Spokane Halts Six-Plexes Amid Appraiser Concerns
In an emergency session, the Spokane City Council unanimously agreed stop six-plexes from being build in residential R1 and R2 zones. The move comes after appraisers feared the move could jeopardize all home sales within the City of Spokane. That position was also the conclusion of city officials and the regions housing practitioners who gathered at the urging of Spokane REALTORS.
In a letter written to the city by Robert “Bob” Mossuto Jr., the President of the Appraisers’ Coalition of Washington, all residential appraisals would cease on January 1st, 2024 because of Spokane’s new ordinance that allows for up to a six-plex to be built anywhere. Mossuto wrote, “Appraisers will no longer be able to appraise what was once considered a single-family property, that being “any” property with one to four units.”
Local lenders also feared that using commercial appraisers would put loan programs from FHA, Fannie Mae and Freddie Mac in jeopardy, because none allow for a commercial appraisal.
READ THE SPOKANE BUSINESS JOURNAL ARTICLE HERE
The key issue is that, by legal definition, a six-plex is a commercial property. Because of the new Spokane rules, the best and highest use of any property would potentially be commercial. By state law, that requires a commercial appraisal and not a residential one. The difference to a home buyer would be an additional thousands of dollars, plus longer closing times waiting for a limited number of specialty appraisers.
City leaders agreed to a temporary ban to allow time for state lawmakers to help iron out these challenges.
The issue earned the attention of Washington State Representative Jessica Bateman, (D) 22nd Wa. Legislative Dist. She was the primary sponsor of HB1110 that would open up zoning for multi-family units in traditional single-family zones.
In a letter to the state’s appraisers coalition, Rep. Bateman wrote:
- I will be advocating for a change in the federal guidelines to amend the definition of commercial housing to over
6 units. It would be helpful if your organization could also advocate for this change since more and more cities
and states will be making these zoning changes. - I’ve also asked the Department of Commerce to work with the Department of Licensing to create an FAQ to be
provided on DOL’s website and to all appraisers. - Finally, DOL has confirmed that for the minority of properties that are feasible to create a sixplex, residential
appraisers can partner with general appraisers to complete the appraisal process
Spokane had enacted many of the provisions of HB1110 early on with it’s Building Opportunities and Choices for All Initiative.
Representative Bateman told the group that the issues facing Spokane, would be felt by other commodities statewide, as they enact HB1110 in the next few years. She pledged to work on fixes in the months to come.