Olympia approves permit fee grant program; targets 50% area median income housing 

The Olympia City Council approved a new permit fee grant program  to reduce development costs for affordable housing projects.  

The permit fee grant program is one of the six measures included in the city's Affordable Housing Emergency declaration, which was adopted in December 2024.  

At a meeting on Tuesday, May 20, Housing Division Manager Jacinda Steltjes said the grant will prioritize projects serving households at 50% of the area median income (AMI), which would be eligible for 100% fee coverage. Projects serving households between 51-80% AMI would be eligible for partial funding.  

The funding approach for the project includes a $500,000 initial allocation from the city's Economic Development Fund, reducing its balance from $1.2 million to $700,000.  

The strategy sets a fund balance range between $500,000 and $700,000 with provisions to add funding when: 

• The balance falls below $500,000. 

• The city sells surplus property with proceeds not already committed elsewhere.  

"There could be instances where there's a sale of city property and the net revenue has already been identified to cover prior obligations. In that case, there wouldn't necessarily be funding to go into this grant program," Steltjes noted.  

Because the city does not sell property often, the proposal also allows the city to add funds through the annual budget process, if needed.  

Permit fees only  

The grant program was initially envisioned to cover both plan review and permit fees. Steltjes said the grant is now limited to permit fees only.

She said plan review fees are triggered early and often involve multiple review periods, while permit fees come at the project's end, when the development is likely to proceed.

She added that city staff are also expected to streamline the process by reducing the need for repeated plan resubmissions.  

The city will allocate funding based on the affordability of housing units and alignment with the Comprehensive Plan.  

Projects serving households at or below 50% of AMI will receive 100% of permit fees.  

Projects serving households between 51-80% AMI will initially receive 50% of permit fees, with opportunities to increase funding by meeting additional criteria, such as: 

• Proximity within ¼ mile of public transit. 

• Maximizing zoning density. 

• Providing enhanced green space or pedestrian infrastructure. 

Steltjes said the funding tiers reflect the city's housing needs assessment, which identified a greater shortage of units affordable to those at or below 50% AMI.

"You may all remember that in our Comprehensive Plan, in our housing element, the highest need of housing is around that 50% AMI," Steltjes said.

Based on recent data and project costs, the city estimates that a $500,000-$700,000 fund could support two large affordable housing projects — about 50 plus units — and smaller or medium-sized developments.  

Steltjes cited examples like Lotus Court by the Low Income Housing Institute (LIHI) and The Landing by the Family Support Center.  

As a pilot project, the city will revisit the grant program and funding strategy after two years to ensure sustainability and evaluate whether the program accomplishes its intended goals under the emergency declaration ordinance.  

Council member Kelly Green asked about the allocation process for the grant funds, seeking clarification on how projects would be selected.  

"If Lansdale Pointe was the first project to apply in the year, do they just get it? And the next person who applies could get the remainder, or is it just first come, first served?" Green inquired.  

In response, Steltjes said the first to apply would be considered for funding. She noted larger affordable housing projects typically already have funding structured to serve 60-80% AMI.  

She explained the tiered funding approach is designed to reserve more funding for lower AMI projects without making the process overly complicated.