Lacey City Council adopts co-living housing regulations 

New regulations for co-living housing are in place after the Lacey City Council unanimously adopted an ordinance that addresses the issue.

Ordinance No. 1697 adds the shared-living model to the Lacey Municipal Code (LMC) and restores local zoning authority that had been suspended earlier this year under state law. The city council approved the ordinance at a meeting on March 3. 

The ordinance implements Engrossed Substitute House Bill 1998, codified in Revised Code of Washington (RCW) 36.70A.535, which required cities planning under the Growth Management Act to adopt co-living regulations by Dec. 31, 2025. 

Cities that missed the deadline fell under state preemption beginning on Jan. 1. As a result, local zoning authority over the housing type was suspended until compliant regulations were adopted. 

Housing model 

Co-living housing consists of private, lockable sleeping rooms rented individually by occupants, with shared kitchens and common living areas.  

The model generally offers units between 200 and 300 square feet. City staffers said the model can provide a lower-cost alternative to studio apartments. 

Ordinance No. 1697 permits co-living housing in eight zoning districts where multifamily development is allowed. That includes moderate- and high-density residential areas, mixed-use high-density corridor zones, the Woodland District, the Central Business District, neighborhood commercial areas, the Hawk's Prairie Business District and community office districts. 

In addition, the housing type must be allowed in any zone permitting six or more dwelling units per acre. 

The ordinance also establishes development standards for the model. Each sleeping unit is limited to 250 square feet and counts as one-quarter of a dwelling unit for density calculations under LMC 16.56. Minimum density requirements do not apply to co-living developments. 

Parking is capped at 0.25 spaces per sleeping unit under LMC 16.72, consistent with limits set in RCW 36.70A.535. 

Shared facility requirements are also included. At least one standard kitchen must be provided for every six sleeping units, with a lockable storage cabinet in each shared kitchen assigned to each unit. 

Shower and bathing facilities must be located in shared common areas, with each stall individually enclosed and lockable. Individual sleeping units may include a private toilet and sink, but may not contain a private kitchen or bathing facilities. 

Co-living developments must also remain eligible for affordable housing incentive programs authorized by the city or under RCW 36.70A.540. The ordinance adds new definitions for co-living housing, sleeping unit, shared facilities and standard kitchen to LMC 16.06. 

Sewer connection fee provisions referenced in RCW 36.70A.535 will be addressed separately through upcoming updates to the city's Development Guidelines and Public Works Standards. 

Council discussion 

Lacey Housing Coordinator Jennifer Adams presented the proposal, saying the model has gained traction in the Puget Sound region as a lower-cost option that can fit into established neighborhoods without public subsidy. 

Adams said co-living aligns with goals outlined in the city's Comprehensive Plan, Housing Action Plan and Affordable Housing Strategy to expand attainable housing options. 

She said the Lacey Planning Commission held a public hearing for the amendments on Dec. 10, 2025. No public testimony was received, and the commission unanimously recommended approval. The council later reviewed the proposal during a Feb. 10 work session. 

Deputy Mayor Malcolm Miller asked about public outreach, noting the city previously hosted an open house when it adopted accessory dwelling unit regulations. 

Community and Economic Development Director Vanessa Dolbee said the city has not developed a formal outreach plan.

However, she said staff will add information about co-living housing to an existing housing incentive information sheet distributed at events with the Economic Development Council and the development community. 

Mayor Andy Ryder asked whether homeowners association covenants could restrict co-living housing in areas where the city now permits it.

City Attorney David Schneider said associations may impose restrictions more stringent than state or local law. Dolbee said the city does not enforce private covenants, conditions and restrictions, leaving enforcement to individual associations. 

Ryder said he supported the policy on its merits regardless of the state mandate. He said it struck him as a matter of basic property rights that a homeowner should be able to rent out a room without regulatory barriers.