Council to consider lot sale for new apartments

Mercy Housing Northwest wants to construct 52-unit building for seniors

February 12, 2013 

Olympia could get a five-story, 52-unit senior housing development in the heart of downtown.

Mercy Housing Northwest is asking the city to sell its 0.3-acre parking lot at State Avenue and Columbia Street for $200,000 so it can construct a nearly $10 million apartment building. The project would include about 1,300 square feet of ground-floor retail, offices and community space, as well as 14 parking spaces.

The Olympia City Council will consider the proposal tonight. City Manager Steve Hall recommends the council research the offer over the next few months, which could lead to a council decision later in the year.

Mayor Stephen Buxbaum expressed interest.

“I think it’s something that the city should look at carefully,” said Buxbaum, who has advocated for more senior housing. “Mercy Housing is an exceptionally good developer.”

He noted that Mercy operates the projects it builds. But he said the city’s funds are limited, and there are several issues to consider before deciding. One is who should pay for environmental cleanup of the site, and whether the city should pay for an environmental assessment, which the city estimates could cost $30,000.

Buxbaum said that an environmental study would probably be a good investment and puts the city in a better position to negotiate.

Mercy Housing Northwest is part of a national, Catholic-sponsored nonprofit that operates 16,000 affordable apartments nationwide. Some 154 of those apartments are in Olympia at Evergreen Vista and Evergreen Vista II at 1209 Fern St. SW.

The proposed apartments would be just across the street from the senior center at The Olympia Center, which provides a variety of day activities. The units would be reserved for seniors earning 50 percent of median income or less, according to Mercy Housing Northwest. It considered a “mixed income development” that would include market-rate housing, according to a letter to the city. But it determined that wasn’t feasible because it would disqualify it for tax credits that could cover up to 70 percent of development costs.

Mercy is asking the city and Thurston County to provide $550,000 in loans guaranteed by federal housing dollars, which it hopes to obtain by this summer. It aims to buy the city property by fall, begin construction in July 2014 or June 2015, and open the building in August 2015 or 2016.

The timeline depends on the availability of state Housing Trust Fund dollars, according to a letter from Bill Rumpf, president of Mercy Housing Northwest. Rumpf could not be reached for comment Monday.

Buxbaum said the matter gained urgency when the state required that Housing Trust Fund applications be made before Jan. 8 for 2013 and 2014. Mercy applied before the deadline, he said.

Mercy Housing has been discussing a project with the city of Olympia for several years. The city awarded the charity $250,000 in federal Community Development Block Grant dollars to initiate an affordable housing project in Olympia. But Mercy Housing returned the money, due to funding availability and market conditions.

Mercy contacted the city again in December with the latest proposal. Hall wrote back with interest, noting several positives and negatives about the site.

For positives, he noted that the site has potential for senior housing because it’s close to the senior center, public transportation and other residential services. Past housing studies have identified the site as having potential for housing and the current lot is underused and in an area that needs revitalization.

For negatives, Hall cited the unknown costs of environmental cleanup, whether alternative investments would yield more benefit, insufficient time for the council to decide before a state grant application deadline and the need to replace lost parking if the site is developed.

The city learned just how much environmental cleanup could cost after it bought its current property for City Hall, which cost $7 million to remediate, far more than expected.

Another development proposal nearby, from Berschauer Group of Olympia, has apparently fallen through. Berschauer had proposed acquiring a piece of former city property at Fifth Avenue and Columbia Street for a development proposal with 30 to 60 apartments. The city sold the site in 2008 to Colpitts Development Co. of Seattle for $270,000 in 2008. Colpitts had planned a seven-story apartment and retail building there, but the housing market tanked and the property went to a receiver.

Hall said a new group, Columbia Heights LLC, bought the property and has discussed building a project similar to the Colpitts proposal. But he said no plans have been filed.

Matt Batcheldor: 360-704-6869 mbatcheldor @theolympian.com @MattBatcheldor

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