Title
Approval of a Resolution Authorizing an Agreement with Habitat for Humanity for Sewer Infrastructure Cost-Sharing
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve a Resolution authorizing an agreement with Habitat for Humanity for sewer infrastructure cost-sharing.
Report Issue:
Whether to approve a Resolution authorizing an agreement with Habitat for Humanity for sewer infrastructure cost-sharing.
Staff Contact:
David Dunn, Wastewater Utility Project Engineer II, Public Works Water Resources, 360.753.8562
Presenter:
None - Consent Calendar Item.
Background and Analysis:
General Project Background
Following the issuance of a Solicitation of Interest, in 2023, the City sold a 10-acre site located at 3900 Boulevard Road SE to Habitat for Humanity (H4H). Since that time, H4H has been working to design, permit and finance the project, which includes a mix of owner-occupied townhomes and cottages totaling 112 housing units.
The total project cost is approximately $56.3 million. Pre-development and infrastructure costs account for approximately $7.76 million of that total. Financing sources for the pre-development and infrastructure include a Community Project Funding grant from Housing and Urban Development (HUD), a 2024 State appropriation, 2023 and 2025 Connecting Housing to Infrastructure Program (CHIP) grants and local Home Fund dollars.
Cost-sharing of Sewer Infrastructure with the Wastewater Utility
During initial project permitting, H4H proposed constructing a sewer system consisting of two 20,000-gallon commercial Septic Tank Effluent Pump (STEP) systems to serve the development. The City is responsible for maintaining STEP systems constructed by private development, including annual pumping.
From the City’s perspective, Commercial STEP systems are not ideal. They are generally more expensive to maintain, can generate odors, cause corrosion, and produce methane. They also rely on continuous power to operate. In the event of extended power outage, if alternate power is not provided, commercial STEP tanks have the potential to overflow, creating a public health hazard. Although, customers are required to provide alternate power capability for commercial steps systems, doing so represents additional upfront and ongoing cost burden to the development.
Wastewater utility staff worked with H4H on an alternative approach to serving the project. The alternative involves constructing an 8-inch gravity sewer main along Cedar Park Loop SE and Reading Street SE. Under the proposed agreement, the City would contribute up to $121,548 to fund the cost difference between the less expensive STEP systems and the gravity sewer main.
The sewer extension along Cedar Park Loop provides the utility the future option to decommission 18 residential STEP tanks and convert them to gravity service. Because those residential STEP tanks are still in good condition the utility decided not to convert them at this time.
Climate Analysis:
Serving the H4H project with gravity sewer, rather than a commercial STEP system, will eliminate methane gas generated through the anaerobic process associated with STEP Systems.
The H4H project site is located adjacent to an Intercity Transit bus line. The project will also include minimal parking spaces in order to increase housing density, reduce 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. These standards also promote health and safety, increase durability, promote sustainable living, preserve the environment, and increase energy and water efficiency. The development will include solar arrays which, in combination with the passive house design standards, are expected to result in net-zero energy development.
In addition, gravity sewer systems are not dependent on electrical power, which improves system resilience during power outages and reduces the risk of sewage overflows associated with pump-dependent systems.
Equity Analysis:
All City sewer customers will benefit from serving the H4H project with gravity sewer, as gravity mains are less costly to maintain and have a longer useful life than commercial STEP systems.
The H4H project aligns with the City's Housing Action Plan, recommendations from the Affordable Homeownership Study, and findings from the Housing Displacement Analysis. It also advances regional efforts in Thurston County to increase the supply of affordable housing across a range of income levels, as consistent with HB 1220.
The project will meet several community needs by providing housing for low-income households, households experiencing housing instability, and households living with disabilities.
Neighborhood/Community Interests (if known):
Keeping utility rates, including sewer rates, as low as possible is a frequent concern raised by utility customers. H4H project with gravity sewer will benefit customers over time, due to lower maintenance and longer infrastructure life.
The H4H project is of interest to neighborhood residents and the broader Olympia community due to its size and location on the formerly City-owned property. Residents have followed the project closely and periodically inquire about its status. The project was also included on the 2025 Regional Housing Council's legislative agenda.
Financial Impact:
Entering into a cost-share agreement with H4H will cost sewer customers up to $121,548 in immediate expenses. These costs are expected to be off-set over time by lowering maintenance and replacement costs compared to constructing and maintaining two 20,000-gallon commercial STEP Systems. Funds are available to cover this expense in the Sewer Utility’s capital program.
Options:
1. Move to approve a Resolution authorizing an agreement with Habitat for Humanity for sewer infrastructure cost-sharing.
2. Direct staff to return with additional information before taking action on the Resolution. This option would delay a decision on the cost-share agreement and may affect the project’s construction timeline and permitting processes.
3. Do not approve a Resolution authorizing the City to execute an agreement with Habitat for Humanity for sewer infrastructure cost-sharing. Without a cost-share agreement, the Habitat for Humanity project may be served by two commercial STEP systems, which will become the City’s responsibility to maintain.
Attachments:
Resolution
Agreement