Supportive and Emergency Housing Dispute Resolution

Summary

Supportive and Emergency Housing Dispute Resolution, a report to the Legislature from the Washington State Department of Commerce, Growth Management Services, dated March 25, 2025 and submitted under Chapter 376, Laws of 2024. It describes a program launched in October 2024 that offers mediation between local governments and developers of emergency shelter, transitional housing, emergency housing and permanent supportive housing (STEP). The report states that $600,000 was appropriated for fiscal year 2025, that two housing providers sought dispute resolution but the jurisdictions declined to participate, and that no parties had completed mediation as of January 2025. It names three contracted mediation firms and states that technical assistance supported more than 40 jurisdictions. Appendix A lists 39 cities and one county that submitted STEP code amendments for review.

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Supportive and Emergency
Housing Dispute Resolution
Pursuant to Chapter 376, Laws of 2024 (SB 5950, Sec. 128(36))




                                               March 25, 2025

     GROWTH MANAGEMENT                         Report to the Legislature
     SERVICES
     LOCAL GOVERNMENT DIVISION                 Director Joe Nguyễn

v3.5.1
Acknowledgments
Washington State Department of Commerce
Dave Andersen, AICP, Managing Director

Anne Fritzel, AICP, Housing Section Manager

Laura Hodgson, Housing Planning and Data
Manager

Hannah Johnston, Assistant Planner

1011 Plum St. SE
P.O. Box 42525
Olympia, WA 98504-2525

www.commerce.wa.gov

For people with disabilities, this report is available on
request in other formats. To submit a request, please
call 7-1-1 and ask to be connected to 360-725-4000.




SUPPORTIVE AND EMERGENCY HOUSING DISPUTE RESOLUTION         2
Table of contents
Executive summary...................................................................................................................................... 4

Supporting housing development ................................................................................................................. 5

Addressing barriers to STEP siting ............................................................................................................... 9

Continued funding will support future STEP ............................................................................................... 12

Appendix A: STEP technical assistance ...................................................................................................... 13




SUPPORTIVE AND EMERGENCY HOUSING DISPUTE RESOLUTION                                                                                                    3
Executive summary
Overview
The supportive and emergency housing dispute resolution program was funded in the 2024 State
Supplemental Budget and launched in October 2024. This program responds to the immense and urgent need
for emergency shelter, transitional housing, emergency housing, and permanent supportive housing (STEP)
facilities in Washington by supporting mediation between housing providers and jurisdictions for issues that
arise in permitting. It is part of a larger effort to develop STEP including numerous statewide policies, goals
and requirements for meeting low-income housing needs, as well as diligent work by stakeholders and
communities.

No parties have successfully completed the mediation process as of January 2025. However, inquiries about
the program and results of outreach with stakeholders and partners suggest it has potential to fill a critical
gap. Continued funding will ensure jurisdictions and STEP providers have an opportunity to forge collaborative
approaches to housing development.

Authorizing statute
This report satisfies the legislative requirement in Section 128 (36) of Chapter 376, Laws of 2024 (ESSB 5290):

    (36) $600,000 of the general fund—state appropriation for fiscal year 2025 is provided solely for the department to
    provide technical assistance to local governments in planning for and siting supportive housing and emergency
    housing facilities; and provide dispute resolution services to help resolve disputes between local governments and
    service providers attempting to site supportive housing and emergency housing facilities. The department shall
    submit a report, pursuant to RCW 43.01.036, to the appropriate committees of the legislature by March 1, 2025, on
    which local governments received funding and resolution status for disputes resolved.

Program highlights
   Dispute resolution services are available to all local governments and STEP developers as of October 2024.
   To date, two housing providers have sought dispute resolution services related to conditions of a project
   permit. In both cases, the local jurisdiction did not choose to participate in mediation, so the requests did
   not move forward.
   Technical assistance funded through this proviso has supported more than 40 jurisdictions in developing
   effective STEP regulations.
   While the STEP authorizing statute includes the ability to provide local governments funding, the
   appropriated funds were dedicated to community technical assistance, outreach, and set asides for on-call
   dispute resolution consultants.

The Legislature provided funding for the STEP dispute resolution program on a one-time basis for fiscal year
2025. Outreach and inquiries suggest mediation services are relevant and of interest to jurisdictions and
housing developers. Funding will be needed to continue the program, which has benefitted many local
jurisdictions in developing STEP regulations.




