Title
Approval of a Resolution Amending and Restating an Interlocal Agreement Between the City of Olympia, City of Lacey, City of Tumwater, and Thurston County for Pooling and Transfer of Funds to Support Permanent Supportive Housing Project at Franz Anderson Road
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve a Resolution amending and restating an Interlocal Agreement Between the City of Olympia, City of Lacey, City of Tumwater, and Thurston County for pooling and transfer of funds to support permanent supportive housing project at Franz Anderson Road.
Report
Issue:
Whether t to approve a Resolution amending and restating an Interlocal Agreement Between the City of Olympia, City of Lacey, City of Tumwater, and Thurston County for pooling and transfer of funds to support permanent supportive housing project at Franz Anderson Road.
Staff Contact:
Jacinda Steltjes, Affordable Housing Program Manager, City Manager’s Office/Housing and Homeless Response, 360.753.8482
Presenter(s):
None - Consent Calendar Item.
Background and Analysis:
In 2022, the City of Olympia and Thurston County partnered to purchase tax assessor’s parcel numbers 58900000300, 58900000301, 58900000400, 58900000500 and 58900000600 along Franz Anderson Road for the purpose of affordable housing. In February 2023, the City of Olympia released a Solicitation of Interest inviting proposals from development teams interested in developing Permanent Supportive Housing at the site. Low Income Housing Institute (LIHI) was awarded the project. The City of Olympia and LIHI entered into a Real Estate Purchase and Sale Agreement for the property in June 2023.
The project is the first of its kind that has the support of the Thurston Regional Housing Council. In December 2023, the cities of Olympia, Lacey, Tumwater, and Thurston County executed an interlocal agreement outlining the amount and sources of funding committed to support the project and establishing that City of Olympia will take the lead on project management and collect and distribute to LIHI the regionally pooled funding available to support the project. At the time the interlocal agreement was executed it was anticipated that LIHI would attract financial resources from the State of Washington in the form of a Housing Trust Fund award and an award of 9% Low Income Housing Tax Credits to develop the project. Both funding processes were extremely competitive in 2023, and LIHI was not successful in securing the needed financing to move forward with development. In part, this was due to the competitive nature of the funding sources. Projects occurring in Thurston County compete in the Balance of State, also referred to as non-metro, geographic pool for a Low Income Housing Tax Credit award. This means projects in Thurston County are scored against projects occurring in 32 other Washington state counties.
LIHI submitted proposals for financing from the Housing Trust Fund and 9% Low Income Housing Tax Credit programs in 2024. Award announcements are anticipated in January 2025. If successful in attracting the needed financing, LIHI will begin construction on the Franz Anderson Permanent Supportive Housing project in fall 2025 and complete the project in early 2027.
However, the Interlocal Agreement is being amended now to replace funding sources from Thurston County and from Tumwater. Both jurisdictions are replacing Coronavirus State and Local Fiscal Recovery Funds (SLFRF) with General Funds in an effort to ensure the federal funds can be drawn down in full by the December 31, 2026, deadline.
The amount of regional funding dedicated to support the project has not changed. Thurston County is contributing $3,500,000. Lacey is contributing $3,000,000. Tumwater is contributing $275,000. Olympia has contributed $825,547 to date and continues to take the lead in managing the project on behalf of the regional jurisdictions.
The First Amendment to the Interlocal Agreement will also incorporate Amendment 1 to the Real Estate Purchase and Sale Agreement between the City and LIHI. This amendment extended the Real Estate Purchase and Sale Agreement’s closing date to February 28, 2025 to allow for financing from the State resources to be sought in late 2024. LIHI has communicated a desire to extend the Real Estate Purchase and Sale Agreement again if it is once again unsuccessful in attracting state financing in January 2025.
Climate Analysis:
The project will be located near a high-frequency transit corridor with bus service every 15 minutes along Martin Way SE. LIHI proposes maintaining a small grove of trees located along the south border of the property. In addition to providing natural space, the trees are a naturally occurring way to minimize roadway noise. The development will comply with the Evergreen Sustainable Development Standards. ESDS contains criteria that safeguard health and safety, increase durability, promote sustainable living, preserve the environment, and increase energy and water efficiency.
The project will also comply with City of Olympia Resolution #M-2289, which requires all new construction of buildings supported by city resources valued over $50,000 to use all electric energy.
Equity Analysis:
The amendment to the Interlocal Agreement permits the project to maintain its existing timeline so that it may serve vulnerable households in Olympia and Thurston County. The project will serve residents whose incomes do not exceed 30% of area median income by household size and who are homeless. The project addresses existing gaps in affordable housing availability and provides housing for marginalized populations who are over-represented in the county-wide homeless system.
People of color and other marginalized populations are over-represented in Thurston County’s homeless population. According to Thurston County’s 5-Year Homeless Crisis Response Plan, people of color make up 18% of the general population in Thurston County, however 32% of people experiencing homelessness are people of color.
Additionally, according to a Housing Needs Assessment produced in January 2021 by Thurston Regional Housing 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.
Lastly, Washington State’s Growth Management Act calls for jurisdictions to plan to accommodate future population growth at various income levels. According to date being used for the City’s Comprehensive Plan update, a total of 3,594 new Permanent Supportive Housing units will be needed in Thurston County by 2045. Of those, 128 will be needed in Olympia.
Neighborhood/Community Interests (if known):
Affordable housing is a community concern. The City’s ability to close the Franz Anderson tiny home village located nearby is contingent on the construction of the Franz Anderson permanent supportive housing project.
Financial Impact:
There is currently no direct financial impact to City of Olympia.
Options:
1. Approve the First Amendment to the Interlocal Agreement as presented.
2. Approve the First Amendment to the Interlocal Agreement with modifications.
3. Do not approve the First Amendment to the Interlocal Agreement.
Attachments:
Resolution
Agreement