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Council approves Coral Canyon Area 5 terms to encourage owner‑occupied housing, with added initial‑sale condition

Washington City Council · March 26, 2026

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Summary

The council approved supplemental terms with SITLA and a private developer to limit developer profits, require 80% owner‑occupancy, and restrict short‑term rentals; council added a requested condition asking staff to pursue language that initial sales be owner‑occupied where feasible.

Council considered a three‑party supplemental terms agreement to develop Sitla Area 5 with an affordable‑housing emphasis. Staff explained that the developer and Sitla agreed to cap developer profit at 6% and to record deed restrictions and CC&Rs requiring that at least 80% of lots be owner‑occupied at any time and that any rental occupancy be for at least one year. The package also restricts short‑term/vacation rentals on the project.

Council members praised the effort to produce more modestly priced homes but raised enforcement and leakage concerns: how the city would ensure the owner‑occupied percentage is maintained, whether investors could buy the initial tranche and convert homes to rentals, and whether the deed restrictions should include initial‑sale owner‑occupancy or minimum owner‑occupied durations. Staff responded that the developer and HOA will share enforcement responsibility, deed restrictions will be recorded, and that state first‑time homebuyer assistance definitions were used to define "affordable" for the agreement.

Following exchange, the council approved the supplemental terms agreement 4–1 and a motion (made and seconded) requesting staff pursue an added provision to prioritize owner‑occupied buyers for initial sales if the parties will agree. Council members said they want to avoid a situation where investors buy a large share of the early units and crowd out first‑time buyers.

Next steps: staff will take council feedback back to Sitla and the developer to try to secure an initial‑sale owner‑occupancy provision and return with final contract language for recording.