Title
Affordable Housing Emergency Ordinance Grant Funding Proposal
Recommended Action
Committee Recommendation:
Move to approve the recommended grant funding proposal for the Affordable Housing Emergency Ordinance and forward to the full Council for approval.
City Manager Recommendation:
Move to approve the recommended grant funding proposal for the Affordable Housing Emergency Ordinance and forward to the full Council for approval.
Report
Issue:
Whether to approve the recommended grant funding proposal for the Affordable Housing Emergency Ordinance.
Staff Contact:
Jay Burney, City Manager, (360) 753-8740
Presenter(s):
Jay Burney, City Manager
Jacinda Steltjes, Interim Housing Manager
Background and Analysis:
On December 17, 2024, the Council approved the Affordable Housing Emergency Ordinance, which provides prioritized permitting, dedicated staffing to assist developers, a grant program to provide infrastructure assistance, and a grant program to offset all or some of the plan review and permits and fees for projects that provide housing units that are affordable to households whose income does not exceed 80 percent of the Olympia-Tumwater Metropolitan Statistical Area Median Income. Funding for the infrastructure assistance is provided through money set aside through the utility rates. Funding for the grant program to offset plan review and permit fees was not determined at the time the ordinance was adopted by Council. Staff was directed to return to Council early in 2025 with a proposal to fund that portion of the ordinance.
In order to determine the proper fund balance for the grant program, staff looked at other development past or current projects that fit the ordinance criteria. Staff determined that the average cost per unit in the projects they reviewed to be around $3,700 per unit. A large project like Habitat’s 3900 Boulevard Rd project, which is 112 units, would require $414,400 in grant funding to fully cover its plan review and permit fee costs. Medium sized projects like Unity Commons with 65 units would require $240,000 to fully cover its plan review and permit fees.
Staff’s recommendation is to keep the grant program fund balance in the range of $500,000 - $700,000, which would be sufficient for at least one larger project per year, and more than one medium, and a mix of smaller ADU-type projects. Staff proposes a multi-pronged approach to funding the grant program. First, staff proposes to immediately seed the program with $500,000 from the Economic Development Fund. This will allow the Community Planning & Economic Development Director immediate funding to begin assisting project applicants. The current balance of the Economic Development fund is $1.2 million. Second, staff proposes that the first 10% of the proceeds of any property sold by the City be deposited into the Affordable Housing Grant fund, unless the fund is within the established range. If the fund is within the established range, funding from the sale of property could be deferred. Third, because we do not sell property on a regular basis, staff will monitor the fund balance for the grant program and may make recommendations to provide funding for the grant program through the annual budget process.
One area that staff would like a recommendation from the committee on is whether or not the grant program should be operated on a first-come, first-served basis, or if a certain portion of the fund should be set aside for smaller developers.
After the first two years of the program, staff recommends that this funding strategy be revisited to ensure sustainability, and ensure it is meeting the needs established within the Affordable Housing Emergency Ordinance.
Climate Analysis:
No specific climate impacts are identified with this action.
Equity Analysis:
A lack of affordable housing, specifically for low-income households, creates housing instability and is a factor in increasing homelessness. A 2021 Housing Needs Assessment produced by the Thurston Regional Planning Council found that over 34,650 Thurston County households are cost burdened, meaning they spend more than 30 percent of their income on housing. Of those 34,650, 13,900 are severely cost burdened, and 7,605 are Olympia residents. Olympia will need 5,800 units of housing for households below area median income by 2045. Access to housing is essential to the security, health, wellbeing, and prosperity of our community.
Neighborhood/Community Interests (if known):
Local housing developers have communicated that Olympia’s permitting and development standards increase housing development costs, making it more difficult to increase the supply of housing that is affordable for low-income populations.
Financial Impact:
Proposed funding for the Affordable Housing Emergency Grant Program is proposed as follows:
1. $500,000 from the Economic Development Fund in 2025.
2. First 10% of the sale of any City property unless the fund is within the established target funding range.
3. Monitor and add funding to maintain the established target funding range through the City annual budget process.
Options:
1. Move to approve the recommended grant funding proposal for the Affordable Housing Emergency Ordinance and forward to the full Council for approval.
2. Move to approve the grant funding proposal for the Affordable Housing Emergency Ordinance as amended by the Committee and forward to the full Council for approval.
3. Do not approve the grant funding recommendation and provide guidance to staff on next steps.
Attachments:
Affordable Housing Emergency Ordinance