Title
Approval of a Resolution Authorizing Submission of a 2025 Connecting Housing to Infrastructure Program Grant Application for South Puget Sound Habitat for Humanity's 3900 Boulevard Road Project
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve a Resolution authorizing submission of a 2025 Connecting Housing to Infrastructure Program grant application for South Puget Sound Habitat for Humanity's 3900 Boulevard Road Project.
Report
Issue:
Whether to approve a Resolution authorizing submission of a 2025 Connecting Housing to Infrastructure Program grant application for South Puget Sound Habitat for Humanity's 3900 Boulevard Road Project.
Staff Contact:
Jacinda Steltjes, Housing Division Manager, Community Planning & Economic Development Department, 360.753.8482
Presenter(s):
Jacinda Steltjes, Housing Division Manager, Community Planning & Economic Development Department
Background and Analysis:
On January 5, 2022, the City issued a Solicitation of Interest seeking a development partner for a city-owned 10-acre site located at 3900 Boulevard Road SE. Twelve (12) responses were reviewed and discussed by the City Council in March 2022. During the review process the Council took into consideration priorities established to guide selection of a development partner. Priorities included the degree of housing affordability; home ownership opportunities; environmental sustainability in development, design, and construction; quality design that reflects the character of the surrounding area; and the inclusion of a neighborhood center. South Puget Sound Habitat for Humanity was selected to develop the site.
Habitat for Humanity 3900 Blvd Rd. Housing Project
In 2023, the city formerly sold the property to South Puget Sound Habitat for Humanity. Since that time Habitat has been working to design, permit, and finance the 3900 Boulevard Road SE project, which involves a mix of owner-occupied townhomes and cottages with the inclusion of a small neighborhood center. Habitat's objective is the creation of owner-occupied housing that is affordable to households making 50-80% of the area median income for Thurston County. Approximately 112 housing units will be built.
The project will cost approximately $56.3 million. Pre-development and infrastructure costs, which will be incurred in fall 2025 through summer 2026, account for $7.76 million of the total costs. Financing sources for the pre-development and infrastructure work include a Community Project Funding grant from HUD. A 2024 State appropriation, a 2023 CHIP grant from the state, local Home Fund dollars awarded through the Regional Housing Council, and funds contributed by Habitat, among other sources.
Development Timeline
Construction is scheduled to begin this fall. Infrastructure will be built first. Construction of housing units will occur in up to four subsequent phases in which several units will come online per year through spring 2029. A neighborhood meeting to communicate the design and implications to neighbors occurred Sept. 4. The project is the largest to date undertaken by South Puget Sound Habitat for Humanity.
Connecting Housing to Infrastructure Program (CHIP)
Habitat requested city staff submit a 2025 CHIP grant application in an amount up to $1 million for the 3900 Boulevard project. The CHIP grant opportunity is offered by the Washington State Department of Commerce. This is the fifth consecutive year CHIP grant funding has been offered by the state. The grant supports the development of affordable housing units by paying for water, sewer and stormwater utility improvements and/or waived system development fees charged by the permitting jurisdiction. Applicants must be a city, county, or utility district in partnership with a housing developer. Projects must meet specific criteria to be eligible for funding:
* Located in a jurisdiction that imposes an affordable housing sales and use tax under RCW 82.14.530(1)(a)(ii) or RCW 82.14.530(1)(b)(i)(B), RCW 82.14.540, or RCW 84.52.105. This includes all counties and the cities within them except Stevens and Ferry counties.
* Located within the urban growth area (UGA) boundary.
* A minimum of 25% of the units are set-aside as affordable to low- or moderate-income households.
* The affordable housing development must begin construction within 24 months of the CHIP award.
* A strong probability of serving residents within the specified income levels for at least 25 years.
Funds originate from the 2025-27 Washington State Capital Budget Building Construction Account and are administered by the Washington State Department of Commerce. This year, the program offers a range of funding options to support the development of affordable housing:
* $55 million set aside for projects in jurisdictions of any size.
* $30 million set aside for projects in cities or counties with 150,000 or fewer residents.
* $5 million for projects serving households in Chelan, Douglas and Okanagan counties.
Funds are awarded to the applicant jurisdiction, which are then sub-awarded to the housing development partner responsible for constructing the project. The maximum grant award this year is $1 million. Grant funds must be drawn during the period of July 1, 2025, through June 30, 2027. Capital projects can take longer to complete. Understanding this the legislature will usually re-appropriate funds. If re-appropriated, the project must be completed and invoiced by June 30, 2029.