SUPPORTIVE AND EMERGENCY HOUSING DISPUTE RESOLUTION                                                                       4
Supporting housing development
Washington needs more supportive and emergency housing
Washington has a shortage of homes affordable to its lowest-income residents. As of 2023, the Department of
Commerce projected a need for 1.1 million new homes by 2044, with almost half affordable to residents at the
lowest income levels (50% of area median income (AMI) and below). 1 Permanent supportive housing and
transitional housing meet the needs of a segment of the lowest-income population that faces barriers to
maintaining tenancy in typical housing arrangements. These housing types address the needs of individuals
exiting or at-risk of homelessness by pairing units with supportive services. People facing homelessness in
Washington will drive a need for approximately 91,360 beds of emergency housing and shelter by 2044 2 even if
all needed housing is produced. Meeting these needs requires the production of emergency shelter,
transitional housing, emergency housing, and permanent supportive housing (STEP) in communities across
the state.

Figure 1: More than 1.1 million new homes will be needed by 2044, with almost 50%
affordable to the lowest-income households




1 Department of Commerce, Planning for Housing in Washington State. Based on Office of Financial Management population

projections.
2 This projection of emergency housing and emergency shelter is based on affordable housing production in 2023.




SUPPORTIVE AND EMERGENCY HOUSING DISPUTE RESOLUTION                                                                      5
STEP faces barriers to development
STEP providers can pursue a variety of building and facility types. Regardless of the form it takes, permanent
supportive housing requires tenants to enter a lease, while emergency and transitional housing may or may not
have such a requirement. City and county governments often collaborate with nonprofits or housing authorities
to build and operate STEP.

In addition to the normal cost and time barriers associated with permitting and development, STEP is often
subject to these barriers:

    A complicated funding process involving many funding sources with differing requirements.
    Unclear development regulations and regulations that may be inconsistent with state and federal law.
    STEP requirements that differ from those for general housing development.
    Conditional use permits, design review requirements and discretionary review processes that add time,
    delay and uncertainty.
    Development regulations that include spacing requirements (e.g., minimum distances from parks, schools
    or other facilities), facility operating and reporting requirements, additional documentation during the
    permitting stage, and/or arbitrary limits on occupants or operation.

Local government regulations are key
State law shapes how local jurisdictions regulate supportive and
emergency housing
All local governments fully planning under the Growth Management Act (GMA) 3 are required to plan for and
accommodate housing affordable to all income levels, including emergency housing, emergency shelter and
permanent supportive housing. 4 Cities in both fully and partially planning counties must adhere to specific
requirements for zoning and regulating STEP in RCW 35A.21.430 and RCW 35.21.683, respectively. These
requirements were adopted in 2021 with Chapter 254, Laws of 2021(HB 1220).

Under the law, cities:

    May not prohibit emergency shelter and emergency housing in areas where hotels or motels are allowed,
    unless the city has already allowed these uses in at least 50 percent of zones within one mile of transit.
    May not prohibit permanent supportive housing and transitional housing in areas where residential
    dwellings or hotels are allowed.
    May establish reasonable local restrictions on spacing, occupancy and intensity of use for STEP to protect
    public health and safety.
    May not impose restrictions on STEP that prevent the development of a sufficient number of units to meet
    the city’s local share of countywide housing needs projected by the Washington State Department of
    Commerce and allocated to the city.




3 RCW 36.70A.040
4 RCW 36.70A.070(2)




SUPPORTIVE AND EMERGENCY HOUSING DISPUTE RESOLUTION                                                            6
Local governments and STEP developers can avoid disputes by taking
a proactive approach
Project applicants
    Meet with planning staff early in the process to discuss requirements for the proposed project to ensure:

    •    The project can proceed in the proposed location
    •    The applicant understands the requirements for zoning, parking and costs for the development, and
    •    The applicant understands any other requirements for the proposed land use under the local
         government's regulations.
    •    Develop a plan for addressing potential community concerns.
    •    Work with consultants to facilitate collaboration with planning staff, including changes to the project to
         align with local requirements and identify any interpretations of local regulations.

Local governments
    Ensure development regulations are consistent with statutory requirements and do not impose undue
    barriers for STEP.
    Engage with applicants early in the process to ensure developers have the information they need to design
    a proposal consistent with local regulations.
    Be transparent with the community about these developments and communicate effectively about why
    they are needed.
    Coordinate with STEP providers to address community concerns.

Dispute resolution program supplements existing processes for
challenging permitting decisions and regulations
The dispute resolution program provides an additional avenue for developers and local governments to resolve
conflicts related to siting STEP. 5 Before this option became available, formal processes to resolve
disagreements over regulations or permitting decisions were limited and costly.

