Housing opportunity vanishes as new owner of Oyo Hotel plans no change, port official says

For months, Port of Olympia commission meetings have featured an agenda item called “FAA land release” as a reminder to the commission to get an update about whether the Federal Aviation Administration will allow hotel land in Tumwater to be turned into potential low-income housing.

Acting Executive Director Rudy Rudolph brought that possibility to a swift end Monday when he announced that the Oyo Hotel and Comfort Inn have been sold to a new group that will continue to operate them as hotels.

“They plan on operating the hotels as hotels, consistent with a port lease,” Rudolph said.

The two hotel properties south of Tumwater Boulevard and east of Interstate 5 are on port property that the FAA oversees.

The company Han Joe Ro LLC, which used to operate them both, filed Chapter 11 bankruptcy in May 2022 in the U.S. Bankruptcy Court for the Western District of Washington.

Han Joe Ro’s filing showed the business had assets of between $1 million and $10 million, but also liabilities that fell somewhere between $1 million and $10 million.

As part of the bankruptcy proceeding, both properties were sold June 30 by a creditor called Satyam to the new owner Satyam Tumwater LLC, Rudolph said.

He said the new owner plans extensive renovations to both properties and plans to operate them in full compliance with existing port leases. They also have a tentative lease deal which would extend the term to 2043 with one, 30-year option, Rudolph said.

Commissioner Joe Downing called the moment “significant.”

“It’s significant because we have been dealing with that for several years and things unfolded according to legal proceedings,” he said.

What the port has been dealing with is whether the Oyo Hotel could be turned into housing. In 2021, the Housing Authority of Thurston County struck a tentative $3.3 million deal to convert the Oyo Hotel into housing for 58 low-income seniors, The Olympian reported.

But because the hotel sits on port property adjacent to Olympia Regional Airport, it is encumbered by FAA rules that restrict land near airports from being used for “residential” purposes, according to The Olympian.

Commissioner Amy Evans Harding, president of the port commission, shared some thoughts after Monday’s meeting.

“Given the two hotels have new ownership, we need to look onward for solutions,” she said. “The port has a role to play in meeting our communities’ housing needs. I hope we are ready to step up.”