State scrutiny could raise stakes in Chelan housing plan update

CHELAN — Chelan’s next comprehensive plan won’t just guide local growth. It will also have to clear a much higher bar with the State of Washington or risk a challenge to its housing policies.

That was the warning from housing economist Brian Points of Points Consulting during a joint City Council and Planning Commission meeting in early November, where consultants walked officials through new state-mandated housing analysis for the city’s 2026 plan update.

Points said the Department of Commerce and the state Growth Management Hearings Board are now enforcing stricter requirements around low-income housing, and several jurisdictions have already learned that the hard way.

“It used to be sufficient to put pretty generic language within your comp plan to say that we will accommodate or allow or facilitate development of affordable housing where it’s helpful,” he said. “They want to see that stepped up… If you don’t do a sufficient job of that, you could face consequences.”

He pointed to recent cases involving Kitsap County and Mercer Island, and a more recent challenge to the city of Duvall brought directly by Commerce rather than a third-party advocacy group.

“This is to let you know that we’re trying to do our job here of keeping you all on the right side of the law and keeping you out of trouble,” he said.

Focus on very low-income households

Under the latest state guidance, the sharpest scrutiny falls on how cities plan for households at the very bottom of the income scale — those earning 0 to 30 percent of area median income (AMI).

“It all comes down to the same thing, which is that zero to 30 percent AMI,” Points said. “So your very low-income audiences.”

The state’s “Housing for All Planning Tool” (HAPT) uses county-level income benchmarks from HUD, which in Chelan County are higher than the city’s own estimated median income. Points said that quirk can actually widen the pool of local households who qualify for affordable housing assistance, because HUD’s higher median makes more working-class residents eligible on paper.

He also stressed that when Commerce talks about “housing demand,” it is talking about residents who already live here and their current incomes, not outside buyers.

“When we say demand in this sense, it’s not the same sense that maybe a realtor might think of it,” he said. “It’s the residents that are here and the incomes that they currently have.”

Enough land, but not enough affordable units

On paper, Chelan is not short of land to build on.

Points Consulting’s land capacity analysis found that the city and its urban growth area have more than enough buildable residential land to meet the state’s 10-year growth projections. Under existing zoning and assumed densities, the analysis shows capacity for well over a thousand additional multifamily units and a similar number of ownership units if the market built to those levels.

“The second takeaway from this slide is that you really don’t have any land capacity issues as it is,” Points told the group.

The problem, he said, is not the quantity of potential housing but the price point. Commerce will be looking for specific policies, zoning changes and programs that make it realistic for very low- and low-income households to find housing without paying more than 30 percent of their income.

Second homes and STRs complicate the picture

The consultants also walked through updated data on vacancy and short-term rentals, trying to pin down what share of the local housing stock is effectively off the table for year-round residents.

Using census “vacancy” categories as a proxy, Points estimated that roughly 36 percent of housing units in the Chelan urban growth area are vacant at any given time, and about two-thirds of those — roughly 24 percent of all units — are used seasonally or occasionally.

“That really sticks out like a sore thumb,” he said. “You see that number, you know there’s something going on because clearly you don’t have a lot of abandoned houses.”

On top of that, city licensing data show about 410 active short-term rentals in the Chelan UGA. When the consulting team compared that to housing stock and to third-party data from AirDNA, they found Chelan and Manson at the top of the county for the share of housing being used as short-term rentals, at about 20 percent of occupied units in each place.

Those overlapping categories — second homes, seasonally vacant units and STRs — make it difficult to settle on one definitive percentage, Points said, but they clearly shape the market for locals.

Community Development Director John Ajax noted that the city’s own analysis of property tax records has already begun to push back against much higher second-home estimates that have circulated in the community.

“We’ve heard upwards of like 65 percent,” Ajax said, calling the new numbers “fact-based” because they pull directly from the city’s records and strip out commercial property and raw land.

Chelan not starting from scratch

Ajax also emphasized that Chelan is not starting from zero on affordability.

“We are doing quite a bit, and we’ve summarized some of that here,” he said. He told council and commissioners that one of Anchor QEA and Points Consulting’s tasks is to fold those existing efforts into the comprehensive plan so Commerce and others see the full picture of what the city has already done.

Points agreed, saying the team will document those actions but may still recommend “upping the ante” with additional measures over the next 10 years, to make sure Chelan’s housing element can withstand state and third-party scrutiny.

For now, the consultants will continue refining the housing chapter and broader plan elements, with a public workshop and environmental review expected in 2026 before the document goes to Commerce for formal 60-day review and, ultimately, local adoption.

Andrew Simpson: 509-433-7626 or andrew@ward.media