LOTT’s pilot program to incentivize low-income housing initiatives in partner cities Lacey, Olympia, Tumwater


The Lacey Utilities Committee held a hybrid meeting last Monday, April 3, to brief the city council on the LOTT Cleanwater Alliance’s (LOTT) Affordable Housing Pilot Program.

Water Resources Manager Peter Brooks said the program would incentivize developers from three partner cities– Lacey, Olympia, and Tumwater- to construct new low-income housing projects.

Similar to the septic conversion rebate, the LOTT program works with a 50% rebate on the Capital Development Charges (CDC) for Equivalent Residential Units (ERUs). ERUs are based on single-family use, according to the Washington State Department of Health.

“The program sets out 300 ERUs for a two-year period. Each of the three cities [Lacey, Olympia, and Tumwater] gets 75 ERUs. So then there [are] 75 leftovers, that's kind of held in a bank,” Brooks explained.

A city may ask other cities to give it ERUs in case it uses up its own allocation, provided the other city is willing and have some to spare.

“If any jurisdiction uses up 75, then they can petition the other cities and say, ‘hey, could I have some of the bank?’ and they would go on and use more,” Brooks added.

According to the agenda document, for a project to be eligible, it must be a new development that involves a new connection to the LOTT system verified by the partner city, and must meet at least one of the following criteria:

  1. Permanent supportive housing that will serve individuals transitioning from homelessness.
  2. Low-income housing that has a cost (rent or mortgage payment) less than or equal to 30% of gross monthly household income that, when adjusted for size, is at or below eighty percent (80%) of the area median income, as annually adjusted by the U.S. Department of Housing and Urban Development.

Cities also have the discretion to add more criteria beyond the established eligibility system to determine qualifying projects.

Brooks also said that an eligible applicant does not need to include the whole project in the rebate scheme.

“If somebody says [they] wanted to put it in a multifamily, and 20% of the units will be low-income, and the rest will be just market rate– they could do that. It doesn't have to be the entire project.”

The developer must document a covenant approved by both the city providing its sewer service and LOTT, guaranteeing the unit meets the affordability requirements for perpetuity (preferred) or at least 30 years.

The property owner is obliged to repay the 50% rebate at the current year’s CDC rates if the covenant's requirements are violated.

After a vote from the board, LOTT has begun this two-year pilot program to incentivize the construction of new affordable single-family or multifamily housing that will serve individuals transitioning from homelessness.