The eight-unit Cherry Street affordable-housing project that the City of Port Townsend is working on could have a foundation in place in four months, City Manager David Timmons says.

“Probably still looking three to four months out … before it’s completed; for a foundation to be in place. If all the things line up,” Timmons said.

REMAINING WORK

The apartment has four two-bedroom units. It was transported by barge from Victoria, British Columbia, to Port Townsend May 10, and placed on city-owned land near Grace Lutheran Church, located at 1120 Walker St.

The city is to build a basement foundation containing four additional one-bedroom units. When the project is complete, it is to have a total of eight units.

Timmons said a structural engineer who was doing pro bono work for the project had to back out, so the city is looking for another engineer to finish the work.

“It’s basically getting the right size rebar and some other things … other than that, it’s pretty much ready to go,” Timmons said of the engineering work.

Building codes do not require the entire building to come up to code, Timmons said, but some electrical work will need to be done on the building.

“Once the foundation is in place and the building is set, it’s not a complicated job,” Timmons said of the electrical work.

The next steps are to update the budget based on their plans, then price out the work and get the financial plan finalized.

A water main running under the property is to be removed, and that work is going out for bid next week, Timmons said. Then, foundation work can begin.

$125,025 PER UNIT

Because four of the eight units are two-bedroom, the complex will have a total of 12 bedrooms.

As the project costs $1,000,200, that works out to $125,025 per unit, or $83,350 per bedroom.

If the value of the land the city donated for the project – valued somewhere between $400,000 and $600,000 – is included, it could be said that the total value of the project is as much as $1.6 million.

If the higher $1.6 million figure (including the high estimate of the land value) is used, the per unit cost is $200,000 or $133,333 per bedroom.

Rents are expected to be $533 for the one-bedroom units and $756 for the two-bedroom units.

The city estimates that the complex would generate $56,922 per year in total rent income.

FINANCING PLAN

The $1,000,200 total cost of the project includes the building, barging costs, building a foundation with four additional units, and interest.

Renters, ultimately, are to fund all costs for the project.

Timmons said the financing plan calls for the city to borrow money on a 20-year basis and then loan it back to a community land trust called Homeward Bound on a 40-year term.

The primary goal of Homeward Bound is to increase and maintain the stock of permanently affordable housing in Jefferson and Clallam counties.

“At the end of the 40 years, the city is paid off,” Timmons said.

“The city’s out-of-pocket expense, or the money that the city has put out, has been repaid” after 40 years, Timmons said.

The 40-year financing plan breaks down into two 20-year segments.

During the first 20 years, annual payments of $50,010 are to be paid.

That $50,010 each year comes from two sources: The first is $26,131, which is derived from renting the eight apartment units. The second comes as a city subsidy of $23,879. The subsidy money is money that the city freed up by refinancing some of its unrelated debt at a lower rate.

“For the first 12 years, the city isn’t out of pocket any money over and above what we’re currently paying. We’re paying it on 2010 debt. We’ll save about $25,000 a year. So that $25,000 plus the rent covers the full debt service for the first 12 years,” Timmons said.

A detailed copy of the financing plan is available online at goo.gl/bJDj3A.

At the end of this first 20 years, a total of $1,000,200 pays for all costs for the project.

Homeward Bound then continues to make an annual payment of $26,131 for the next 20 years to repay the city, Timmons said.