The following concepts will provide a basis for understanding the new development types that will be permitted in Mercer Island under the new interim development regulations.

Middle Housing

Middle Housing includes the housing types that fall in between detached single family homes and midrise apartment buildings. In the interim development regulations, Mercer Island has permitted six middle housing types in the Residential zones: Duplex, Triplex, Fourplex, Townhome, Courtyard Apartment and Stacked Flat.

The permitted middle housing types will be subject to the existing development standards for single-family development in the Residential zones as well as the Unit Density standards, described further below. Thus, on most residential lots, two middle housing units will be allowed. The development regulations do not include minimum or maximum size limits for middle housing units. Rather, the size is governed by the dimensional standards in the development regulations, including building heigh, setbacks and gross floor area. Any middle housing units (as well as single family or ADU units) on the lot must fit within these limits.

Accessory Dwelling Units

Accessory Dwelling Units (ADUs) are a small housing unit (between 220 and 1,000 square feet) that is either attached or detached from a primary dwelling unit. The interim development regulations permit up to two ADUs per Residentially-zoned lot. These ADUs are limited, along with other accessory buildings (e.g. garages, sheds), to 25% of the gross floor area (GFA) allowed on the lot. So, for example, on a lot that permits 4,000 square feet of GFA, up to 1,000 square feet (total) can be used for ADUs, garages, sheds and other accessory buildings.

Unit Density

HB 1110 requires cities to establish a new system for regulating housing density that has not been commonly used in the past. This system regulates density based on the number of housing units allowed per lot, regardless of lot size. This is referred to as “unit density”. Any of the permitted middle housing types can be combined on residential lots to meet the unit density as follows:

• Allow at least 2 middle housing units per lot.
• Allow at least 4 middle housing units per lot if:
  1. The lot is located within a quarter mile walking distance of the light rail station (see Map 2: Distance from Light Rail, on the following page), or
  2. At least one unit is affordable (more information is provided below on this affordability incentive).

Unit Lot Subdivision

Unit lot subdivision allows the land beneath detached single family housing, ADUs or middle housing where no units are stacked on another unit, to be divided for individual sale. Unit lot subdivision is defined in state law as a type of short subdivision. The Mercer Island City Code defines a short subdivision as “a subdivision consisting of four or less lots on four or less acres.” Together these requirements will enable parent lots to be divided into up to four unit lots for individual sale and fee-simple ownership.

In February and March 2025, the Mercer Island City Council enacted a series of interim development regulations and a fee schedule amendment intended to comply with several new state legislative requirements related to bills adopted in 2023 (HB 1110, HB 1337, and SB 5258). These interim development regulations were adopted quickly in order to comply with state-mandated deadlines and avoid state regulations superseding the City's authority. The City plans to adopt permanent regulations and will undertake additional public outreach and analysis to assist in developing these regulations, beginning in 2026.

The interim development regulations permit middle housing and expand allowances for Accessory Dwelling Units (ADUs) throughout the city's residential zones (Ordinance No. 25C-02). They also permit a new type of land division, Unit Lot Subdivision, that enables the individual sale of these housing units, separate from any primary unit located on the property (Ordinance 25C-06). Finally, the City's fee schedule has also been amended to apply the existing impact fee rates to middle housing and ADU units (Resolution 1671). These fees help to cover the costs of infrastructure improvements that are needed to accommodate additional growth and development within the city.

Additional details on each of these actions are summarized below, and links are provided to the full text of the adopted ordinances and resolution.

Ordinance No. 25C-02

Ordinance No. 25C-06

MICC 19.16.010: adds definitions for Parent Lot and Unit Lot

Resolution 1671

In 2023, the Washington State Legislature approved three pieces of legislation related to middle housing and accessory dwelling units (ADUs), House Bill 1110, House Bill 1337 and Senate Bill 5290. Cities are required to adopt regulations in compliance with these new GMA requirements by six months after the due date for adoption of the periodic update of the comprehensive plan (June 30, 2025 for Mercer Island). If cities do not come into compliance by the due date, the state statute will "supersede, preempt and invalidate any conflicting local development regulations.” In the case of HB 1110, the state has adopted a model ordinance that will preempt any relevant local regulations if compliant regulations are not adopted by the deadline. More details on the requirements of each of these pieces of legislation are provided below.

