Homeownership dev. loans

AN ACT Relating to establishing a revolving loan fund for mixed-1
income affordable homeownership development; and adding a new chapter 2
to Title 43 RCW. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
NEW SECTION. Sec. 1. The definitions in this section apply 5
throughout this chapter unless the context clearly requires 6
otherwise.7
(1) "Commission" means the Washington state housing finance 8
commission. 9
(2) "Department" means the department of commerce.10
(3) "Eligible organizations" includes nonprofit developers, for-11
profit developers, public housing authorities, public development 12
authorities, and other applicants eligible under rules established by 13
the commission. 14
(4) "Homeownership housing" means residential dwelling units 15
provided for ownership that are permanently affordable for low-income 16
households. 17
(5) "Low-income household" means a single person, family, or 18
unrelated persons living together whose adjusted income is less than 19
80 percent of the median family income adjusted for household size, 20
for the county where the project is located. 21
S-3677.3
SENATE BILL 6028
State of Washington 69th Legislature 2026 Regular Session
By Senators Alvarado, Trudeau, Bateman, Conway, Nobles, and C. Wilson
Prefiled 01/07/26. Read first time 01/12/26. Referred to Committee
on Housing.
p. 1 SB 6028
NEW SECTION. Sec. 2. A revolving loan fund is created in the 1
department to provide loans to eligible organizations to finance 2
mixed-income affordable homeownership development in which a portion 3
of the development is permanently affordable for low-income 4
households. The department shall contract with the commission to 5
administer the revolving loan fund, subject to the availability of 6
amounts appropriated for the specific purposes provided in this 7
section.8
NEW SECTION. Sec. 3. If economically feasible, the commission 9
may administer loans subject to the following considerations:10
(1) Loans must be awarded to eligible organizations based on 11
criteria established by the commission, including at least the 12
following: 13
(a) Readiness to proceed with construction, including possession 14
of necessary permits and completed land use entitlements;15
(b) Amount and commitment of private capital being leveraged as 16
part of the financing for the project; 17
(c) Amount of homeownership housing provided in the project;18
(d) Development location, with the goal of awarding funding to 19
projects in as many areas of the state as financially feasible and 20
viable; 21
(e) The applicant's qualifications and demonstrated capability to 22
develop and manage the proposed project; and 23
(f) Any other criteria established by the commission, provided 24
that such criteria may not exceed the priority of any other criterion 25
listed in this subsection. 26
(2) The homeownership housing financed under this section must be 27
sold and resold only to low-income households for at least 99 years; 28
however, the commission, in consultation with loan recipients, may 29
establish a longer time period. The commission must:30
(a) Require the applicant to record a covenant or deed 31
restriction that ensures the affordability requirements and other 32
conditions are met for the homeownership housing; and33
(b) Refer any applicable homebuyer to education seminars 34
available through local partnerships. The commission may establish 35
qualifying purchase price thresholds and requirements to ensure that 36
the purchase price is affordable to low-income households under the 37
program. 38
(3) Loans awarded under this section must: 39
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(a) Not exceed the lesser of $5,000,000 or 20 percent of total 1
project costs of the housing to be developed. The commission may 2
exceed this maximum allowable loan amount for cause; and3
(b) Provide loan terms and amounts that are proportional to the 4
estimated value of homeownership housing. 5
(4) Loans awarded under this section may be used in combination 6
with private sector loans, tax-exempt or taxable bonds, real estate 7
excise tax abatements, corporate funding, or any other source of 8
capital as recognized by the commission. 9
(5) The commission must structure loans issued pursuant to this 10
section with a below market interest rate above one percent.11
(6) Loans administered under this section may not include 12
repayment timelines longer than 36 months, except as authorized by 13
policies established by the commission. 14
(7) If a loan recipient refinances, the commission may require 15
loan repayment at an equivalent percentage to the overall capital 16
project financing package at the time of award. 17
(8) Upon receipt and repayment, any interest earnings and repaid 18
loan funds must be tracked separately from other revenue and be 19
reloaned to qualifying applicants to finance additional mixed-income 20
affordable homeownership development in which a portion of the 21
development is homeownership housing. 22
(9) The commission must: 23
(a) Strive to provide as much geographic distribution in areas 24
where this type of financing tool is feasible and viable. The 25
commission may not allocate more than $5,000,000 per round of funding 26
to projects in each individual county. However, subject to available 27
funding, the commission may award more than $5,000,000 per round of 28
funding to projects in an individual county if there are no 29
qualifying applications in other counties; 30
(b) Establish criteria and procedures for long-term monitoring of 31
the program, including the number of affordable housing units 32
developed at each income level; and 33
(c) Establish reporting requirements for loan recipients. The 34
report must include, at minimum: 35
(i) The total value, number, and type of affordable housing 36
constructed; and 37
(ii) The value, number, and type of homeownership housing.38
(10) The commission may adopt policies necessary to administer 39
the program established in this section. 40
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(11) No commission general funds shall be expended to implement 1
this program. 2
NEW SECTION. Sec. 4. (1) If economically feasible, the 3
commission must adopt and implement a program to effectively audit or 4
review each project to ensure that the units sold to low-income 5
households are affordable and include a covenant or deed restriction 6
that ensures the affordability requirements and other conditions are 7
met for at least 99 years. The commission may determine the 8
percentage of the loan amount to use to subcontract with eligible 9
organizations to monitor the long-term affordability of homeownership 10
housing for each project.11
(2) If the review or audit required under subsection (1) of this 12
section for a given project finds that the developer did not offer 13
the amount of homeownership housing committed to for the project, or 14
is not properly screening households for income-restricted units, the 15
developer must repay the full loan amount plus interest and a penalty 16
not to exceed 10 percent to the commission. 17
(3) If a subsequent review or audit required under subsection (1) 18
of this section for a given project finds that homeownership housing 19
has not been sold as affordable, the seller must pay a penalty to the 20
commission not to exceed the difference between the sale price and 21
the affordable price. 22
NEW SECTION. Sec. 5. Sections 1 through 4 of this act 23
constitute a new chapter in Title 43 RCW.24
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