For development regulations:
    Adopted regulations can be challenged within 60 days of the published decision through an appeal to the
    Growth Management Hearings Board in fully planning jurisdictions. In partially planning jurisdictions,
    challenges must be filed through the court system within 21 days of the decision.
    Further appeals are through the Superior Court and must be filed within 30 days of the hearings board's
    decision.

For project permits:
    Project permit decisions may be appealed to a local council or ideally a hearings examiner. However,
    jurisdictions are not required to allow for administrative appeals. 6
    In places with no administrative appeal process, contested project permits may be appealed under the
    Land Use Petition Act.



5 Development regulations determine where, how and through what process individual development projects are approved. They are

adopted via ordinance at the local level through a legislative decision process by an elected body of officials. After regulations are
adopted, they are implemented through permitting decisions for specific projects.
6 RCW 36.70B.110(9)




SUPPORTIVE AND EMERGENCY HOUSING DISPUTE RESOLUTION                                                                                      7
In many cases, existing legal remedies may not be ideal for resolving conflicts during the pre-development
stage of a project. Existing remedies require parties to retain legal counsel, and filing and responding to legal
challenges can drain resources. This may be particularly prohibitive for small nonprofits involved in STEP
development. Additionally, legal action may damage relationships for governments and housing developers
likely to work together again.

Lastly, permit delays drive costs and may jeopardize a project.

In many cases, mediation may be more desirable. It's free for communities to access, less adversarial and may
bring an expedient resolution.

Commerce resources support local jurisdictions in implementing state
requirements
Since 2021 and the passage of Chapter 254, Laws of 2021 (HB 1220), Commerce has developed many tools to
assist cities, towns and counties in meeting state requirements for siting STEP. These include:

   Projected housing needs for all income levels, to inform evaluation of land capacity for emergency housing
   and permanent supportive housing as required by RCW 36.70A.070(2)(c).
   "STEP State of the Practice Report," which summarizes state and federal regulations, existing local
   practices, and best practices.
   "STEP Model Ordinance, User Guide, and Best Practices Report" provides detailed guidance to local
   jurisdictions.
   A communications toolkit helps jurisdictions communicate effectively about STEP.
   A checklist for state STEP requirements helps local jurisdictions create STEP codes consistent with
   statutory requirements.

Jurisdictions and developers share a need for collaboration in
overcoming barriers
The dispute resolution program responds to the experiences of jurisdictions, housing developers and other
stakeholders, many of whom have voiced a need for additional support.

   Local housing developers described concerns about projects denied due to pressure from small numbers
   of community members, as well as onerous zoning regulations that prevent nonprofits from providing
   housing.
   Local government staff likewise underscored the need for dispute resolution services to facilitate STEP
   development.
   Other stakeholders spoke to the possibility for some parties to undermine collaboration between local and
   state governments by opposing STEP at the permitting stage.

These key groups shared a consensus that dispute resolution is needed to address challenges related to STEP
siting and permitting.




SUPPORTIVE AND EMERGENCY HOUSING DISPUTE RESOLUTION                                                                 8
Supporting housing development
The state Legislature appropriated funds in the 2024 supplemental operating budget to support dispute
resolution between local governments and service providers attempting to site STEP. 7 Commerce used these
funds to retain on-call services from dispute resolution firms who will mediate disagreements related to STEP
siting and permitting. Mediated resolution services are intended to further housing development by helping
local governments and housing developers collaboratively address areas of disagreement about regulations or
permitting conditions.

This proviso also funds technical assistance to local governments in developing effective local codes to
permit STEP, consistent with statutory requirements. Improving local regulations may prevent situations that
lead to requests for mediation.


Addressing barriers to STEP siting
Dispute resolution firms provide mediation services
Commerce has contracted with three firms to provide on-call mediation services to the STEP dispute
resolution program:

    Fulcrum Institute Dispute Resolution Clinic
    Pierce County Center for Dispute Resolution
    Skullnah Legal Services, PLLC

These firms went through a competitive Request for Proposals process initiated in April 2024 and completed
in August 2024. The procurement combined mediation services for STEP dispute resolution with services to
provide tribal mediation along with mediation on general issues related to GMA requirements. The selection
criteria emphasized diversity and familiarity with tribal law and the GMA. If provided funding, Commerce
intends to renew existing contracts with all dispute resolution firms who fulfill expectations, and to re-open the
procurement process annually to bring in new firms.

