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Housing Authority proposes to convert Tumwater hotel to low-income housing for seniors

April 21, 2021

A Tumwater hotel could become 58 units of low-income housing for seniors as part of a proposal from the Housing Authority of Thurston County.

Across the country, municipalities are seeing pandemic slowdowns as an opportunity to cheaply acquire hotels and quickly convert them into much-needed affordable housing.

Several pieces of this particular project already are in place: the owner is ready to sell, the city of Tumwater has indicated it is open to rezoning the land, and Olympia’s City Council voted last week to commit $150,000 to the project from its Home Fund.

According to the Home Fund application, the Housing Authority would spend roughly $3.3 million to purchase the Oyo Hotel, which sits just off Interstate 5 and Tumwater Boulevard. While it does not account for possible renovations, that projection would net a per-unit cost of $58,719 – roughly 5 times cheaper than building new.

But there’s one major problem.

The hotel sits on land owned by the Port of Olympia, part of the 440-acre New Market Industrial Campus adjacent to Olympia Regional Airport. Although the hotel is 0.7 miles from the airport proper, the land, which after World War II was passed from the federal government to the city of Olympia and finally to the Port of Olympia in 1964, comes with restrictions set by the Federal Aviation Administration (FAA) that prohibit “residential” uses.

In the FAA’s legal reasoning, hotels are not considered “residential,” because they can be construed as possibly related to air travel, according to legal documents shared by the Port of Olympia with The Olympian.

Restrictions on the site first surfaced last year, when the Port of Olympia explored leasing some portion of its 550 acres of non-airport holdings to the city of Tumwater to create a sanctioned tent camping site. That idea, which was floated after the Port called in sheriff’s deputies to remove about a dozen people who were camped on port property, was promptly sunk when staff discovered the FAA restrictions.

Despite these obstacles, there are signs that this time might be different.

At a meeting on Monday, Housing Authority executive director Craig Chance presented his case to the Port Commissioners, who unanimously agreed to forward a request to the FAA.

As Chance explained to the Port Commissioners, the Oyo Hotel presents a unique opportunity.

Despite the news stories about hotel owners across the country rushing to sell as rooms sit empty, Chance said that locally, hotels have largely weathered the economic storm. The Oyo Hotel is one of fairly few looking to sell. It also happens to be one of few “suite-type” hotels — meaning it has larger rooms and some with kitchenettes, making them better suited to long-term living.

Chance said he envisions the project as serving seniors or disabled adults whose incomes are between 0-50% of Area Median Income. Rents could be as low as $455 a month, without being subsidized by federal vouchers. (Tenants with Section 8 vouchers would pay even less.)

“Not a week goes by when we don’t hear from someone on social security or on disability,” Chance told The Olympian. “An average social security check goes for $1,500. A lot of people work their whole life for that. And that’s what a decent apartment costs, so what am I supposed to do?”

There are numerous funding sources the Housing Authority could tap for such a project.

Thurston County has $56 million of federal money from the American Rescue Plan, and has proposed setting aside $5 million to purchase a motel, although those efforts are separate from the Housing Authority’s proposal.

At the state level, current capital budget proposals include $90 million in grants for municipalities (or housing authorities) for exactly this purpose — to quickly buy hotels and turn them into housing. Gov. Inslee, meanwhile, has called for this program to get even more funding.

“Things are kind of coming together at the right time,” Chance said.

More importantly, the hotel owner is ready to sell.

Chami Ro’s family has owned the Oyo Hotel, previously known as the Guest House Inn and Suites, for 14 years.

Ro was born in South Korea and came to the United States with her family in the 1980s from Paraguay, where her entrepreneurial father sold clothing door to door. They later moved to Tacoma, where they started a clothing factory. Ro said that her father, who died in January at age 82, was one of the first businessmen to invest in the row of stores along South Tacoma Way sometimes referred to as Korea Town.

The family later purchased two hotels in Tumwater: the one now called Oyo, and the Comfort Inn, right next door. Ro, who runs the hotels along with her husband and was working the front desk when she spoke to The Olympian, said she never intended to own them forever.

Recently, her mother began undergoing chemotherapy in Tacoma, and selling the Oyo Hotel will allow Ro more time to take care of her.

The only thing standing in her way of selling, Ro said, is the FAA restriction.

Ro has one important person backing her effort: Congresswoman Marilyn Strickland, whose district includes Tacoma and Olympia. Strickland wrote a letter to the FAA on March 12 urging them to grant an exemption to allow the project to move forward.

A spokesperson for the FAA said the agency is aware of questions about the Oyo Hotel property, but has not seen an official proposal yet.

The FAA spokesperson said issues around residential use come up frequently, and in the past the FAA has approved requests from “sponsors” (like the Port of Olympia) to “release and dispose” the land from being part of the airport, which would release it from the grant obligations.

“Requests for property release and disposal are fairly common, and the FAA often approves them when the there is no foreseeable aeronautical need for the property,” the FAA spokesperson wrote in an email to The Olympian.

At Monday’s meeting, Port of Olympia legal counsel Heather Burgess said that if the Port can get the FAA to release the property, there would be a few other logistical hurdles, though none are insurmountable.

The Port currently has a lease with Ro’s family which specifies that the tenant can only be a hotel. The port could change its lease and reassign it to the Housing Authority, but the city of Tumwater also would need to change its zoning laws to allow residential uses. The area is currently zoned industrial, which city spokesperson Ann Cook said is partly a reflection of those FAA rules.

“In the event that there is an action that the FAA is willing to reconsider that rule, absolutely we’d look at our zoning,” Cook said.

Ro said she hopes that the various levels of government can figure out a solution to let the project move forward. A lot of things have changed since those FAA rules were first put in place and since the Port of Olympia purchased the airport from the city of Olympia and its 440 adjoining acres in 1963.

One big change Ro has noticed since her family moved here in the 1980s is how many more visible instances of homelessness she encounters.

“The reality today is so different,” Ro said. “I think government agencies need to adapt as needs change.”

Issues:Housing