Affordable Housing Policy Background

The City of Lacey’s Affordable Housing Strategy was developed as part of the Housing Element of the City’s 2016 Comprehensive Plan. The strategy provides a framework for understanding housing needs in the community and outlines policy approaches intended to support housing affordability and expand housing opportunities for Lacey residents.

The document reflects the housing conditions, planning framework, and legislative environment that existed at the time it was prepared. Since its adoption, housing needs, market conditions, and Washington State housing legislation have continued to evolve. While the affordable Housing Strategy remains a helpful reference for understanding Lacey’s earlier planning work related to housing affordability, it should be considered within the context of more recent housing policy developments.

The City is currently implementing recent state housing legislation and continues to evaluate strategies that support housing choice, affordability, and a range of housing options for current and future residents.

What is affordable housing?

Understanding Affordable Housing

Housing affordability refers to the relationship between household income and housing costs. A commonly used benchmark is that housing is considered affordable when a household spends no more than 30 percent of its income on housing expenses., including rent or mortgage payments and basic utilities. When a household spends more than 30 percent of its income on housing, it is typically considered cost-burdened, meaning a larger share of income must be used for housing rather than other necessities such as food, transportation, healthcare and childcare.

Because affordability is tied to income, housing that is affordable for on household may not be affordable for another. For example, a household earning $100,000 per year may be able to afford housing costs that would be out of reach for a household earning $50,000 per year.

What contributes to Housing Affordability Challenges?

Housing affordability is influenced by many factors, including household incomes, housing supply, construction costs, interest rates, and regional conditions. In many communities across Washington State, housing demand has grown faster than the supply of available homes. When this occurs, housing costs often increase and households may have fewer housing choices within the communities where they live and work.

The City of Lacey continues to explore ways to increase housing opportunities and support a variety of housing types that can serve residents at different income levels and with varying needs.

The City’s Role

While cities do not typically build housing directly, local governments can help create conditions that support housing opportunities through planning, zoning, partnerships, and housing programs.

The City of Lacey works with regional partners, housing providers, and the development community to support a range of housing options and to help address housing affordability challenges. These efforts are guided by the City’s planning policies, housing strategies, and evolving state housing legislation.

Housing affordability is a complex issue that requires coordination among local governments, nonprofit organizations, housing providers and state and federal programs. The City will continue working with partners to support housing opportunities for all.

Housing Development Trends

Many factors influence the availability of housing in Lacey and the surrounding region. One of the most significant challenges affecting housing affordability is the relationship between housing demand and the supply of available homes. When the number of people seeking housing grows faster than the number of homes being built, housing costs can increase and households may have fewer housing options.

Like many communities in Washington State, Lacey experienced strong housing development during the mid-2000s. Following that period, housing construction slowed before gradually increasing again in more recent years.

Over the past several years, housing development in Lacey has included both single-family and multifamily homes. Since January 2023, the City has issued permits for approximately 187 single-family homes, most of which are located within larger residential developments where homes are constructed as part of a planned subdivision.

During the same period, the City issued approximately 33 permits for multifamily projects, representing more than 850 housing units in apartment and other multifamily developments. Multifamily housing can provide smaller homes and rental opportunities that meet a wide range of resident needs. Together, these developments contribute to expanding housing options in the community and help support a range of housing choices for residents at different income levels.

While the City does not construct housing directly, it plays an important role in shaping housing opportunities through planning, zoning, and partnerships with both public and private development partnerships. Lacey continues to support a range of housing types that can serve residents at different income levels.

Developments

Although the City does not actually build housing, we support programs that help residents find and maintain an affordable place to live. The following are examples of how Lacey has created an environment to promote the development of affordable-housing projects.

Habitat for Humanity South Puget Sound

Habitat for Humanity serves the very-low income families whose dream is to own their own home. Working with donors and volunteers, Habitat builds affordable housing communities in Thurston County. In 2005, the City of Lacey passed an ordinance creating a policy to waive development fees for Habitat for Humanity. These waivers allowed them to begin construction of the Deyoe Vista neighborhood — a 33-home, affordable-housing development — located near College Street and 37th Avenue. Habitat expects to have the neighborhood completed in late 2020. In 2019, the City extended these fee waivers to Community Housing Development Organizations.

The Reserve at Lacey – Affordable Senior Housing Project
The Reserve Properties provide affordable living opportunities for seniors and families in the Puget Sound Region. In January 2019, they began work on a multi-story, mixed-use building on the corner of Pacific Avenue and Carpenter Road (former Albertson’s site). The project includes 9,000 square feet of ground floor commercial space and 241 units of affordable senior housing. The units will be available for seniors who meet the income restrictions defined by the number of people in their household.
The City supported the developer’s application for financing with the Washington State Housing Finance Commission by providing written and oral testimony at the hearing. The developer was able to move forward with the project once they secured financing through the Commission.

Gayteway at Hawks Prairie
Construction of a 96-unit, multi-family development has begun on the site of the former Ranchotel (8819 Martin Way E). The property is located in the mixed-use high-density corridor zoning district, which permits residential development at a density between 12 and 20 units per acre. A developer can obtain a density-bonus incentive to build more than 20 units per acre if they include low-income housing in the project. For this project, the City and developer negotiated a density-bonus incentive with the requirement that 10 percent of the units must be rented to people who make less than 80% of the area median income.
The City will continue to focus on ways to increase the number of affordable housing units in our community. As you can see from the examples above, we can be creative and supportive in our approach to how this is accomplished.

Housing Action Plan

With help from Thurston Regional Planning Council, the cities of Lacey, Olympia, and Tumwater developed individual Housing Action Plans in order to encourage the construction of additional affordable and market-rate housing in a greater variety of housing types at prices accessible to a greater variety of incomes.

Funding for the Housing Action Plans was provided by the state legislature through HB 1923 and awarded by the Dept. of Commerce to each of the three cities. Read more about our region’s Housing Action Plans here.

Lacey Housing Action Plan