Poulsbo council leans toward allowing more ‘flex’ residential use outside downtown storefronts

Council held an extended policy discussion on whether to expand the city’s 2019 "flex" allowance, which permits ground floors to be built to commercial standards but occupied as residential until a commercial demand appears. Staff summarized interviews with developers and MRSC research showing few jurisdictions use broad flex and that lending and rent economics make purely market-driven commercial recovery uncertain.

Staff said a conservative approach would allow flex on corner lots in downtown with a requirement for 30% ground‑floor commercial on those corners; for Viking Avenue and the C‑4 college marketplace staff recommended watching current redevelopment rather than immediate expansion. "If there's a demand, it will happen," a staff presenter summarized of market behavior. Mayor Rebecca Erickson said she favored expanding flex outside the downtown shop‑front overlay: "I think we should do flex in all of it except for the overlay."

Councilmembers raised tradeoffs: some said flex can catalyze housing where commercial demand is stagnant; others worried it would reduce pedestrian foot traffic in downtown shopfront areas and might never convert back to commercial. The Sophie project downtown was cited as an example where ground-floor residential reduced expected pedestrian activation. Several councilmembers suggested an approach that allows flex across multiple commercial zones but protects key storefronts and corner retail with minimum commercial percentages.

Council directed staff to return the proposal to the planning commission for formal consideration and recommended drafting maps and corner-specific rules, with a possible October update to council.