History of Successful Grant Awards
The City's Housing Division has applied for CHIP funds for the past three years. In 2022, the City was successful in receiving a $2 million award for Family Support Center of South Sound's The Landing project. In 2023, Olympia received an award of $2 million for South Puget Sound Habitat for Humanity's 3900 Boulevard project. The City was unsuccessful in attracting a CHIP grant in 2024. If 2025 CHIP funds were to be awarded in full they would be offered in conjunction, though through a separate sub-grant agreement, with the 2023 CHIP grant funds to Habitat's 3900 Boulevard project. This would bring the project's total CHIP funding up to $3 million.
Climate Analysis:
The project will occur on property adjacent to an Intercity bus line. The project will also include minimal parking spaces in an effort to increase housing density, decrease greenhouse gas emissions and encourage use of public transportation. All homes will be built to passive house standards, which exceed Evergreen Sustainable Development Standards. The passive house approach creates durable, resilient buildings that slash heating energy use by as much as 90% and dramatically reduce operational carbon emissions. Passive house standards include criteria that safeguard health and safety, increase durability, promote sustainable living, preserve the environment, and increase energy and water efficiency. The development will be equipped with solar arrays, which, in combination with the passive house design standards, will result in a net-zero energy development.
Equity Analysis:
The project aligns with efforts included in the City's Housing Action Plan, efforts recommended in the Affordable Homeownership Study, and findings and recommendations identified in the Housing Displacement Analysis. The project also helps advance the regional work underway in Thurston County to increase the supply of affordable housing for a range of incomes, as required by HB 1220. The proposed project will meet several community needs by providing housing for low-income households, households experiencing housing instability, and households living with a disability.
Low-Income Households
There is an immense need for affordable housing for low-income Olympian households. According to the Thurston Regional Planning Council's Housing Needs Assessment produced in 2021, approximately 7,605 of Olympia's current 23,000 households are cost burdened, meaning they pay more than 30% of their income on their housing needs.
According to the Washington State Department of Commerce, Olympia will need to plan for 14,295 new housing units to serve a range of household income levels by 2045 to meet the City's projected population growth. Of those units, an estimated 7,616 will be needed for low-income households with annual gross incomes up to 80% of the area median income.
Unstably Housed Households
Homeownership is a leading way to create generational wealth and increase housing stability. However, due to rising housing prices and strict financing regulations, marginalized residents are less likely to become homeowners. A recently completed Housing Displacement Analysis of the Thurston County area conducted by Uncommon Bridges calls attention to the need to identify creative ways to support and maintain homeownership, especially among lower-income households.
Under Habitat for Humanity's model, homeownership becomes affordable for households with incomes between 50 and 80 percent of the area median income. Habitat assists participants to become homebuyer ready with a financial institute through education classes and guidance meetings. Habitat often offers a silent second mortgage to program participants; this ensures the primary mortgage through a financial institution is right-sized to the homebuyers' income and the mortgage will be affordable. Homebuyers help to build their new, energy-efficient homes alongside volunteers, construction professionals, and their future neighbors.
Disabled Households
The most recent Assessment of Fair Housing identified an estimated 7,385 individuals in Olympia who experience one or more disabilities, of which nearly 16% had incomes below the federal poverty level. Approximately 80 individuals who responded to a data-gathering survey associated with the assessment reported they have difficulty accessing transportation near where they live. Many also reported it is challenging for them to find housing units that are both affordable and easily accessible.
All units constructed will be designed with accessibility in mind. The majority of multiple-level homes will feature a bedroom on the first floor. All interior and exterior doorways, bathrooms, and community sidewalks will allow for wheelchair maneuverability. Cottages will have zero step entrances. Walls will be reinforced in areas of the home that may call for future accessibility devices.
Neighborhood/Community Interests (if known):
The project is of interest to the neighborhood and Olympia residents in general given the project's scope and that the project is occurring on property formerly owned by the City of Olympia. Residents have followed the project closely and they periodically ask City staff about the status of the project. The project was also included on the 2025 Regional Housing Council's legislative agenda.
Financial Impact:
Applying for the grant will not have a direct financial impact on the City of Olympia.
Options:
1. Move to approve a Resolution authorizing submission of a 2025 Connecting Housing to Infrastructure Program grant application for South Puget Sound Habitat for Humanity's 3900 Boulevard Road Project.
2. Mpve to approve the Resolution authorizing the submission of a CHIP grant application in the amount of $1 million for the South Puget Sound Habitat for Humanity Boulevard Road Project with amendments.
3. Do not approve the Resolution authorizing the submission of a CHIP grant application in the amount of $1 million for the South Puget Sound Habitat for Humanity Boulevard Road Project for the Habitat for Humanity Boulevard Road Project.
Attachments:
Resolution