Lacey City Council approves city’s version of ‘missing middle’ housing policy

Rolf Boone
·3 min read

Lacey City Council on Thursday unanimously approved a suite of items designed to stimulate certain kinds of housing, including affordable housing, as the city continues to grow.

In Olympia, they referred to it as “missing middle” and took steps to address the lack of housing types that fall between a single-family home and an apartment.

Lacey council took a similar step and approved three housing-related items:

  • It upzoned a low-density zoning designation — typically found in the city’s older single-family neighborhoods — to 3-6 units, potentially opening the door for duplexes and triplexes to be built on those lots.

  • It approved waiving building-related fees for private developers who pursue affordable housing.

  • It extended a multifamily tax exemption for an area of the city known as Lacey’s Midtown, an area bordered by Interstate 5 on the north, Sleater-Kinney Road on the west, Pacific Avenue on the south, and College Street on the east.

When the up-zone proposal first came before the Lacey Planning Commission in 2019, it generated public concern about how it might affect neighborhood character. But on Thursday, Lacey City Council focused most of its energies on discussing the multifamily tax exemption.

Under the exemption in Midtown, a developer who pursues a housing project with 20 or more units can take advantage of a property tax exemption over eight years for market-rate housing or 12 years if they agree to commit 20 percent of the units to serve low-income needs.

Real estate developer MJR Development of Kirkland, a business that has redeveloped much of Midtown around Huntamer Park, is currently using the exemption to build apartments on Sixth Avenue.

Mayor Andy Ryder, who acknowledged that he isn’t a huge fan of the property tax exemption, wondered whether the council should just approve a 12-year exemption so that the city could get the low-income units it needs.

Councilman Lenny Greenstein countered that he likes giving developers the option of eight or 12 years.

“Overall, we just need more housing,” he said. “All housing becomes more affordable when there is more housing. It’s simple supply and demand.”

But Ryder pointed out that 2,600 multifamily units are currently in the city’s pipeline.

“To say that we need more multifamily housing when we have that many in the pipeline is a tough argument,” he said.

He acknowledged that Midtown needs more housing, but added, “what we need to see is more affordable housing.”

The current multifamily tax exemption program for Midtown, which was first approved by the city in 2014, expires at the end of 2024.

Given that the current program isn’t going to expire soon, Councilwoman Carolyn Cox wondered if they couldn’t delay their vote and give it more consideration.

That could become a timing issue for MJR Development, said Rick Walk, Lacey’s community and economic development director, because they want to take advantage of the exemption for a second housing project in Midtown.

In the end, the council voted to extend the Midtown multifamily tax exemption program until 2034.