Why a plan to turn this Tumwater hotel into low-income housing is falling apart
An effort by the Housing Authority of Thurston County to buy an underused hotel and turn it into low-income housing for seniors appears to be falling by the wayside.
Chami Ro, whose family owns the Oyo Hotel, located on a remote stretch of Tumwater Boulevard between the Olympia Regional Airport and Interstate 5, has been looking to sell for over a year now so she can spend more time taking care of her mother.
Ro reached a tentative deal with the Housing Authority earlier this year for $3.3 million that would see the hotel revamped as 58 units of housing for low-income seniors.
But arcane federal rules governing the use of property near airports and a sluggish effort to overcome those obstacles by the Port of Olympia, who owns the land, have led Ro to look elsewhere for buyers.
“I’ve given it a year and so little progress was made,” Ro said. “I cannot wait forever.”
Ro listed the property for $3.65 million earlier this month and has several interested private sector buyers. The price has gone up, she said, as revenues have improved with increased travel. She’s exploring her options, but she’s not giving up on the Housing Authority’s mission.
That’s more than can be said for the Port of Olympia.
The Port, which is the largest landowner in Tumwater, has said it cannot sell the land, which is part of its 440-acre New Market Industrial Campus, without express permission from the Federal Aviation Administration (FAA). The FAA responded to an initial inquiry on June 29 with specific instructions for how the Port could apply for permission, but the Port has not taken any action in the nearly four months since then.
Port Commissioners Joe Downing and Bill McGregor did not respond on Friday to an email requesting comment on the Port’s inaction. But Executive Director Sam Gibboney said the port dropped any efforts at working with the FAA because she believed Ro had moved on to other buyers.
“That is no longer a matter under consideration by the Port,” Gibboney wrote in an email to The Olympian.
Ro says that’s nonsense. She still wants to sell to the Housing Authority, and is now exploring other options due to the slow, now-abandoned process of seeking FAA approval.
“I never told them that I was setting aside my interest with Thurston County Housing Authority,” Ro said.
An uphill regulatory battle
Although the Oyo Hotel sits 0.7 miles away from the Olympia Regional Airport, FAA rules restrict it from being used for “residential” purposes. In the FAA’s legal reasoning, hotels are not considered “residential” because they can be construed as possibly related to air travel, according to documents the Port shared with The Olympian.
The FAA restrictions surfaced in 2020, when the Port explored leasing some portion of its holdings to the city of Tumwater to create a sanctioned tent camping site. That idea, which was floated after the Port called in sheriff’s deputies to remove about a dozen people who were camped on port property, was promptly dropped, citing the FAA restrictions.
When Craig Chance, the Housing Authority’s executive director, first approached the Port about the idea of buying the Oyo Hotel in late 2020, he knew there would be legal challenges with the FAA, but they were compounded by the Port’s apparent lack of interest. Chance said that Port staff told him that even if it was possible to sort out the federal red tape with the FAA, staff were “overwhelmed, understaffed, and focused on other priorities.”
“We heard loud and clear that they couldn’t devote time to it,” Chance said.
Chance said he understands that the Port has other priorities and is limited in the scope of its mission. But he believes that they have opportunities to participate in community development.
In March, U.S. Rep. Marilyn Strickland wrote a letter to the FAA urging them to release the property. A few weeks later, the Port Commission agreed to forward along a request to the FAA.
An FAA compliance specialist responded on June 29 with a list of criteria the Port would need to include in a proposal to release the property. Among the criteria: The Port must receive fair market value for the land and put that money towards “airport purposes.”
The Port also would have to show that the sale of the land would “produce an equal or greater benefit (to the airport or another public airport) than the continued retention of the land.”
Three weeks after receiving the criteria from the FAA, Port executive director Gibboney forwarded the email to Chance at the Housing Authority.
“I will continue to be frank in our assessment that the standards (as articulated below) are quite a high hurdle,” Gibboney wrote to Chance. “As we also discussed today, we have a number of high-priority issues that we are working on.”
Chance wrote back and asked if Port staff could spend some time helping the Housing Authority craft a proposal. He has yet to hear back.
The Port’s priorities
The Port is a major landowner in Tumwater, with its 2.4 square miles of property accounting for 13% of the entire city.
Its 440-acre industrial campus adjacent to the Olympia Regional Airport was originally federal government land. After World War II, it was passed to the city of Olympia before being purchased by the Port of Olympia in 1964.
Joel Hansen, who is running for Port Commissioner against Amy Evans, said he believes that the Port should “absolutely be at the table” to help address the housing crisis.
“If I was on the Port Commission, I’d be asking questions about what’s holding up this project and why it hasn’t moved forward,” Hansen said. “The Port has a lot of land and that is a resource that could be brought to bear on the housing problem.”
The Housing Authority could attempt to write their own application to the FAA, but the odds of success, at this point, seem low.
“It’s impossible without some engagement on the Port’s part in the process,” Chance said. “So if they can get other issues, whatever their other priorities are, squared away and clear a few hours of time to help us, that would be essential to make it happen.”
Although the Port’s three Commissioners all ostensibly support the project, the agency has not discussed the issue at any public meetings since then.
Port Commissioner E.J. Zita, who is not seeking re-election and will leave the commission at the end of the year, wants the agency to show more effort in advocating for the project and said she detects a lack of interest among the staff and other commissioners.
“They don’t see it as their mission. We would have to put some paperwork together and make an argument to the FAA that, yes, this would benefit [the port] and meet all their standards,” Zita said. “We just haven’t tried.”
This story was originally published October 24, 2021 at 5:00 AM.
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