PORT TOWNSEND — Jefferson County is looking into a possible land swap with the City of Port Townsend to bring some county parcels into the urban growth area in hopes it will make the county more competitive for certain state grants.

During their regular meeting Monday, the Board of County Commissioners unanimously approved a motion directing county staff to conduct a review of a possible land exchange that would allow Jefferson County to modify the borders of its urban growth area.

In October, Jefferson County submitted three grant applications to the state Department of Commerce’s Connecting Housing to Infrastructure Program (CHIP), which will provide funding for infrastructure construction if it’s connected to housing developments.

One of the CHIP grants the county is pursuing would help Port Townsend complete a sewer lift station to connect the Caswell-Brown Village to necessary infrastructure. However, the Caswell-Brown Village sits outside the county’s UGA — which is congruent with Port Townsend’s city limits — and county officials are concerned that the project might not be eligible for the grants.

The Caswell-Brown Village began as a homeless encampment but has since grown into a tiny home village and is the future site of an emergency homeless shelter.

“Because the site is outside the city limits, and it’s adjacent to the city limits, it does meet the preliminary requirements,” said Brent Butler, chief strategy officer for the county’s Department of Community Development.

While the county argues the site does meet the preliminary requirements, officials are concerned the Department of Commerce might not view the project as eligible for CHIP grant funding.

But a state bill passed in 2022 does allow counties to modify their urban growth area — areas where denser developments are permitted — so long as they don’t increase the total area of the UGA. That means the county can add new parcels to the UGA if they are swapped for parcels of the same size that will be taken out of the urban growth area.

Jefferson County is unique, Butler said, in that it has no UGA parcels outside city limits.

County Administrator Mark McCauley said City of Port Townsend officials had expressed approval of the plan in meetings between the two jurisdictions, and Port Townsend City Manager John Mauro gave public comment in support of the plan at Monday’s meeting.

District 2 Commissioner Heidi Eisenhour said she had been contacted by county landowners who might be interested in a potential land swap.

Butler said the University of Washington’s Center for Real Estate Research has identified Port Townsend as one of the least affordable areas in the state and that the CHIP grants would help the county pay for the creation of much-needed housing.

Jefferson County also submitted CHIP grant applications for projects that would further extend the new Port Hadlock wastewater treatment system — currently under construction and meant to support additional housing in that area — and another to support Bayside Housing and Services plan to construct 60 units of affordable housing near the Old Alcohol Plant.

Each grant application is seeking more than $2 million for a total of $5.5 million from the $55.5 million available for the 2023-25 biennium.

Butler said support from local jurisdictions would improve the various applications’ chances of being selected.

“I feel that the Department of Commerce would need to benefit from a strong show of support to the extension of urban levels of service outside the city limits,” Butler said.

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Reporter Peter Segall can be reached at peter.segall@peninsuladailynews.com.