The proposed bill aims to enhance housing affordability in Washington State by promoting the construction of "American dream homes," which are defined as owner-occupied single-family residences of 1,500 square feet or less intended for low-income households. The bill introduces several new sections to various chapters of the Revised Code of Washington (RCW), establishing criteria for the approval of permits for these homes, including limits on permitting fees, impact fees, and requirements for maintaining affordability for low-income households for seven years post-sale. Additionally, it allows for the construction of these homes outside urban growth areas under certain conditions and mandates annual reporting by cities and counties on the number of permits issued.

Furthermore, the bill provides financial incentives for local governments and builders. It includes provisions for tax distributions to cities and counties related to the construction of American dream homes, a tax credit for builders based on the selling price of these homes, and a seven-year property tax exemption for qualifying homes. The legislation also outlines the intent to appropriate funds for down payment assistance for buyers and reimbursement for local governments for revenue losses incurred due to the program. The act is set to take effect on July 1, 2024, and will apply to taxes levied for collection in 2025 and thereafter.