Title
Discuss the Affordable Housing Emergency Declaration
Recommended Action
Committee Recommendation:
Not referred to a Committee.
City Manager Recommendation:
Discuss the Affordable Housing Emergency Declaration.
Report
Issue:
Whether to discuss the Affordable Housing Emergency Declaration
Staff Contact:
Jacinda Steltjes, Housing Manager, Community Planning and Economic Development, 360.753.8482
Presenter(s):
Jacinda Steltjes, Housing Manager, Community Planning and Economic Development
Background and Analysis:
Adoption of Affordable Housing Emergency Declaration (AHED)
In December 2024, the Olympia City Council adopted Ordinance 7414, declaring the insufficient supply of affordable housing a public health emergency. The ordinance defines affordable housing as housing that costs no more than 30% of a household’s income. It also recognizes that approximately 14,295 new housing units will be needed in Olympia and its urban growth area by 2045 to accommodate projected population growth, with nearly half required to serve low-income households-those earning at or below 80% of the area median income (currently $116,700).
The Ordinance aligns with the City’s Housing Action Plan and One Community Plan and is modeled after similar emergency declarations adopted in jurisdictions such as San Diego, Los Angeles, Portland, and the State of Hawaii. It establishes six strategies aimed at increasing the supply of affordable housing for low-income households in Olympia.
• Prioritizes affordable housing projects in the permitting queue.
• Provides dedicated staff support to help affordable housing projects move efficiently through the permitting process.
• Authorizes the City Manager to defer or waive certain City requirements for qualifying affordable housing projects.
• Creates a permit fee grant program for affordable housing developments.
• Establishes an infrastructure assistance grant to support affordable housing projects.
• Outlines the City’s willingness to participate in 1033 tax exchange transactions with property owners to preserve affordability in projects at risk of conversion.
Developers benefitting from the emergency declaration must offer all units of their project as affordable for a minimum of 25 years. A restrictive covenant which runs with the land guarantees this affordability period.
Promoting the Declaration
Much of 2025 focused on implementing the (AHED) and increasing awareness among the public and development community. In the first quarter, the City updated an Affordable Housing Incentives fact sheet outlining available programs, which is now accessible on the Housing and Homeless Response website and through the City’s permit portal.
Throughout the year, staff used multiple communication channels to share information about the declaration. In February, AHED was featured in the internal Difference Makers staff newsletter. In March, Housing and Strategic Communications staff developed a signature graphic to support consistent messaging. In April, information about the declaration and middle housing code updates was included in a utilities insert, and a companion blog post was published highlighting the importance of affordable housing and the City’s efforts to expand it. In June, an e-news update provided progress on the AHED rollout.
With all six strategies now operational, Housing staff continue to support implementation by sharing incentive information and working directly with developers. Staff regularly participate in site plan review meetings to outline available incentives for affordable housing projects and assist developers in navigating and applying for these programs.
AHED Participants
The declaration has been well received by the development community. To date, five projects have been prioritized and moved to the front of the permit queue. Four of these projects have received direct assistance from planning and engineering staff to support timely review and processing.
One project received a targeted exemption from City code, which also adjusted the affordability requirement associated with another City incentive from an indefinite term to a 25-year affordability period. One project is currently pursuing the permit fee grant. No projects have yet applied for the infrastructure assistance grant or participated in a 1033 tax exchange transaction.
In all cases, AHED incentives have been used in combination with other existing affordable housing incentive programs to support project feasibility and delivery.
Other Affordable Housing Incentives
In addition to the six AHED strategies, the City offers several other affordable housing incentives intended to encourage development of affordable housing. Transportation and park impact fees are exempted by 80%. In partnership with both Olympia School District and North Thurston School District, school impact fees are also exempted by 80%. A 50% exemption of City general facility charges and a 50% exemption of LOTT Clean Water Alliance capacity development charges are also offered. LOTT’s Affordable Housing Supply program started as a pilot in 2023 and is now in its first biennium as a full-fledged program. Olympia has drawn its full allocation, plus relied on a shared pool among other partner jurisdictions, since the introduction of the program.
Lessons Learned
While the AHED has been successful, many lessons have been learned. Significant coordination is needed between several city staff teams to successfully apply the incentives. Housing, Planning & Engineering, Administrative Services, and Finance all play a role. Staff have come a long way in understanding each other’s work and applying that learning to guide developers on when AHED incentives should be requested but there is room for improvement and continued learning.
For example, while planning and engineering staff have pushed hard to fast-track affordable housing projects in the permitting process, two projects were held up on the developers’ side by federal funding gaps or regulations that caused the permit timeline to periodically stall.
• The Low Income Housing Institute’s Franz Anderson Permanent Supportive Housing project experienced a mid-process delay when housing vouchers were not available. The developer identified alternative operating funding and adjusted the target population, while permitting progress slowed as Housing staff coordinated regionally to help address the gap.
• South Puget Sound Habitat for Humanity’s 3900 Boulevard project accepted a federal grant that triggered a required National Environmental Policy Act (NEPA) environmental review. The review took several months to complete, during which AHED incentives could not be fully applied and fees could not be finalized or paid until the process was complete.
All in all, each project benefiting from an incentive has brought a learning opportunity and process improvement.
