Grant distribution

AN ACT Relating to increasing accountability for the distribution 1
of grants for economically disadvantaged people; amending RCW 2
43.79.567, 43.185A.140, and 43.181.040; and creating a new section.3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
NEW SECTION. Sec. 1. In the face of an increasing housing 5
shortage and budget shortage, accountability for the expenditure of 6
public funds becomes substantially more important. The legislature 7
finds that public funds should be focused where they can have the 8
greatest impact. Housing loans and grants must be focused on the 9
economically disadvantaged and there must be assurances and 10
accountability in place to ensure that a repeat of this summer's 11
scandal does not occur. The legislature finds that housing loans and 12
grants must be distributed in an equitable and accountable method to 13
those who need them the most.14
Sec. 2. RCW 43.79.567 and 2025 c 424 s 952 are each amended to 15
read as follows: 16
(1) The community reinvestment account is created in the state 17
treasury. Revenues to the account shall consist of appropriations and 18
transfers by the legislature and all other moneys directed for 19
S-3683.1
SENATE BILL 6205
State of Washington 69th Legislature 2026 Regular Session
By Senators Braun and Dozier
Read first time 01/19/26. Referred to Committee on Housing.
p. 1 SB 6205
deposit into the account. Moneys in the account may be spent only 1
after appropriation. 2
(2) Expenditures from the account may be used by the department 3
of commerce for: 4
(a) Economic development, which includes addressing wealth 5
disparities to promote asset building such as homeownership and 6
expanding access to financial resources including, but not limited 7
to, grants and loans for small businesses and entrepreneurs, 8
financial literacy training, and other small business training and 9
support activities; 10
(b) Civil and criminal legal assistance to provide postconviction 11
relief and case assistance, including the expungement of criminal 12
records and vacation of criminal convictions; 13
(c) Community-based violence intervention and prevention 14
services, which may include after-school programs focused on 15
providing education and mentorship to youths; 16
(d) Reentry services to facilitate successful transitions for 17
persons formerly incarcerated in an adult correctional facility or 18
juvenile residential facility in Washington; and 19
(e) Beginning July 1, 2025, agricultural and economic support and 20
services available to historically marginalized communities.21
(3) The distribution of the grants under this section must be 22
done in collaboration with "by and for community organizations" as 23
defined by the department of commerce and the office of equity. ((For 24
the 2025-2027 fiscal biennium, "by and for community organizations" 25
include, but are not limited to, those operated by and for Black, 26
Latino, Native American, Asian, Native Hawaiian, and Pacific Islander 27
communities)) An officer or family member of an officer of a "by and 28
for community organization" must not, directly or indirectly, have a 29
beneficial interest in, or receive any compensation, gratuity, or 30
reward in connection with, a grant distributed under this section.31
(4) Priority must be given to grant recipients who demonstrate 32
greater need based on:33
(a) Income;34
(b) Family size;35
(c) Cost, condition, and energy efficiency of available 36
residential housing;37
(d) Availability of decent, safe, and sanitary housing;38
(e) Age or infirmity; and39
(f) Applicable federal, state, and local requirements.40
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(5) The department of commerce must evaluate the distribution of 1
the grants under this section biannually. The evaluation must contain 2
the eligibility requirements, the number of participants and their 3
corresponding eligibility categories, and metrics for determining 4
success and success rates. These evaluations must be made available 5
to the legislature upon request. 6
Sec. 3. RCW 43.185A.140 and 2023 c 275 s 3 are each amended to 7
read as follows: 8
(1) The department must use moneys from the housing trust fund 9
and other legislative appropriations to finance in whole or in part 10
any loan or grant projects that will provide affordable housing for 11
persons and families with special housing needs and who are low-12
income households. 13
(2) At least thirty percent of these moneys used in any given 14
funding cycle must be for the benefit of projects located in rural 15
areas of the state as defined by the department. If the department 16
determines that it has not received an adequate number of suitable 17
applications for rural projects during any given funding cycle, the 18
department may allocate unused moneys for projects in nonrural areas 19
of the state. 20
(3)(a) The department must prioritize allocating at least, but 21
not limited to, 10 percent of these moneys used in any given funding 22
cycle to organizations that serve and are substantially governed by 23
individuals disproportionately impacted by homelessness ((,)) 24
