Lacey City Council approves $3 million for Franz Anderson amid LIHI concerns 

The City of Lacey is proceeding with a $3 million contribution to the Franz Anderson housing project despite concerns over spending and Low Income Housing Institute (LIHI) accountability.  

The Lacey City Council approved a revised interlocal agreement (ILA) at its meeting on Sept. 15. The ILA authorizes City Manager Rick Walk to sign the revised amendment with Olympia, Tumwater and Thurston County. Council member Lenny Greenstein cast the only dissenting vote. 

The contribution comes from the city's general fund. Thurston County has earmarked $3.5 million and Tumwater $275,000 for Franz Anderson, with Olympia administering the pooled money for the permanent supportive housing project.  

Testimony ahead of the vote featured opposing arguments from former council member Nicolas Martinez-Dunning and Thurston County Commissioner Emily Clouse, who are vying for the District 5 county commission seat in the Nov. 3 General Election. 

Funding debate 

Dunning urged the council to reject the agreement, questioning the use of Lacey money for an Olympia project while Maple Court enhanced shelter in Lacey needs an estimated $1.5 million for conversion to permanent supportive housing. 

"Lacey does not own the land. Lacey does not run the building. Lacey residents do not get those units, but Lacey writes the largest check," Dunning said. "That money is general fund money. It's the same pot that pays for police, streets, parks, and the rest that the city residents use every day." 

Dunning pointed to previous public funding already committed to Maple Court as further reason the facility should take priority. 

Clouse, speaking in her personal capacity, supported the agreement and pointed to recent Maple Court monitoring results.

She said all categories were rated satisfactory, no life-safety findings were reported and 16 positive exits were recorded during a three-month period. 

"What a no vote does with the money: Lacey's $3 million comes back to you, but 15 and a half million dollars in tax credits and $3.9 million in Housing Trust Fund money goes elsewhere in the state," Clouse said. "It could go to Pierce County, it could go to Spokane, but it likely will not come back to Thurston County.” 

Concerns about LIHI continued to be raised during the public comment period.

Lacey resident Sarah Morris questioned additional tax dollars for LIHI and called for measurable performance standards, while resident Kathy Martin supported funding to address homelessness, but questioned Maple Court's results and previous spending. 

Bob Kagy, a former member of Lacey’s Community Workgroup on Homelessness, questioned further funding before issues at Maple Court are addressed. 

Supporters then pressed for accountability while backing Franz Anderson.

Thurston County Lived Experience Housing Steering Committee Chair Heidi Barrientes urged approval, while calling for accountability measures and input from people with lived experience of homelessness. 

Interfaith Works Board President Robert Dandy supported the proposal, emphasizing the need for permanent supportive housing. 

Nine written comments were also submitted. 

Revised terms 

Revisions requested by the council at its meeting on Sept. 1 gained approval from Olympia, Tumwater and Thurston County before the agreement returned for final consideration. 

The revised terms require quarterly LIHI activity reports, two on-site case managers and behavioral health services through Sea Mar Community Health Centers or an equivalent provider. 

The agreement also identifies Maple Court’s conversion as a regional priority and commits the participating governments to support related funding requests.

Payment safeguards require LIHI invoices to document completed work and money requested. Olympia must also inspect and photograph the work before payment. 

Greenstein argued that Lacey could use its $3 million for Maple Court, human services grants or the city’s anticipated 2027 budget shortfall. 

“These dollars are Lacey tax dollars. … They are general fund revenues that the City of Lacey has that can be used for any purpose because they are general revenue dollars,” Greenstein said. “This is clearly not a responsible use of tax dollars.” 

Council member Ryan Siu backed the agreement, pointing to language in the amended ILA committing all four jurisdictions to work toward converting Maple Court. 

"I feel like they have made almost everything that we have asked for, every worry that we have that we brought up during our last meeting has been addressed in the new ILA," he said. 

Council member Maren Turner proposed a resident council as an additional accountability measure, allowing people living in supportive housing to comment on services and management.

Staff said formal inclusion in the agreement would require review by the other jurisdictions, though the idea could also be pursued separately without reopening the ILA. 

Council member Carolyn Cox supported the agreement, but suggested exploring other ownership arrangements that could give participating jurisdictions greater leverage. 

Deputy Mayor Malcolm Miller backed the regional effort, but criticized LIHI’s documentation of outcomes, saying he wanted evidence showing people progressing through the program and into stable lives. 

Mayor Andy Ryder also supported the agreement, framing regional cooperation as the better path to securing Maple Court's conversion. 

Franz Anderson must secure full funding and close financing by Dec. 31, 2026, and construction must begin by March 30, 2027.

A participating jurisdiction may withdraw if those requirements are not met, requiring Olympia to return its transferred money. LIHI has proposed completing the project by May 2028.