Council hears first read of ordinance to enable CHIP reimbursements for affordable‑housing connection fees

City staff gave a first reading on Aug. 27 of an ordinance that would enable Sedro‑Woolley to submit applications to the Washington State Department of Commerce’s Connecting Housing to Infrastructure Program (CHIP) to reimburse developers for eligible utility connection fees for qualifying affordable housing projects.

City staff explained the program: under CHIP the city would act as the grant applicant and, if a project and grant are approved, the state would reimburse eligible connection fees — such as sewer, stormwater and water connections — up to the amount awarded. Presenters said the ordinance is structured so the city would not waive fees in advance or expend city funds unless and until a CHIP award is received and council approves reimbursing a developer.

Staff said Family Promise has inquired about the program and that other potential projects (for example a project by RJ Group and future YMCA projects) could be eligible if they meet program rules. To qualify under CHIP for connection‑fee reimbursement, staff said a project typically must have at least 25% of units reserved as affordable at or below 80% area median income (AMI).

Council members raised administrative and policy questions. Councilwoman Kesty said she was concerned about the city taking on the administrative burden for grant applications and about nonprofit developers that may not have every required piece in place when applying. Councilman Henderson asked whether applicants must front the connection fees and staff confirmed developers pay fees up front and would be reimbursed only after the city receives state grant funds and the council approves reimbursement. Council members asked staff to estimate the city’s administrative workload and consider a modest non‑refundable processing fee to offset staff time.

Staff provided preliminary cost examples in response to council questions: Family Promise’s project (as discussed at the meeting) had an estimated connection‑fee total of about $9,900 for the scope discussed; a larger RJ Group project could face connection charges on the order of $1.3 million depending on final scope, staff said. Charlie Bush (city administrator) said the ordinance would improve grant scoring and expand opportunities to bring state dollars to local projects, but staff recommended returning with detailed program rules and cost coverage options.

Why it matters: CHIP can reduce upfront connection barriers for affordable housing projects but requires the city to act as grant applicant and to manage administrative work; council members expressed caution about administrative load and asked staff to return with clearer workload estimates and potential application conditions.

Next steps: staff said they will return to the council on Sept. 10 with additional information including administrative workload estimates, potential processing fee options and recommended ordinance language.

Ending: because this was a first read, the council took no final action; staff will provide a second reading and additional analysis in early September.