More specifically, the ordinance will lower impact fees for "housing with a monthly housing expense that is no greater than 30 percent of 80 percent of the median family income." The idea is that since developers make the most money building high-end housing for people that can afford it, this will create an incentive to build less expensive housing for those who can't.
But in the short term, I think we should pull back and take a look at impact fees in general and what kind of housing this ordinance is likely to encourage.
First though, let's say that impact fees are a one time fee for initial impacts that a new house will have on Olympia. Things like new roads, new parks, new schools are paid for out of these fees. But, long-term maintenance of these public assets come out of property taxes that end up being paid on the value of each home. So, while the initial burden of new homes can be blunted by impact fees, long term maintenance is everyone's problem. And, that is when we get into choosing what kind of housing we choose to build.
Up until very recently, most of Olympia was locked into single family home only zoning. Now, more neighborhoods are open for what is called Missing Middle housing types, like duplexes, townhomes, etc. And, a lot of people are connecting this impact fee proposal to the Missing Middle proposal. Larry Dzieza's post on Nextdoor about the cut in impact fees is even called "Missing Middle Tax/Fee Cut for Developers."
What people aren't talking about is that so-called Missing Middle development leads to higher valued properties, which leads to more taxable value for the city in the long run.
Here is how that works.
Generally, downtown Olympia is pretty valuable to the city and produces a lot of tax revenue (here and here). This is generally because the auto-centered suburban development style just isn't as valuable.
Let's get to another good example of how this is working in Olympia. Take this block of densely packed housing along Jefferson:
This isn't likely anyone's favorite place in Olympia, it sits on a stretch of Jefferson that has train tracks and is just a good example of what kind of housing we used to build downtown. At at just less than 10 percent of an acre it is valued at $2,661,538.46 per acre. When you look at the map, you can see it isn't even out of the neighborhood in terms of value per acre.
Let's go a few miles south on 37th Street, south of Olympia High School a block or so. This is a neighborhood of single family homes in a neighborhood with no sidewalks, and though it is walking distance to two schools and a couple of churches, isn't really what anyone would consider walkable in general.
And, looking at this map, you see very similar values per acre among the neighbors.
Another way to look at it is to think about what value is being lost to the city of Olympia by sea level rise. Downtown Olympia by 2095 (if we don't do anything) will lost about 370 acres and about $600,491,269 in total value. The land in low lying Olympia is valued at $1,631,769.75 per acre, Compared to the value of the land outside the inundation zone at $494,018.11.
So, coming back to the finances of the city. In the short run, we want more walkable neighborhoods filled with affordable housing of various sizes and types. So, we want to cut impact fees to help this happen. Single family housing is more expensive to the consumer (even using the data provided by opponents of the Missing Middle). But, because high density housing uses the land more efficiently, it ends up providing more taxes to the city itself, blunting the need for impact fees anyway.