Next Steps
The Council will consider continuation of the Affordable Housing Emergency Declaration in early June 2026. If continued, Housing staff plan to focus the remainder of 2026 on strengthening education, outreach, and identifying process improvements. Following an extended vacancy, the Housing Director position is expected to be filled in spring 2026, increasing capacity to dedicate additional focus to the AHED and other affordable housing incentive programs.
Staff will also update Housing program webpages and pursue expanded collaboration with internal and external partners, including the City’s Economic Development Division and the Thurston Regional Housing Council, to improve awareness and understanding of AHED and related incentives.
In addition, staff intend to more actively promote available incentives to affordable housing developers to help attract additional development interest to Olympia and Thurston County. Finally, staff will explore opportunities to better align AHED incentives with other City initiatives, including the land banking strategy, to increase overall impact in 2026 and into 2027.
Climate Analysis:
Affordable housing and middle housing create density and better utilize the limited availability of land. Affordable housing projects are often funded by and rely upon state and federal resources. These resources require projects to comply with development standards that safeguard health and safety, increase durability, promote sustainable living, preserve the environment, and increase energy and water efficiency. Additionally, affordable housing projects are commonly located along frequent transportation routes and thereby help to decrease greenhouse gas emissions.
Equity Analysis:
The emergency declaration is intended to increase the supply of affordable housing, with the greatest benefits expected for low-income households in Olympia. Low-income residents and people of color are disproportionately impacted by the limited supply of affordable housing. The Thurston Regional Planning Council’s 2021 Housing Needs Assessment found that approximately 7,600 Olympia households are cost burdened, meaning they spend more than 30% of their income on housing costs. In general, lower-income households are more likely to experience housing cost burden.
The Assessment also notes that about one in four Thurston County residents identifies as a person of color, including residents who are Hispanic or Latino, Black, Asian, multiracial, or other races. These communities have been disproportionately impacted by systemic inequities, including lower homeownership rates, lower household incomes, and higher rates of housing instability and homelessness compared to white, non-Hispanic residents.
Housing unaffordability is also associated with negative public health outcomes, including increased risk of chronic conditions such as cardiovascular disease and respiratory illness, as well as mental health challenges such as chronic stress, anxiety, and depression.
The Fair Housing Assessment was produced in 2022 in partnership with Thurston County and Housing Authority of Thurston County. The Assessment evaluates housing discrimination and fair housing planning efforts as well as identifies outstanding fair housing needs in Thurston County. The assessment is used to inform spending of federal funds, create goals and strategies to advance fair housing in Thurston County, and inform program areas and policies that involve housing efforts. Some key findings of the Assessment of Fair Housing were:
• The 600+ community members who participated in a survey to assess fair housing barriers and priorities in Thurston County rated access to affordable housing among the highest priority needed to address housing disparities in Thurston County.
• Housing that is safe, accessible, and affordable to households experiencing a disability is severely lacking in Thurston County.
Neighborhood/Community Interests (if known):
Affordable housing has ranked as a top priority among Olympia community members in recent years. In May 2023, the City of Olympia conducted a public opinion survey. Respondents overwhelmingly (74%) indicated housing and homelessness was a concern. Only 11% of the 531 respondents felt residents could access affordable and stable housing in Olympia. A theme identified in comments concerning the Land Use & Urban Design chapter of the City’s Comprehensive Plan was that community members want housing options for all income levels across the city. They also feel more should be done to help people find housing solutions. A theme in the Public Services chapter comments was that the availability of affordable housing is a primary issue for our community and there should be housing opportunities for everyone across the entire income spectrum.
Financial Impact:
There are no direct financial impacts associated with the discussion of the Affordable Housing Emergency Declaration. However, if Council chooses to continue the declaration in June 2026, two AHED strategies have ongoing financial implications.
Permit Fee Grant
In spring 2025, Council approved funding the permit fee grant with $500,000 in seed money from the Economic Development reserves fund. The permit fee grant fund will maintain a minimum balance of $500,000. Each time a city-owned property is sold up to 10% of the proceeds from the sale is directed to this grant fund. At no time will funds exceed $750,000.
Eligible applicants to this grant fund benefit from 50-100% exemption of permit fees, though not review fees. The degree of exemption is dependent upon degree of affordability and whether the project meets Comprehensive Plan goals in addition to providing affordable housing for low-income households. The permit fee grant exempts the applicant from paying permit fees, which are directed into Fund 006. Fund 006 is heavily relied upon to pay personnel costs associated with several Community Planning & Economic Development staff.
Infrastructure Assistance Grant
The infrastructure assistance grant provides funds to affordable housing developers to offset the cost of wastewater and drinking water infrastructure. The fund was seeded in 2025 with a 0.5% increase to drinking water utility and a 1% increase to wastewater utility. This provided roughly $55,000 for drinking water infrastructure and $85,000 for wastewater infrastructure. Revenue from the drinking water utility are collected in Fund 145 and must be used toward drinking water infrastructure. Revenue from the wastewater utility are collected in Fund 146 and must be applied toward wastewater infrastructure.
Options:
1. Discuss the Affordable Housing Emergency Declaration.
2. Do not discuss the Affordable Housing Emergency Declaration.
3. Provide other direction to staff.
Attachments:
Affordable Housing Emergency Ordinance 7414