermediary) would be spent on‑island. Staff said Arch could use funds locally or countywide, but when compliance is measured for the hearings board order, "those units have to be on Mercer Island," a staff representative said.

Zack said staff and consultants are completing a land‑capacity analysis that will (1) count potential capacity under current code, including accessory dwelling units and small-unit types not fully included in the 2024 review, and (2) test proposed code changes (height and other standards) to show how much capacity would be added. He warned that construction‑type constraints (podium design, timber limits) and realistic development assumptions will be fed into the capacity analysis.

Process and schedule: staff said they will seek additional council direction April 21, the commission is expected to conduct legislative review in May–June and provide a recommendation by mid‑June, and council is expected to consider amendments for adoption in July so the city can file a compliance brief and face a hearings‑board compliance hearing in September.

What remains open: staff repeatedly noted some statutory or implementation specifics remain to be clarified by the state Department of Commerce and that certain TOD (transit‑oriented development) compliance items from House Bill 14 91 cited in the presentation will be addressed in the project’s phase 2. The presentation also noted constraints from agreements with WSDOT that limit use of some park parcels near I‑90 and that parks were removed from the modified station‑area boundary per council direction.

The commission engaged in detailed questions on AMI calculations, the difference between permanent supportive housing and emergency shelters, permanence of affordability covenants (staff said inclusionary obligations would be for the life of the building under the proposed approach), monitoring and income‑verification procedures (to be administered via covenants and Arch), and potential design‑review or permit adjustments. Staff said any permit‑process changes would need to align with state clear‑and‑objective rules.

Next steps: staff will present code and comp‑plan amendment details to the commission and council over the next three months to meet the July 31 order; the commission was told to expect extra meetings and detailed tables from consultants showing capacity, subsidy assumptions and draft fee calculations.

Sources: presentation and Q&A by Principal Planner Adam Zack and staff during the Mercer Island Planning Commission meeting, March 25, 2026.