Title
Approval of a Resolution Authorizing Submission of a 2026 Connecting Housing to Infrastructure Program Grant Application for Low Income Housing Institute’s Franz Anderson Permanent Supportive Housing Project
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve a Resolution authorizing submission of a 2026 Connecting Housing to Infrastructure Program (CHIP) grant application for Low Income Housing Institute’s Franz Anderson Permanent Supportive Housing project.
Report
Issue:
Whether to approve a Resolution authorizing submission of a 2026 Connecting Housing to Infrastructure Program (CHIP) grant application for Low Income Housing Institute’s Franz Anderson Permanent Supportive Housing project.
Staff Contact:
Jacinda Steltjes, Housing Manager, Community Development Department, 360.753.8482
Presenter(s):
Jacinda Steltjes, Housing Manager, Community Development Department
Background and Analysis:
Connecting Housing to Infrastructure Program (CHIP)
CHIP is a competitive grant funded through Washington State’s 2025-2027 capital budget and managed by the State’s Department of Commerce. A CHIP applicant must be a city, county or public utility district in partnership with an affordable housing developer. An applicant must identify a specific housing project which the funds will benefit. The goal of the program is to help local governments encourage the creation of affordable housing by reducing or covering the cost of water, sewer and stormwater utility improvements and/or waived system development fees charged by the permitting jurisdiction and associated with the applicant project.
Funding Availability
This is the fifth consecutive year CHIP grant funding has been made available. Olympia was successful in attracting CHIP awards on behalf of affordable housing development partners in 2022 and 2023. In the 2026 funding cycle, a total of roughly $31 million is available. Of this, approximately $25.8 million is available for eligible jurisdictions statewide and $5.2 million is set-aside for projects in eligible jurisdictions with a population less than 150,000. Applicants may request up to $2 million per project.
Eligible Uses of CHIP Funds
Funding can be utilized for the following eligible activities specific to the affordable housing project identified in an application:
§ Water and sewer line upsizing to serve increased density;
§ Water and sewer line extensions to serve new infill development;
§ Water, sewer and stormwater connections;
§ Regional stormwater systems or upgrades necessary to support housing development; and
§ System development charges waived for affordable housing.
Eligible Projects
To be eligible for the funding, projects must meet the following criteria:
• Be located in a jurisdiction that imposes an affordable housing sales and use tax under RCW 82.14.530(1)(a)(ii) and (1)(b)(i)(B), RCW 82.14.540 <https://app.leg.wa.gov/rcw/default.aspx?cite=82.14.540>, or RCW 84.52.105. This includes all counties and the cities within them except Stevens and Ferry counties;
• Be located in the urban growth area (UGA) boundary;
• Set-aside a minimum of 25% of the units as affordable to low- or moderate-income households (<80% AMI);
• Demonstrate construction on the project will begin within 24 months of the CHIP award;
• Illustrate a strong probability of housing units remaining affordable for at least 25 years;
• Demonstrate that the project will break ground no later than January 2029; and
• Demonstrate a strong likelihood that funds can be spent by June 30, 2027.
Applicant Project Details
Low Income Housing Institute has requested city staff submit a 2026 CHIP grant application in the amount of $730,000 for the Franz Anderson Permanent Supportive Housing project occurring at 527 Franz Anderson Rd. SE. The project consists of 70 studio and one-bedroom units for households with annual incomes up to 50% of Area Median Income and one unit for an on-site property manager. A minimum of 35 units will be set aside for households with incomes <30% AMI.
The project will offer 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. LIHI anticipates beginning construction by March 2027 and completing construction by late spring/early summer 2028.
Scoring Criteria
Applications are scored based on criteria such as readiness to proceed, access to public transit, need for the type of project in the community, budget, leveraging of private funding, and cost per unit (defined by CHIP as total funding request/ # of affordable units). Staff believe the project will score well across all scoring criteria as it is in close proximity to public transit along a high-frequency corridor, there is need for approximately 1,100 new permanent supportive housing units by the year 2045 in the Olympia community, the project is fully funded, and has a relatively small cost per unit (total funding request of $730,000/71 units) of $10,282. Should a CHIP grant be awarded, the grant funding will supplant a portion of committed funding originating from low-interest loans, thereby decreasing the amount of debt the project must service.
Climate Analysis:
Approval of a resolution authorizing submission of a CHIP application for the Project will have no direct climate impact. However, the project itself will be located within one-half mile of a high-frequency transit corridor along Martin Way SE serviced by Intercity Transit routes 60, 62A and 62B with bus service every 15 minutes. The project will also comply with the Evergreen Sustainable Development Standards, which safeguard health and safety, increase durability, promote sustainable living, preserve the environment, and increase energy and water efficiency.
Equity Analysis:
The project will serve marginalized low-income and homeless residents whose incomes do not exceed 50% of area median income by household size. The project addresses existing gaps in affordable housing availability and provides low-barrier housing with voluntary supportive services.
According to a Housing Needs Assessment produced in January 2021 by Thurston Regional Planning 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. According to Olympia 2045: Comprehensive Plan, Olympia and its urban growth area will need nearly 1,100 new permanent supportive housing units and an additional roughly 5,930 units for households with incomes up to 50% of AMI by year 2045 to accommodate the anticipated population growth.
Neighborhood/Community Interests (if known):
Affordable housing is of high interest to the community. Three consecutive Community Engagement and Public Opinion surveys have identified housing and homeless services as the community’s number one priority.
Financial Impact:
The grant does not require a local match and will have no direct financial impact on the City of Olympia.
Options:
1. Move to approve a Resolution authorizing submission of a 2026 Connecting Housing to Infrastructure Program (CHIP) grant application for Low Income Housing Institute’s Franz Anderson Permanent Supportive Housing project.
2. Move to approve, with modifications, a Resolution authorizing submission of a 2026 Connecting Housing to Infrastructure Program (CHIP) grant application for Low Income Housing Institute’s Franz Anderson Permanent Supportive Housing project.
3. Do not approve the resolution
Attachments:
Resolution
CHIP Scoring Criteria
CHIP Application Questions
Olympia Housing Needs by 2045 Table