Olympia's Finance Committee unanimously approved moving forward with two major community projects — the Yelm Highway Community Park Phase 1 construction and Armory Arts Center renovations — despite a significant cost increase of more than $11 million.
At its meeting on Monday, June 16, the committee recommended that the city council authorize debt issuance to fund both projects.
Parks, Arts & Recreation interim Director Sylvana Niehuser said the cost of the combined projects has increased to $49 million from a projected $37.5 million in December 2024.
"These are legacy projects. Even at the earlier price point, they would have required debt financing," Niehuser said.
To bring down costs while preserving core amenities, Olympia staff made several revisions to the Yelm Highway Community Park Phase 1 project.
Among the changes, one of the three planned Yalp Toro electronic soccer play features was removed, as well as two picnic shelters.
Playground features were modified, as misting poles were replaced with simpler alternatives. Niehuser said some items may be added back later if other savings allow.
The restroom building was scaled back by eliminating the spray park mechanical room that had been planned in anticipation of a future phase.
To further reduce costs, staff switched many of the concrete pathways to asphalt and cut back on landscaping, with the intent to add more over time.
The project still includes 13 pickleball courts, one of which would be Americans with Disabilities Act (ADA) accessible, a synthetic turf soccer field, and a fully developed playground.
The adjustments brought the total project cost, including design and project management, down to $26.7 million. The proposed funding plan includes $14.7 million in debt financing, $2 million from the voted utility tax fund balance, 2026 impact fee revenues, grants and donations of $3.8 million, and cash on hand that has been set aside for the project, which is $5.9 million.
Unlike Yelm Park, the Armory Arts Center project had fewer options to scale back to reduce the cost. Its estimated cost has increased to $19 million from $12.2 million because of the scope of critical improvements.
At the 80% design stage and with a conditional use permit submitted, the project aims to transform the Armory into a fully accessible, modern community space.
The proposed upgrades include essential ADA improvements, an elevator installation, seismic and structural work to support a rooftop solar installation, fire suppression, electrical upgrades, and necessary lead and asbestos abatement.
Niehuse noted a $1.5 million solar grant will cover installation costs and trigger approximately $6 million in additional building improvements.
She added that eight anchor partners are eagerly waiting to occupy the space once it meets safety and accessibility standards.
The funding proposal for this project includes using $12.2 million in debt financing, $3 million in non-voted utility tax funds, $2.62 million in grants, a portion of Metropolitan Park District revenue (starting next year), and dedicated case reserves.
"Together, that put a debt financing package at $26.6 million," Niehuser said.
Niehuser presented financing options for a debt financing package for the two legacy projects.
"These projects, whether they were at the old price or the new price, required debt financing for this size of a project," she said.
Option 1 would fully fund both the Yelm Highway Community Park and Armory Arts Center projects with a 20-year bond.
However, it would require pulling $2.3 million from existing city fund balances. This includes taking $1 million from the Squaxin playground project, $1 million from the voted utility tax fund balance, and $300,000 in impact fees.
Even with those contributions, the city would need to cut an additional $1.2 million, possibly from the Yelm Park project, to bring total bond financing to $18.7 million.
Option 2 suggested extending the one-half percent non-voted utility tax money, which expires in 2029, and using $250,000 to $300,000 annually to help repay a 20-year bond.
This would enable the city to fund both projects without drawing down other fund balances. It would also allow the remaining funds to support future park projects.
Option 3 focused on fully funding both projects through two potential financing models: a 20-year bond with a $1.95 million annual payment or a 25-year or a 30-year bond with a $1.7 million annual payment. That option would maintain the project scope, including solar array and full improvements in the Armory, and provide more long-term financial flexibility.
During the discussion, the committee members endorsed Option 3 with a longer debt term at either 25 or 30 years.
The committee directed staff to bring the full city council a preferred financing path that keeps both projects intact, limits the use of fund balances, and minimizes reliance on the non-voted utility tax revenue.
5 comments on this item Please log in to comment by clicking here
JW
The Jungle, downtown, and a giant budget deficit.
What's the solution? More money on parks. Parks parks parks.
Friday, June 20 Report this
KarenM
The voters of Olympia have said YES twice to tax themselves specifically for parks. In 2004 the private utility tax was increased to pay for more parks and new sidewalks. In 2014 the Metropolitan Parks District was formed, which assesses a property tax.When the voters say they want to tax themselves for a specific thing, that is where the money must be used.
I actually don't think the City has a 'giant budget deficit' as JW says. There are certainly some programs and projects that could be trimmed. There are also some revenue sources they are not using yet.
Friday, June 20 Report this
Arete
Thank you Karen M for an intelligent comment.
Friday, June 20 Report this
MrCommonSense
How is a solar array on the Armory justified if it triggers a $6M dollar in additional building improvements? Didn't this set off any alarm bells with anyone? Spending $6M because the array is funded by a $1.5M grant (which is paid for by taxpayers, too) appears to be "nuts". No one is questioning this expenditure and run any kind of cost/benefit analysis?
And how these project estimates could change so drastically in 6 months? The park increasing 23% and the Armory project by 34%? Why aren't we questioning these numbers and why isn't the JOLT digging into these questions as part of good journalism and reporting on it?????
I'm all for parks and the art center, but someone at the City needs to demand better estimates and use some common sense!
Saturday, June 21 Report this
longtimeresident
I agree with MrCommonSense. Explain the increase in costs........
Sunday, June 22 Report this