Program implementation
Growth Management Services finalized procedures and guidelines for the dispute resolution program in
September 2024. This information is published online to provide transparency to prospective participants and
the public. 8, 9

Who may request to participate in the dispute resolution program?
    An organization involved in developing STEP, such as a developer, operator or project applicant
    A jurisdiction, such as a county, city or town, in which a STEP project is planned or seeking a permit

Interested parties may submit a request for mediation services by emailing the program with basic information
about the project, the dispute and any steps taken toward resolution. Both parties must consent to participate.




7 ESSB 5950, Section 128 (36)
8 GMS Mediation Services webpage
9 Housing Dispute Resolution Process (PDF)




SUPPORTIVE AND EMERGENCY HOUSING DISPUTE RESOLUTION                                                              9
If one party chooses not to participate, Commerce will provide information on alternatives to dispute
resolution.

Mediation services will be available for disputes over permits or
adopted regulations for STEP siting
Mediation services through the dispute resolution program will be available in the following circumstances:

   When a jurisdiction denies a permit for a STEP project
   When a dispute arises between a jurisdiction and a STEP developer during the permitting process, as early
   as the pre-application meeting
   When a jurisdiction’s regulations prevent the siting of a STEP project and may be inconsistent with state
   requirements, regardless of whether the jurisdiction’s comprehensive plan periodic update is complete
   When a local government attempts to close or relocate a STEP project, such as through formal notice of
   violation, communication of intent to revoke a permit, or resolution to close or relocate a project.

Mediation will progress through these steps:
   Commerce receives a request for mediation.
   Commerce will determine eligibility for dispute resolution services within three business days of receiving a
   request.
   If the request is eligible, Commerce will contact the jurisdiction to notify them of the dispute resolution
   request, ask if there are steps that can be taken to address concerns before moving to dispute resolution,
   or, if there is not an alternative path, if they are willing to engage in dispute resolution.
   If and when the path is dispute resolution, Commerce will:

   •   Notify each party with next steps.
   •   Contract with on-call dispute resolution consultants to begin the mediation process within two to three
       weeks of confirming dispute resolution process is possible.
   •   Notify the Housing Division of the dispute resolution request to ensure Commerce staff is aware of any
       potential disputes related to projects funded by Commerce and possible delays.
   •   If applicable, review the jurisdiction’s code for consistency with state statute, then distribute review
       notes to the dispute resolution consultant.

   The dispute resolution consultant will lead the mediation process, including coordinating meetings and
   engaging parties. Commerce staff will participate as a supportive housing subject matter expert only if
   requested by the consultant.
   When the mediation process is complete, the consultant will deliver a memo summarizing the problem
   statement and if a resolution was reached. Information that both parties are willing to share will be
   retained by Commerce and be publicly available upon request, such as a summary of the mediated
   agreement.
   Commerce will support implementation of negotiated agreements where appropriate, such as through
   technical assistance for jurisdictions to amend code or for project applicants to develop an application
   consistent with local regulations.

The timeline for services will vary but is estimated to take four to six weeks.

Requests for dispute resolution
Requests for dispute resolution to date:



SUPPORTIVE AND EMERGENCY HOUSING DISPUTE RESOLUTION                                                           10
    Two housing providers sought dispute resolution services related to conditions of a project permit. In both
    cases, the permitting jurisdiction chose not to participate in mediation, so the requests did not move
    forward.

Results of dispute resolution
No siting disputes regarding supportive or emergency housing have been resolved through mediation to date.

Insight from outreach and engagement
Commerce has received several inquiries suggesting unmet needs and areas where the program may benefit
from further refinement.

    Transitional housing: Outreach to the Department of Corrections suggests some barriers to siting
    transitional housing are unique to re-entry housing and may benefit from focused support. Barriers include
    noticing and public messaging requirements, as well as misconceptions among local planning staff about
    how such uses should be classified.
    Behavioral health facilities: Service providers have expressed interest in receiving mediation services to
    resolve disputes around siting behavioral health facilities. Behavioral health facilities are facilities that
    provide behavioral health assessment, intervention and treatment services on-site to support residents
    with substance use, mental health or co-occurring disorders. 10 Some examples of behavioral health
    facilities are residential treatment facilities, crisis triage and stabilization facilities, and mental health peer-
    run respite centers. This may represent a potentially significant area of unmet need. However, it is unclear
    whether behavioral health facilities are considered supportive and emergency housing, for reasons outside
    the scope of this report.