including, but not limited to, black, indigenous, and other people of 25
color and, lesbian, gay, bisexual, queer, transgender, and other 26
gender-diverse individuals. 27
(b) An officer or family member of an officer of an organization 28
under this subsection must not, directly or indirectly, have a 29
beneficial interest in, or receive any compensation, gratuity, or 30
reward in connection with, loans or grant projects under this 31
section.32
(c) The department of commerce must evaluate the distribution of 33
the loan or grant projects under this subsection biannually. The 34
evaluation must contain the eligibility requirements, the number of 35
participants and their corresponding eligibility categories, and 36
metrics for determining success and success rates. These evaluations 37
must be made available to the legislature upon request.38
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(4) Activities eligible for assistance from the housing trust 1
fund and other legislative appropriations include, but are not 2
limited to: 3
(a) New construction, rehabilitation, or acquisition of low and 4
very low-income housing units; 5
(b) Preconstruction technical assistance, design and finance 6
services and consultation, and administrative costs for eligible 7
nonprofit community or neighborhood-based organizations;8
(c) Administrative costs for housing assistance groups or 9
organizations when such grant or loan will substantially increase the 10
recipient's access to housing funds other than those available under 11
this chapter; 12
(d) Shelters for the homeless, including emergency shelters and 13
overnight youth shelters; 14
(e) Down payment or closing costs assistance for low-income 15
first-time homebuyers; 16
(f) Acquisition of housing units for the purpose of preservation 17
as low-income housing; 18
(g) Projects making affordable housing projects more accessible 19
to low-income households with members who have disabilities; and20
(h) Remodeling and improvements as required to meet building 21
code, licensing requirements, or legal operations to residential 22
properties owned and operated by an entity eligible under RCW 23
43.185A.040, which were transferred as described in RCW 24
82.45.010(3)(t) by the parent of a child with developmental 25
disabilities. 26
(5)(a) Legislative appropriations from capital bond proceeds may 27
be used for the costs of projects authorized under subsection (4) of 28
this section, except for costs of subsection (4)(c) of this section.29
(b) The department may use up to three percent of the 30
appropriations from capital bond proceeds or other new appropriations 31
for affordable housing investments for administrative costs 32
associated with application, distribution, and project development 33
activities of the affordable housing program. 34
(c) Reappropriations must not be included in the calculation of 35
the annual funds available for determining the administrative costs.36
(6)(a) Moneys received from repayment of housing trust fund loans 37
or other affordable housing appropriations may be used for all 38
activities necessary for the proper functioning of the affordable 39
housing program, including, but not limited to, providing 40
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preservation funding, as provided in RCW 43.185A.180, and 1
preconstruction technical assistance as provided in RCW 43.185A.170.2
(b) Administrative costs associated with compliance and 3
monitoring activities of the department may not exceed four-tenths of 4
one percent annually of the contracted amount of state investment in 5
affordable housing programs. 6
Sec. 4. RCW 43.181.040 and 2025 c 143 s 1 are each amended to 7
read as follows: 8
(1) As part of the covenant homeownership program, the department 9
shall contract with the commission to design, develop, implement, and 10
evaluate one or more special purpose credit programs to reduce racial 11
disparities in homeownership in the state by providing down payment 12
and closing cost assistance. The contract must authorize the 13
commission to use the contract funding as follows:14
(a) The contract must authorize the commission to use up to one 15
percent of the contract funding for costs related to administering 16
the program including, but not limited to, costs related to 17
completing a covenant homeownership program study required under RCW 18
43.181.030, and other administrative, data collection, and reporting 19
costs; 20
(b) The contract must authorize the commission to use up to one 21
percent of the contract funding to provide targeted education, 22
homeownership counseling, and outreach about special purpose credit 23
programs created under this section to black, indigenous, and people 24
of color and other historically marginalized communities in 25
Washington state, including outreach to relevant affinity groups for 26
mortgage lenders; and 27
(c)(i) The contract must authorize the commission to use the 28
remainder of the contract funding to provide down payment and closing 29
cost assistance to program participants. This portion of the contract 30
funding may not be used to provide any type of assistance other than 31
down payment and closing cost assistance. 32
