Poulsbo turns towards commercial district along Highway 305 as home to new housing

The City of Poulsbo only covers four and a half square miles, but its population continues to grow, demonstrated by an updated sign at city limits along Highway 3 now reads more than 13,000 residents. And so does its demand for more housing.

The city is anticipated to need nearly 2,000 more housing units over the next 20 years, so the Ppulsbo City Council is looking to beef up residential development in some of its commercial zones to compound the use of its limited space.

The Highway 305 corridor, from Town and Country Market on the north to Hostmark Street on the city's south end, is already zoned for mixed-use development, which allows developers to build commercial on the ground level with housing units up above. But the area just wasn’t attracting developers interested in building residential-only units, said the city's Planning and Economic Development Director Heather Wright.

Commercial-only developers were “poking around” the area, Wright said, but that wasn’t the kind of growth Poulsbo officials were looking to attract.

Though a major apartment development is now underway near the Highway 305 and Bond Road intersection, te city is looking toward the Highway 305 corridor further south during its 2024 Comprehensive Plan deliberations to provide housing for a population of 800, on its way to meet a housing target of nearly 2,000 new units by 2044. Commercial areas can support smaller housing units and are often close to transit, which serves people of all incomes well, Wright said.

The city council placed a moratorium on all development through the area in September 2023. The pause was meant to give the council time to make regulatory changes to building code in order to entice developers interested in residential and mixed-use development.

“For the first time ever, the state has not only mandated that we accommodate a certain amount of homes coming, but we also have to accommodate different income levels,” Wright said. “So we can't just meet our population projection through single family neighborhoods. We have to also provide a variety of housing types.”

A market and feasibility study funded by grant money from the Washington State Department of Commerce also recommended that the city encourage mixed use development by increasing height limits, reducing front yard setbacks, reducing parking requirements, establishing a multifamily tax exemption and allowing for 100% residential building instead of mixed-use.

Less than a year after the city imposed the moratorium (which typically lasts for 12 months), the planning and economic development presented the city council with a package of code amendments including allowance for residential and mixed-use projects and a variety of housing types and sizes, increased height maximums, and reduced setbacks.

The council voted unanimously and without discussion to approve the amendments and repeal the moratorium, reopening the gates for new development on the Highway 305 corridor, stretching a few blocks out from the highway in either direction. Wright said she's already had a conversation with a developer who is interested in building mixed-use along the steep slopes along 10th Avenue behind the commercial areas that house Town and Country and other businesses, though no preapplication meeting has been made.

The city isn’t stopping at the Highway 305 commercial district, either.

“This is part of a larger effort of our council looking at all of our commercial zones,” Wright said.

Poulsbo has four commercial zones: Highway 305, Viking Avenue, Front Street and Olhava, where a development moratorium was also approved, in August 2023. Front Street isn’t being eyed for any changes at this time, she said, but conversations about increasing height and reducing setbacks along Viking Avenue are starting to take place.

“We haven't had a lot of opposition of people coming out against any of these changes,” Wright said, “and so I think our council feels more comfortable looking at our Viking corridor as well.”

This article originally appeared on Kitsap Sun: Poulsbo turns towards commercial district along Highway 305 as home to new housing