Program funding supports direct assistance to jurisdictions
In addition to activities directly related to implementation of the dispute resolution program, Commerce is
using the proviso funding to provide technical assistance to local governments as they develop regulations for
STEP siting. This includes one-on-one meetings with jurisdictions and standing "office hours" for technical
assistance. The team has completed detailed reviews of development regulations for STEP that are submitted
to Commerce, and provided recommendations to jurisdictions whose regulations are inconsistent with state
law. While many jurisdictions have made updates to allow these housing types in appropriate areas as
required by statute, many have added restrictions making it more difficult to site STEP. To date, more than 30
cities have received detailed reviews of code amendments for STEP types.

This work has yielded insights on challenges and opportunities for regulation of STEP at the local level.
Commerce will continue to refine guidance for local governments on meeting state requirements. One area of
focus has been the requirement that cities may only impose "reasonable" occupancy, spacing, and intensity of
use requirements on STEP to protect public health and safety. 11 This requirement has yielded confusion for
local jurisdiction staff and officials about defining reasonability and how standards should be documented as
necessary to protect public health and safety.




10 WAC 246-341-1105
11 RCW 35.21.683, RCW 35A.21.430




SUPPORTIVE AND EMERGENCY HOUSING DISPUTE RESOLUTION                                                                   11
Stakeholder outreach has been far-reaching
Commerce has shared information about this program with interested parties through many platforms and has
had frequent discussions with communities about dispute resolution services and goals:

   Growth Management Services newsletter and webpages
   Emails to permanent supportive housing stakeholders, the State Advisory Council on Homelessness, and
   other stakeholders engaged with state affordable housing work.
   Presentations at industry gatherings including the Housing Washington conference, the Washington
   chapter of the American Planning Association conference, the Homeless Assistance Unit and Office of
   Homeless Youth convening of emergency housing service providers, and a meeting of permanent
   supportive housing providers.
   Staff coordination with Housing Trust Fund, Apple Health and Homes, and Housing Division staff to
   distribute program information to housing providers.
   Presenting materials to the Affordable Housing Advisory Board in a virtual meeting and via email.


Continued funding will support future STEP
Commerce's sustained focus on local STEP regulations through the periodic update process will help local
governments plan for STEP effectively. This ongoing technical assistance will support jurisdictions in adopting
zoning and development regulations that anticipate STEP and regulate it in a way that allows for development
while protecting public health and safety. However, even with careful planning, siting disputes may still pose
barriers to development. Therefore, mediation services will be critical to support local governments and
housing providers.

The continuation of STEP not only removes barriers to permitting for barriers but will also ensure that parties
involved in permitting and developing STEP projects receive support in resolving disputes collaboratively, in
service of developing needed housing. Ongoing funding of the dispute resolution program will facilitate
continued STEP development statewide through mediation and technical assistance for jurisdictions. This
promises to complement state and local efforts to encourage the development of needed housing in
Washington.

The Legislature provided funding for this program on a one-time basis for fiscal year 2025 only. A request for
continuing this program is included in Commerce’s 2025-27 budget request, which requested approximately
$556,000 each fiscal year and includes ongoing mediation services and two full-time staff positions. This was
ultimately not included in the final budget. Moreover, in the 2025 legislative session, legislation in the House
and Senate, respectively, proposed to codify STEP and dispute resolution services and continue the program,
but neither proposal was enacted.




SUPPORTIVE AND EMERGENCY HOUSING DISPUTE RESOLUTION                                                           12
Appendix A: STEP technical assistance
The following 39 cities and one county submitted code amendments related to STEP for Commerce review.
This list is not exhaustive of all jurisdictions that received a formal comment letter on STEP regulations, or
other informal suggestions to improve their local codes.

Jurisdictions receiving STEP technical assistance

Arlington                                           Milton

Auburn                                              Monroe

Beaux Arts Village                                  Moses Lake

Bothell                                             Mukilteo

Burien                                              Orting

Colville                                            Port Townsend

Covington                                           Poulsbo

DuPont                                              Redmond

Ellensburg                                          Sammamish

Enumclaw                                            SeaTac

Federal Way                                         Seattle

Fife                                                Shoreline

Issaquah                                            Snohomish

Kenmore                                             Snoqualmie

La Conner                                           Stanwood

Lakewood                                            Steilacoom

Liberty Lake                                        Sumner

Lynnwood                                            Tacoma

Maple Valley                                        Tukwila

Mill Creek                                          Snohomish County




SUPPORTIVE AND EMERGENCY HOUSING DISPUTE RESOLUTION                                                              13


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