HB 1337

HB 1337, codified at RCW 36.70A.680, 681, and 696, requires jurisdictions to allow two ADUs per lot on all lots that permit single-family residential development. The Washington State Department of Commerce (Commerce) has published ADU Guidance outlining the requirements and local policy options available to local jurisdictions; the requirements of the legislation are outlined below and more detailed information and examples can be found in the Commerce ADU guidance. On Mercer Island, HB 1337 will apply to lots in the R, MF, PBZ, and TC zones, as these zones all allow singlefamily homes. This will expand the allowance for ADUs from just the residential zones to also include the MF, PBZ, and TC zones. RCW 36.70A.696 defines an ADU as “a dwelling unit located on the same lot as a singlefamily housing unit, duplex, triplex, townhome or other housing unit.” In addition, the following requirements apply:

• ADUs may be attached, detached, or a combination and may be a conversion of existing structures (such as garages).
• Must allow ADUs on lots that meet the minimum size requirements for the principal unit.
• Must allow at least 1,000 square feet of floor area for each ADU. Development regulations for ADUs can be no more restrictive than those for principal units. Must allow ADUs of at least 24 feet in height. Detached ADUs may be sited on the rear lot line if it abuts an alley.
• Cities should apply the same health, safety, and environmental regulations to an ADU that would be applicable to the principal unit (e.g. building and fires codes, critical areas code, shoreline master program, etc.).
• Owner occupancy of the ADU or primary unit may not be required, except when an ADU is used as a short-term rental.
• Sale of ADUs as independent units may not be prohibited.
• Impact fees may be imposed on ADUs at a rate that does not exceed 50% of the rate that would apply to the principal unit.
• May not require public street improvements for ADUs.
• May not require off-street parking within ½ mile of a major transit stop. For lots that are less than 6,000 feet, parking requirements are limited to one space per unit and for lots that are greater than 6,000 feet, parking requirements are limited to two spaces per unit.

HB 1110

The main provisions of HB 1110, codified in RCW 36.70A.635 through RCW 36.70A.638, requires jurisdictions to allow middle housing on residential lots. Commerce has published, and subsequently updated several times, a Middle Housing User Guide and Model Ordinance to assist cities in complying with the new GMA provisions enacted by HB 1110. HB 1110 identifies three tiers of middle housing regulations, based on the population of the city. Mercer Island is categorized as a Tier 2 city, with populations of at least 25,000 but less than 75,000. The requirements summarized below are those that apply to Tier 2 cities.

Applicability

In Mercer Island The requirements of HB 1110 will apply in Mercer Island’s residential zones, including R-8.4, R-9.6, R-12, and R-15 (see Map 1: Residential Zoning). These requirements will not apply to the Multi-family, Planned Business, or Town Center zones because they already allow higher densities of residential development. The Commercial Office and Business zones do not allow residential development and the middle housing requirements are also not applicable there. There are approximately 7,500 residentially zoned lots located throughout Mercer Island that will be subject to the middle housing unit density requirements in HB 1110. Nearly 100 of these lots are within ¼-mile walking distance from the light rail station where four units per lot will be permitted outright (see Map 2: Walking Distance from Light Rail, page 5). However, some of these lots will have practical limitations to middle housing development due to restrictions related to critical areas (more information on this is provided below), or a covenant or deed restriction preventing further lot division or development. Staff have not analyzed the extent of such covenants or deed restrictions.

Middle Housing

Middle Housing is moderate density housing intended to be “compatible in scale, form, and character with single-family houses” (RCW 36.70A.030). Specifically, Tier 2 cities, including Mercer Island, must allow a range of middle housing types on all residential lots, including at least six of a prescribed list of nine housing types:

• Duplex/Triplex/Fourplex/Fiveplex/Sixplex: A residential building with 2 to 6 attached dwelling units.
• Townhouses: Buildings that contain three or more attached single-family dwelling units that extend from foundation to roof and that have a yard or public way on not less than two sides.
• Stacked Flats: Dwelling units in a residential building of no more than three stories on a residential zoned lot in which each floor may be separately rented or owned.
• Courtyard Apartments: Attached dwelling units arranged on two or three sides of a yard or court (typically open space).
• Cottage Housing: Residential units on a lot with a common open space that is often owned by all units.

