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File #: 25-0850    Version: 1
Type: recommendation Status: In Committee
File created: 9/24/2025 In control: Land Use & Environment Committee
Agenda date: 10/23/2025 Final action:
Title: Approval of Middle Housing Code Amendments
Attachments: 1. Draft Amendments, 2. Planning Commission Recommendation, 3. Staff Memo, 4. Survey Summary, 5. Policy Decision Points Used in Draft, 6. Public Comments, 7. Project Webpage

Title

Approval of Middle Housing Code Amendments

 

Recommended Action

Committee Recommendation:

Move to accept the Planning Commission recommendation to adopt the proposed Middle Housing Code Amendments, with revisions, and forward to the full Council for approval. 

 

City Manager Recommendation:

Move to accept the Planning Commission recommendation to adopt the proposed Middle Housing Code Amendments, with revisions, and forward to the full Council for approval. 

 

Report

Issue:

Whether to accept the Planning Commission recommendation to adopt the proposed Middle Housing Code Amendments, with revisions, and forward to the full Council for approval.

 

Staff Contact:

Joyce Phillips, Planning Manager, Community Planning and Economic Development, 360.570.3722

 

Presenter(s):

Joyce Phillips, Planning Manager

 

Background and Analysis:

In 2023 and 2024, Washington State passed laws that require the City of Olympia to address middle housing, accessory dwelling units (ADUs), and co-living housing in its development regulations. Implementing these new requirements will require modifications to multiple Titles in the Olympia Municipal Code (OMC), although the majority of the changes are to OMC 18.04, Residential Districts.

 

To help community members understand the types of changes that would be needed, Community Planning and Economic Development (CPED) staff prepared information sheets for Middle Housing, ADUs, and Co-Living Housing. The intention was to highlight the primary new requirements of the bills with a focus on what is not already addressed in the OMC. Below is a  summary of each, and the information sheets can be found on the project webpage (see Attachment 7):

 

Middle Housing

                     The City must now allow more than one unit per lot on all lots zoned primarily for residential use 

                     The number of units allowed on a lot increases for affordable housing

                     The number of units allowed on a lot increases within a certain distance of key transit types

                     The City cannot require any standards for middle housing that are more restrictive than those required for detached single-family residences

                     The City may apply development regulations that are required for detached single family residences including, but not limited to, setbacks, lot coverages, stormwater, clearing, and tree canopy and retention requirements to ensure compliance with existing ordinances intended to protect critical areas and public health and safety

                     The City must apply the same development permit and environmental review processes that apply to detached single-family residences to middle housing

 

Accessory Dwelling Units

                     Cannot assess impact fees on new ADUs that are greater than 50 percent of those imposed on the principal unit

                     Must allow at least two ADUs on all lots located in all zoning districts within an urban growth area that allow for single-family homes

                     Must allow a maximum gross floor area requirement for ADUs of at least 1,000 square feet

                     Cannot impose setback requirements, yard coverage limits, tree retention mandates, restrictions on entry door locations, aesthetic requirements, or requirements for design review for ADUs that are more restrictive than those for principal unit

                     Must allow ADUs to be converted from existing structures, including but not limited to detached garages, even if they violate current code requirements for setbacks or lot coverage

                     Must allow the sale or other conveyance of a condominium unit independently of a principal unit

 

Co-Living Housing

                     Development Regulation standards cannot be more restrictive than those required for other types of multifamily residential uses in the same zone

                     Cannot require a review, notice, or public meeting for co-living housing when that is required for other types of residential uses in the same location, unless otherwise required by state law

                     Cannot exclude co-living housing from participating in affordable housing incentive programs under RCW 36.70A.540

                     Cannot treat a sleeping unit in co-living housing as more than one-quarter of a dwelling unit for purposes of calculating dwelling unit density

                     A city may not treat a sleeping unit in co-living housing as more than one-half of a dwelling unit for purposes of calculating fees for sewer connections, unless the city makes a finding based on facts that connection fees should exceed the one-half threshold

 

Decision Points

As the draft code amendments were being contemplated and developed, it was clear to staff that some things were being proposed because they are required under state law and other things could be proposed one way or another, because of a policy choice.  Staff relied on earlier input from the Land Use and Environment Committee members, language from the comprehensive plan or other city plans like the Housing Action Plan, and staff in development review roles to help shape the first draft. 

 

However, staff wanted to help highlight those decision points for the public, to be transparent and to help community members develop comments that are the most relevant to parts of the proposal that could change in a future draft. A document highlighting the main decision points used in developing the draft was also posted online.

 

The primary decision points used to develop the proposed code amendments include:

                     Meet the requirements for “Tier 1” Cities even though Olympia is classified as a “Tier 2” City due to our population being more than 25,000 but less than 75,000

                     Use “Frequent Transit Routes” (as locally defined) rather than the state defined “Major Transit Stops”

                     Use the distance of a half-mile from frequent transit routes, rather than a quarter-mile from major transit stops, for the distance applied to receive an increase in unit lot density

                     Clarify that Accessory Dwelling Units (ADUs) will count toward the total number of units allowed on a lot

                     Increase the size of ADUs to 1,000 square feet, which is required by law, but do retain a maximum size for ADUs

                     Eliminate the maximum number of stories allowed in zoning districts and instead rely on the maximum building height

                     Allow unit lot subdivisions, but only as a short subdivision (9 or fewer lots and tracts)

 

Soliciting Public Comments

The first public draft was posted online in January (accessible from Attachment 7).  The information sheet pointing out the primary decision points was also provided.  Staff spent several weeks providing information and talking with members of the public about the draft. Staff gave presentations at the Council of Neighborhood Associations, the South Capital Neighborhood Association, the Planning and Heritage Commissions, and held a Questions and Answers public meeting. A community survey was open from April 1 - May 15th to solicit additional input. Questions in the survey focused on the parts of the draft where there was opportunity to make revisions in the public hearing draft, related to the policy decisions that were made in the first draft. 

