Sequim affordable-housing project delayed by wetland review; city, Habitat press to preserve $2 million CHIP grant

Habitat Clallam’s proposed affordable-housing development on Sequim Avenue is advancing through Sequim’s review process but has been slowed by a wetland study that reduced the project’s unit count and prompted extensive resubmittal requirements, city and Habitat representatives said March 10.

Colleen (Habitat Clallam) told the Sequim City Council that Habitat submitted the grant application for the project on Oct. 31, 2022; the city learned of the award July 1, 2023. Washington State Commerce ultimately awarded $2,000,000 toward sewer, electrical and permitting costs through the state’s Connecting Housing to Infrastructure Program (CHIP). After contract activation in November 2024 and Commerce’s ratification Jan. 14, 2025, project permitting proceeded in the city’s development-review pipeline but encountered a wetland study that, Colleen said, reduced the project by at least four units.

Colleen said Habitat resubmitted responses to 11 pages of city comments on March 6 and that those responses are now under city review. Megan Uecker, public works project manager, said the Commerce contract end date is listed as June 20, 2025 and is “subject to reappropriation” to June 30, 2027; she said Commerce had not yet issued formal guidance about extensions but indicated the program is popular and extensions may be possible. City staff and Habitat both urged that showing permitting progress—particularly an issued permit or clear movement toward construction—improves the project’s chances of preserving revenue from the CHIP program.

Christina Nelson Gross, representing the city for the record, said many of the items in the November comment letter were within Habitat’s control and could be corrected quickly; she added the city remains a willing partner and will continue outreach to help Habitat navigate the review steps. City Manager Matt Hewitt noted the city had engaged Commerce staff early in the process and emphasized the council’s interest in seeing the project move to construction.

Habitat described a multiyear timeline: purchase of the Sequim Avenue parcel (the record indicates Habitat’s acquisition was finalized in 2022), project planning and design work in 2022–23, award of the CHIP grant in 2023 and contract activation in November 2024. Colleen said losing the four units reduced the expected number of affordable homes on the site and that a separate community-impact grant from Representative Derek Kilmer is likely not available, increasing reliance on the CHIP award.

City staff outlined the remaining procedural steps: the city’s code requires a complete conditional-use application for the proposed multifamily use, followed by review, noticing and a hearing-examiner date (if required). Staff estimated that, if resubmittals are complete, the application could proceed to a hearing date in April or May, subject to noticing timelines and the hearing examiner’s schedule. Staff cautioned that timelines vary and additional changes could be required during the site-construction phase, which finalizes street, utility and grading plans before building permits are issued.

Council members asked whether advocacy at the state level might help protect the CHIP funding; staff said the city has been in touch with state representatives and will notify lobbyists and Commerce contacts as needed. City staff and Habitat said they will continue to coordinate closely, prioritize completing resubmittals and seek to demonstrate progress to Commerce before the current contract end date.

No formal council action was recorded on the project during the March 10 meeting; councilors and staff emphasized continued partnership and pledged staff assistance to help bring the project to a hearing and, ultimately, to construction if possible.