Development standards for the selected middle housing types may not be more restrictive than those required for single-family homes. Permit and environmental review processes for middle housing must be the same as those for single-family homes. Design review for middle housing is limited to administrative design review.

Unit Density

In addition to permitting middle housing types, HB 1110 requires cities to establish a new system for regulating housing density that has not been commonly used in the past. This system regulates density based on the number of housing units allowed per lot, regardless of lot size. This is referred to as “unit density”. Any of the permitted middle housing types can be combined on a lot to meet the unit density. Tier 2 cities must allow the following lot densities on all residential lots:

• Allow at least 2 middle housing units per lot.
• Allow at least 4 middle housing units per lot if:
  1. The lot is located within a quarter mile walking distance of the light rail station (see Map 2: Distance from Light Rail, on the following page), or
  2. At least one unit is affordable (more information is provided below on this affordability incentive).

Recent updates to the Middle Housing User Guide have clarified how these lot density requirements apply in conjunction with single family and ADU housing units. Single-family housing and ADUs are not included in the definition of middle housing and are considered separate housing types. Thus, only middle housing types are counted towards the 2 or 4 units that must be allowed per lot. More specifically, since both single-family homes and middle housing must be permitted on residential lots and single-family homes do not count toward the middle housing unit density, these lots must allow BOTH a single-family home AND 2 to 4 units of middle housing.

Additionally, the legislation also provides the option for cities to allow ADUs to count towards the middle housing unit density requirements. So while ADUs are a different housing type from middle housing, they can be counted towards the unit density requirements in HB 1110. Thus, property owners will have the option of several different development scenarios on a residential lot – e.g. a single family home plus two ADUs, a single family home plus two middle housing units, or a combination. Additional middle housing units would also be permitted on lots within ¼-mile of the light rail station or those that provide one unit of affordable housing. These projects could include a total of five units, including a single-family home and four units of middle housing.

Affordability Incentive

HB 1110 requires jurisdictions to provide additional unit density for projects that incorporate affordable housing. For Mercer Island, this means any residential lot may have four middle housing units if one unit is affordable. Affordable housing is defined as housing that is affordable to households earning at or below 60% of the Area Median Income (AMI) for rental housing and 80% AMI for owner-occupied housing. Affordable units must be maintained as affordable for at least 50 years, by a covenant or deed restriction held and maintained by the City.

Parking Restrictions

HB 1110 limits the amount of off-street parking that jurisdictions can require in middle housing developments, as follows (these provisions are identical to those in HB 1337):

• No off-street parking requirements are allowed within ½-mile walking distance of the light rail station.
• May only require 1 off-street parking space per unit for lots smaller than 6,000 square feet.
• May only require 2 off-street parking spaces per unit for lots larger than 6,000 square feet.

SB 5258

SB 5258, primarily concerns construction defect claims in condominiums. However, the bill also includes a requirement, codified at RCW 58.17.060(3), that local jurisdictions “include in their short plat regulations procedures for unit lot subdivisions allowing division of a parent lot into separately owned unit lots…” The Middle Housing User Guide addresses this requirement and how it aligns with the middle housing requirements in HB 1110 (see pages 87-91). Commerce also recently published additional draft guidance: Unit Lot Subdivision Fact Sheet. Unit lot subdivision allows the land beneath detached single family housing, ADUs or middle housing where no units are stacked on another unit, to be divided for individual sale. Unit lot subdivision is defined in state law as a type of short subdivision. The Mercer Island City Code defines a short subdivision as “a subdivision consisting of four or less lots on four or less acres.” Together these requirements will enable parent lots to be divided into up to four unit lots for individual sale and fee-simple ownership. Unit lot subdivision can be used with all forms of non-stacked housing, including single-family, middle housing, and ADUs. Unit lot subdivision is not appropriate for stacked flats, apartments, or configurations where one unit is stacked on top of another unit. This type of land division is commonly used for townhouse and cottage housing development, and it can also be used with side-by side duplexes, triplexes and fourplexes as well as other detached or non-stacked orientations of middle housing units. RCW 36.70A.635 also requires cities to allow zero lot line subdivision. This means that attached housing forms, including townhomes and duplexes, can be built on separate unit lots with no setback between the housing units.