Title
Approval of a Resolution Authorizing the Execution of a Real Estate Purchase and Sale Agreement with the Low Income Housing Institute for Franz Anderson Road SE Property
Recommended Action
Committee Recommendation:
Staff representing the City of Olympia’s Housing and Homeless Response team, City of Lacey, City of Tumwater, and Thurston County reviewed and rated the responsive proposals and selected the Low Income Housing Institute (LIHI) to conduct Phase One of the project.
City Manager Recommendation:
Move to approve a Resolution authorizing the execution of a real estate purchase and sale agreement between the City of Olympia and LIHI for Franz Anderson Road SE property to be used for affordable housing.
Report
Issue:
Whether to approve a resolution authorizing the execution of a real estate purchase and sale agreement between City of Olympia and LIHI for Franz Anderson Road SE property to be used for affordable housing.
Staff Contact:
Jacinda Steltjes, Affordable Housing Program Manager, Office of Community Vitality, 360.753.8482
Presenter(s):
None - Consent Calendar
Background and Analysis:
In spring 2022, City of Olympia and Thurston County partnered to purchase tax identification parcel numbers 58900000300, 58900000301, 58900000400, 58900000500, 58900000600 and 41701000100 along Franz Anderson Rd. SE for the purpose of utilizing the property for affordable housing efforts. A Solicitation of Interest seeking proposals to acquire and develop tax parcels 58900000300, 58900000301, 58900000400, 58900000500, 58900000600 into permanent supportive housing, also referred to as Phase One, was issued February 17, 2023. Proposals were due March 27, 2023.
Staff representing the City of Olympia’s Housing and Homeless Response team, City of Lacey, City of Tumwater, and Thurston County reviewed and rated the responsive proposals and selected the Low Income Housing Institute (LIHI) to conduct Phase One of the project. Staff has worked with LIHI to execute a real estate purchase and sale agreement, which proposes selling the property for $1 with the option to purchase the property back at the same price if LIHI fails to develop it as instructed in the agreement within a 24-month period.
Phase One Project Type
Phase One will involve the development of a permanent supportive housing project. RCW 36.70A.030(19) defines permanent supportive housing as "subsidized, leased housing with no limit on length of stay that prioritizes people who need comprehensive support services to retain tenancy and utilizes admissions practices designed to use lower barriers to entry than would be typical for other subsidized or unsubsidized rental housing, especially related to rental history, criminal history, and personal behaviors. Permanent supportive housing is paired with on-site or off-site voluntary services designed to support a person living with a complex and disabling behavioral health or physical health condition who was experiencing homelessness or was at imminent risk of homelessness prior to moving into housing to retain their housing and be a successful tenant in a housing arrangement, improve resident's health status, and connect the resident of the housing with community-based health care, treatment, or employment services.”
Phase One Unit Mix and Target Population
LIHI proposes constructing 71 units of studio and one-bedroom multi-family rental units for homeless adults whose incomes do not exceed 30% of the area median income by household size, as determined by the U.S. Department of Housing and Urban Development (HUD) and who are homeless or imminently at risk of homelessness. A one-person household with an income of 30% of area median income has an income of $21,550 annually.
The project will operate using a low barrier entry model and tenants will be offered voluntary wrap-around support services designed to support a person living with a complex and disabling behavioral or physical health condition in achieving housing stability. Engaging in supportive services will not be a condition of receiving housing. LIHI will be the developer of the property and owner of the project.
Phase One Project Costs and Timeline
The project is anticipated to cost LIHI $28.2 million to develop. Thurston County and the Cities of Lacey and Tumwater have agreed to provide approximately $6.7 million toward the construction cost, some of which originates from the American Rescue Plan Act. LIHI proposes accumulating the remaining financing needed to develop the property in the remainder of 2023 and into 2024 before beginning construction in fall 2024. Site control is needed to participate in the state funding application processes. A real estate purchase and sale agreement will meet this need. The project is anticipated to be completed and leased up in early 2026.
Phase Two
A second phase of affordable housing will occur on tax identification parcel number 41701000100 along Franz Anderson Road at a later point in time. The parcel will first accommodate a city-owned 50-unit tiny home village that is anticipated to open in summer 2023 and operate for a duration of approximately three years. The City will retain ownership of this parcel for the duration of time the tiny home village operates. The City will then pursue a purchase and sale agreement with another affordable housing developer for workforce housing on this parcel.
Climate Analysis:
Phase One of the project will be located near a high-frequency transit corridor with bus service every 15 minutes along Martin Way SE. LIHI proposes maintaining a small grove of trees located along the south border of the property. In addition to providing natural space, the trees are a naturally occurring way to minimize roadway noise. The development will comply with the Evergreen Sustainable Development Standards. City staff will work with LIHI as the project design is finessed to incorporate design standards intended to mitigate climate change.
Equity Analysis:
Phase One of the project will serve Olympia and Thurston County residents whose incomes do not exceed 30% of area median income by household size and who are homeless or imminently at risk of homelessness. This project addresses existing gaps in affordable housing availability and provides housing for marginalized populations who are over-represented in the county-wide homeless system.
People of color and other marginalized populations are over-represented in Thurston County’s homeless population. According to Thurston County’s 5-Year Homeless Crisis Response Plan, people of color make up 18% of the general population in Thurston County, however 32% of people experiencing homelessness are people of color. Additionally, according to a Housing Needs Assessment produced in January 2021 by Thurston Regional Housing Council, there are two critical housing gaps that hinder Thurston County’s ability to address both short-term and long-term homelessness. Those gaps are a lack of permanent supportive housing and of housing units which are affordable to households whose income is at or below 30% of area median income by household size.
Neighborhood/Community Interests (if known):
Affordable housing is of high interest to the community. The City has received some public comment from homeowners near the property who are concerned the project will negatively impact them.
Financial Impact:
The real estate purchase and sale agreement proposes selling the property for $1 with the option to repurchase the property for the same price if LIHI fails to begin development of the property into permanent supportive housing within 24 months. A restrictive covenant limiting the property’s use in perpetuity for affordable housing as defined in RCW 36.70A.030(2) and (19) will be recorded.
If the City of Olympia does not execute the real estate purchase and sale agreement before August 2023, it will negatively impact LIHI’s ability to attract state financing needed to develop the project and will delay the project by a year or more. Not executing the real estate purchase and sale agreement will also put the $6.7 million in Thurston County, City of Lacey, and City of Tumwater funding in jeopardy. This could result in $3.275 million in American Rescue Plan Act funding being taken back by the U.S. Department of Treasury.
Options:
1. Move to approve the Resolution as presented authorizing the execution of a real estate purchase and sale agreement between the City of Olympia and Low Income Housing Institute.
2. Move to Approve the resolution with amendments authorizing the execution of a real estate purchase and sale agreement between the City of Olympia and Low Income Housing Institute.
3. Do not approve the resolution authorizing the execution of a real estate purchase and sale agreement between the City of Olympia and Low Income Housing Institute.
Attachments:
Resolution
Agreement