(ii) An officer or family member of an officer of an organization 33
under this subsection must not, directly or indirectly, have a 34
beneficial interest in, or receive any compensation, gratuity, or 35
reward in connection with projects under this section.36
(2) The commission shall create one or more special purpose 37
credit programs to provide down payment and closing cost assistance 38
for the benefit of one or more economically disadvantaged classes of 39
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persons identified in a covenant homeownership program study under 1
RCW 43.181.030. In creating a special purpose credit program, the 2
commission must consider the evidence-based documentation and 3
programmatic and policy recommendations set forth in the initial 4
covenant homeownership program study and any subsequent program 5
studies. If the covenant homeownership program study identifies an 6
economically disadvantaged class or classes of persons that share one 7
or more common characteristics such as, race, national origin, or sex 8
and the board of the commission finds it necessary to consider this 9
information in tailoring a special purpose credit program to provide 10
credit assistance to economically disadvantaged classes of persons, 11
the commission may consider these characteristics in designing and 12
implementing the program. 13
(3) At minimum, a special purpose credit program authorized under 14
this section must: 15
(a) Provide loans for down payment and closing cost assistance to 16
program participants that can be combined with other forms of down 17
payment and closing cost assistance; 18
(b)(i) Except as provided in (b)(ii) of this subsection, require 19
a program participant to repay loans for down payment and closing 20
cost assistance at the time that the house is sold;21
(ii) For a program participant who has a household income at or 22
below 80 percent of the area median income for the county where the 23
home is located at the time that the loan is made, a special purpose 24
credit program authorized under this section may fully forgive a loan 25
entered into at any time after enactment of the special purpose 26
credit program once the loan has been outstanding for at least five 27
years; and 28
(c) Be implemented in conjunction with the commission's housing 29
finance programs. 30
(4) To be eligible to receive down payment and closing cost 31
assistance through a special purpose credit program authorized under 32
this section, a special purpose credit program applicant must:33
(a) Have a household income at or below 120 percent of the area 34
median income for the county where the home is located;35
(b) Be a first-time homebuyer; and 36
(c)(i) Be a Washington state resident who: 37
(A) Was a Washington state resident on or before the enactment of 38
the federal fair housing act (Title VIII of the civil rights act of 39
1968; P.L. 90–284; 82 Stat. 73) on April 11, 1968, and was or would 40
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have been excluded from homeownership in Washington state by a 1
racially restrictive real estate covenant on or before April 11, 2
1968; or 3
(B) Is a descendant of a person who meets the criteria in 4
(c)(i)(A) of this subsection; 5
(ii) Records that show a person's address on or about a specific 6
date or include a reference indicating that a person is a resident of 7
a specific city or area on or about a specific date may be used to 8
provide proof that a person satisfies the criteria in (c)(i) of this 9
subsection, such as genealogical records, vital records, church 10
records, military records, probate records, public records, census 11
data, newspaper clippings, and other similar documents.12
(5) The commission may adopt rules, and shall adopt program 13
policies, as necessary to implement this section. Program rules or 14
policies must include procedures and standards for extending credit 15
under the special purpose credit program, including program 16
eligibility requirements. From time to time, including in response to 17
a covenant homeownership program study's evaluation of program 18
efficacy, the board of the commission may amend the special purpose 19
credit programs, rules, and policies. 20
(6) By July 1, 2024, one or more of the special purpose credit 21
programs must begin providing down payment and closing cost 22
assistance to program participants. 23
(7) By December 31, 2025, and by each following December 31st, 24
and in compliance with RCW 43.01.036, the commission shall submit an 25
annual report to the appropriate committees of the legislature on the 26
progress of the special purpose credit program or programs developed 27
under this section. The report shall include, at minimum, the program 28
eligibility requirements, the type and amount of down payment and 29
closing cost assistance provided to program participants, the number 30
of program participants and their corresponding eligibility 31
categories, the location of property financed, and program outreach 32
efforts. The report must be posted on the commission's website.33
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