Thursday, October 1, 2026
Facing a significant operational funding gap, the Low Income Housing Institute (LIHI) is seeking approval to adjust the unit mix of the Franz Anderson Permanent Supportive Housing Project to serve higher income tenants.
LIHI has proposed that 35 of the 71 units serve households up to 50% of the area median income (AMI). Under the original plan, almost all units were intended for households earning 30% AMI or less.
The project, in development since 2022, is planned as 71 units of permanent supportive housing with optional on-site services, including studios and one-bedroom units.
LIHI is going to construct the project at 527 Franz Anderson Road SE in Olympia. The city plans to sell the property to the developer for $1. The project is funded by multiple jurisdictions, including Olympia, Lacey, Tumwater, Thurston County and the Regional Housing Council (RHC).
The project originally included 18 units dedicated to individuals living on public rights-of-way and 10 units for individuals through the state’s Apple Health and Homes Program. The remaining units would be offered to homeless or near-homeless households.
Earlier this year, LIHI notified Olympia and Thurston County that fewer project-based vouchers than expected would be available due to federal funding constraints.
Without sufficient rental subsidy, LIHI cannot attract investors for its state-awarded, low-income housing tax credits. This would put about $15 million, or around half of the project’s total funding, at risk, and could potentially stop the development.
If the project remains fully permanent supportive housing with all units at 30% AMI, the estimated first-year operating deficit would be $285,496, which would grow over time as costs outpace revenues.
LIHI is also exploring additional funding options, including veteran-specific Veterans Affairs Supportive Housing vouchers through the Housing Authority of Thurston County. That could help cover operating costs until long-term subsidies are available.
Construction is expected to take 13 to 14 months, with lease potentially beginning in fall 2027.
Olympia’s Affordable Housing Manager Jacinda Steltjes presented LIHI’s request to the Regional Housing Council at its meeting on Wednesday, Dec. 10. She said Olympia would not move forward with the real estate and funding agreements without support from all participating jurisdictions.
Lacey City Councilwoman Carolyn Cox questioned whether the mixed-income project could effectively deliver supportive services. She noted the proposal would blend two populations with different income levels, raising concerns about how wraparound services would function.
Lacey City Councilman Nicolas Dunning also raised concerns about the long-term sustainability of permanent supportive housing reliant on government funding.
“This is the private industry telling you that this model does not work and it is not sustainable long term unless the government just floods it with money, but then they can take away that money as they’ve done in the last few years,” Dunning said.
He encouraged the RHC to explore different conversations about how to handle the housing issue.
The RHC and participating jurisdictions are expected to continue discussions in January on LIHI’s request and its continued commitment to funding the project’s construction.
8 comments on this item Please log in to comment by clicking here
JulesJames
The Lacey city councilperson nailed it: political partners are flakey. So if Thurston County can't handle 100% of the subsidies on operations, giving away the land for $1 is going to be a forever-more incredibly expensive $1.
Tuesday, December 16, 2025 Report this
JW
LIHI is a wretched organization that builds dens of criminality with no rules and poorly trained staff. They are one of the worst dumpsters for taxpayer money to end up.
The question is why the city of Olympia is hosting yet another supportive housing slum built within its borders. Probably a combination of utter ineptitude on the Olympia city council's part paired with savvy TC, Tumwater, and Lacey leaders that can take advantage of that ineptitude and park a black hole of crime and taxpayer money in another jurisdiction.
Tuesday, December 16, 2025 Report this
longtimeresident
By the time this housing gets built and renters move in - Fall 2027 - rents in the 3 cities will have dropped considerably. Why bother with this project..........
Tuesday, December 16, 2025 Report this
BobJacobs
This article seems to omit a very important bit of information -- how long would the project remain limited to low-income people? Federal funding often provides 25 or so years, after which a project can switch to market rate, i.e., much higher rents, poor folks need to move out.
I suggest we avoid all such time-limited projects. Reason is obvious.
Bob Jacobs
Wednesday, December 17, 2025 Report this
jimLacey
They can't afford to build and operate it as they planned.
And also, "LIHI is going to construct the project at 527 Franz Anderson Road SE in Olympia. The city plans to sell the property to the developer for $1. "
Since it sounds like they haven't started building yet, and property hasn't been donated to them yet, maybe it is time for the city to rethink their strategy and find a model that actually has been proven to work elsewhere.
Wednesday, December 17, 2025 Report this
Porter
I'll buy it for $2 and open it to squatters.
Wednesday, December 17, 2025 Report this
HomesFirstOutreach
50% AMI is still VERY low income! The reality is that the costs keep going up rapidly for maintaining the housing and without being able to include slightly higher rent tenants, it is impossible to keep the units safe and healthy. There was no way to predict the enormous cost increases in such a short time period when Franz Anderson was built.
Tuesday, December 23, 2025 Report this
WebinarStudent
Creating housing is not cheap. In 2022, how could LIHI predict the massive increases in cost? To keep people at 50%AMI from becoming 30% AMI or homeless, they need places to live that they can afford. Mixed income housing is more successful that 100% same-income-housing so why not be flexible if it means long-term success of the project? Do we want more housing for low-income people or not? Don't be all talk and no action!
Tuesday, December 23, 2025 Report this