 

The webpage and survey received more views and survey takers than is common for code amendments. There were 990 visitors to the site, with 189 people selecting to take the survey. A 46-page report, including all survey responses, is posted on the project webpage (Attachment 7). A shorter survey summary, with a statement about how input from the responses for each question was used, is attached for consideration (Attachment 4). For the most part, the community input supported the initial proposal, including in areas of the draft where the City exceeds the state’s minimum requirements. 57% of the survey participants supported meeting the Tier 1 requirements of the middle housing legislation, with many mentioning it was an opportunity to more fully address the housing crisis by allowing more residential dwellings. The City currently only has to meet the requirements for Tier 2 cities, but within several years the City would have to meet the Tier 1 requirements due to growth (see Attachment 4 for a comparison the Tier 1 and Tier 2 requirements), if the City Limits and the Urban Growth Area are both considered. 58% of the participants supported the current proposal for having Accessory Dwelling Units count towards the maximum number of units allowed per lot.

 

Planning Commission

The Planning Commission held a public hearing on the proposed code amendments on August 18, 2025. Ten people provided comments at the hearing, some supporting and some opposing the proposal. Those that were opposed raised concerns about meeting Tier 1 provisions when we are not yet required to do so, concerns about reduced setbacks, and issues such as impacts to historic neighborhoods or the potential shading of solar panels on adjoining properties. Those who spoke in favor were generally supportive due to the need for more housing and the ability to have more than one Accessory Dwelling Unit on a property. 

 

The Commission began its deliberations that evening but continued the discussion at its next meeting on September 15, 2025. The Commission recommends approval of the proposed amendments, with revisions.  One Commissioner voted not to approve the amendments, with their reasoning included in the Commission’s recommendation letter (see Attachment 2).

 

Climate Analysis:

Overall, the proposed amendments will support efforts to increase urban density and reduce urban sprawl. This work will promote infill residential development, making more use of the existing transportation and utility systems than development in undeveloped areas would. In addition, paratransit, retail deliveries, mail, and school buses already serve these areas with transportation services. Most parts of the City of Olympia are served with public transit. More development in these areas will support increased transit use and any increases in service that come with more density and higher ridership.

 

Equity Analysis:

Equity is challenging to address in code amendments.  The code language applies citywide, or at least equally across the zoning district designations (standards are the same for all R4-8 zoning districts, regardless of where they are in the city). The systemic barriers that need to be overcome, that this effort may help address, have more to do with ensuring access to a variety of housing types in any and all neighborhoods, by rental or purchase.

 

Near-term benefits will likely be more for people who are seeking housing, either to rent or purchase, especially in the areas of the city that are primarily made up of single family homes at lower densities (which make up approximately 70% of the City and Urban Growth Area).

 

The longer-term benefits may primarily be to property owners, who can recoup construction costs through rents and can continue to build wealth over time. There are provisions in the draft that will allow further subdivision of these units (unit lot subdivisions) or conversion to condominium (condominiumization) of these units - but that is at the discretion of the property owners. Some may go through the process and offer for sale, likely at market rates, but many may hold on to them and rent them out to recoup costs and then to gain income. This provides flexibility for the current property owners but could also at least hold the income gap in status quo. However, allowing for these homeownership opportunities is also an opportunity for some people to buy a home that may not otherwise be able to do so. In the past, community members have supported efforts that increase homeownership opportunities.

 

 

Neighborhood/Community Interests (if known):

The initial draft amendments were posted online in January. The public hearing draft was posted online in June and revised in early August. Staff spent several months informing people of what is in the proposal and what it means. The survey results indicate a higher level of support for these amendments than staff had anticipated.  Some community members also submitted written comments, which are attached for consideration (Attachment 6). In contrast to the survey results, several of the 10 written comments submitted by community members did not support allowing more dwellings on a lot and did not support the City meeting the Tier 1 requirements instead of those for Tier 2. See Attachment 4 for written comments.

 

Financial Impact:

The City was awarded a grant from the Washington State Department of Commerce, Growth Management Services, to help cover the costs of this work. The portion of the grant that helps fund this work is $37,500. The remainder of funding is from the Community Planning and Economic Development annual budget.

 

Options:

1.                     Move to accept the Planning Commission recommendation to adopt the proposed Middle Housing Code Amendments, with revisions, and forward to the full Council for approval. 

2.                     Move to accept the Planning Commission recommendation, with additional revisions, and forward to the full Council for approval.

3.                     Do not accept the Planning Commission recommendation or the proposed code amendments and direct staff to return to the Land Use and Environment Committee for further discussion.

 

Attachments:

Draft Amendments

Planning Commission Recommendation

Staff Memo

Survey Summary

Policy Decision Points Used in Draft

Public Comments

Project Webpage