We are at least a decade into a counterrevolution in downtown Olympia. Urban Olympia LLC is systematically tearing up old surface lots and replacing them with housing. This brings us to the history of Block 46 of Sylvester’s Plat. The eastern portion of this block is currently on the developer’s list as they plan for a five story apartment building on what used to be a patch of concrete. For a hundred years, this block served as a laboratory for our ambitions. It shifted from a muddy shoreline to an industrial rail hub, then to a stagnant field of parking, and now toward a high-density residential future.
To understand why a five story apartment building is rising here, you have to look past the surface of the parking lots and into the dredge spoils of 1910.
The Disappeared Shoreline
In the late 19th century, Block 46 was essentially a frontier of the tide. The 1891 plat shows a few single family homes and a duplex, but the geography was different back then. Before the city was tamed by engineering, this was the edge of the Swantown Slough. It wasn’t a scenic beach with sand. Instead, it was a muddy shoreline much like the mudflats you see today near Buzz’s Bar and Grill on Mud Bay Road.
The transformation of this block was dictated by the Carlyon Fill of 1910 and 1911. Dr. P.H. Carlyon was a dentist and mayor with a relentless vision for the permanence of Olympia. He spearheaded the dredging of 2 million cubic yards of material from the bottom of Budd Inlet. This massive slurry was pumped behind bulkheads to create 29 blocks of new upland, including the area right next door to Block 46.
While the fill added land to the east, it fundamentally changed how people used Block 46. By stabilizing the area around downtown, the project allowed the Union Pacific to stretch its tracks across the city to reach a new terminal. The block was no longer a quiet residential edge. It became a strategic corridor for the Olympia Branch spur line.
Rails and the 1959 Disaster
By 1915, the Union Pacific had established a permanent foothold. They acquired a local startup line to connect downtown to the mainline at East Olympia. This 7.4 mile spur was the lifeblood of the city’s early 20th century economy. It carried beer from the brewery, plywood, and timber products.
Most noteable to us today, you could board the train in downtown Olympia and ride to Seattle, Portand or Tacoma. Passenger rail service has been lost to us for decades, but we can imagine how twice a day service by modern rail would have felt 110 years ago.
The presence of the rail line carved through the heart of Block 46. By the 1947 Sanborn maps, the domestic character of the block was starting to fade. The oil industry arrived on the east side. Maxwell Oil and Gull Oil established a footprint right next to the tracks. Yet, a surprising amount of housing stuck around on the south and west upland portions. Remnants of that era still stand today as the last two houses on 7th Avenue.
The most violent chapter in the rail history of the block occurred on Friday, March 13, 1959. A 900 ton segment of rail cars was left uncoupled and without brakes at the Tumwater border. The cars hurtled downhill and gained terrifying speed. They smashed into the Union Pacific Depot at over 60 miles per hour.
You can imagine living in of the houses on Block 46 as the rail cars flew buy and then hearing the unimaginable noise as they destroyed the depot.
The crash killed an employee and leveled a significant portion of the station. Though the depot was eventually rebuilt, the event marked a slow turning point. The industrial intensity of the rail line began to wane. It left behind underutilized land that would eventually become the hallmark of our 20th century downtown, the parking lot.
The Era of Stagnation
From the 1960s through the 1980s, the history of Block 46 became a story of divestment. Local families began selling their interests. Diamond Parking moved in and acquired two lots for vehicle storage. The Union Pacific eventually sold its interests to developers. The parking lots were leased specifically to various state agencies as they looked to keep their employees heading downtown by car.
In recent years, much of the block had settled into a low-value equilibrium. It was mostly asphalt. It generated a modest $7,000 annually in property taxes for local government. This was the stagnant parking lot phase, contributing very little to the city’s vibrancy or budget bottom line.
The Legion and Jefferson Project
Today, at least some of the asphalt is being torn up for a five story, 84,449 square foot mixed use development represents the first major residential investment on this block in a generation. It will house 91 units above ground-floor commercial space. The design uses a brick warehouse aesthetic that nods to the industrial past of the neighborhood.
Building here is not easy. Because the site sits on the soft silts of the historic shoreline, the foundation must rest on piles.
It is also fueled by a controversial financial tool called the Multi-Family Tax Exemption.
The Math of the Tax Gap
Critics often frame this tax exemption as a giveaway to developers. However, the fiscal reality of Block 46 suggests a different story.
Currently, the parking lot pays $7,000 a year. Once the apartment building is finished, the assessed taxes will jump to at least $100,000 (a best guess I arrived at by looking at a smaller apartment building nearby). Under the eight year exemption, the city essentially foregoes the $93,000 tax gap to make the high density project viable. This results in a short term loss of roughly $744,000.
But the math changes in year nine. The moment the exemption expires, the building begins paying its full $100,000 share. It takes only eight years of full payments for the city to repay its original investment. By year 17, which is less than two decades into the life of a building meant to last fifty years, the tax debt has broken even. Every year after that, the building generates 14 times the annual revenue of the original parking lot.
The But For Reality
This leads to a central mystery of urban planning called the “But For” test. Would this housing exist without the incentive? For decades, new housing in downtown Olympia was almost nonexistent. If a building isn’t built because the math doesn’t work for the developer, the city doesn’t lose millions in potential taxes. It simply continues to collect $7,000 a year from a parking lot. You cannot lose taxes on a building that does not exist.
What we don’t often ask is the impact urban sprawl has had in the “But For” context. But for building Henderson Boulevard from the interstate down to Eskridge, would Southeast Olympia exist the way it is today?
But for widening Mud Bay Road after Cooper Point, would the west side have grown the way it has? We don’t often talk about the subsidy that exists for suburban sprawl, especially as it reaches out into the woods in isolated pockets of neighborhood level development, but it does exist. So squinting at an eight year tax exemption instead of a permanent subsidy seems rich.
Beyond the property tax, we have to consider the hidden math of density. Ninety-one new households mean hundreds of people buying groceries and dining at downtown restaurants. It is also far cheaper for a city to provide services to 100 people on one city block than to 100 people spread across suburban sprawl.
The transition of Block 46 from a mudflats shoreline to a rail through-way, then to a parking lot, and finally to a residential hub is a microcosm of Olympia itself. The exemption isn’t a permanent subsidy. It is a deferred revenue strategy to speed through the parking lot era. The city is accepting a short term plateau to guarantee a massive, permanent increase in the tax base for the next half century. On the corner of Legion and Jefferson, we are finally trading the stagnation of the 20th century for the density of the 21st.
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