Cherry St. eightplex soon to get foundation

Chris Tucker ctucker@ptleader.com
Posted 4/11/18

Permits have been filed for a four-unit affordable-housing complex near Cherry Street, about one year after the building was barged from Victoria, British Columbia, to a city-owned lot in Port …

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Cherry St. eightplex soon to get foundation

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Permits have been filed for a four-unit affordable-housing complex near Cherry Street, about one year after the building was barged from Victoria, British Columbia, to a city-owned lot in Port Townsend.

It could be on a new foundation and connected to utilities in as soon as 30 days, PT City Manager David Timmons said.

“They’re getting ready. They’ve got their permits filed,” Timmons said April 6.

The permits should be approved within the next week or two, he added.

“I’ve got all the financing documentation. I’ve got their loan application. I’ve got the bank quote. I’ve got the ordinance for the bond. I’ve got the promissory notes. So, I’ve got everything ready to go to pull the trigger so they can get started,” he said.

Nickel Bros., the company that moved the house here from Canada in May, is still working on the project.

“They’re going to have Nickel Bros. come in and put some additional cribbing in so they can remove one set of cribbing to get better access to one corner of the building,” Timmons said, referring to blocks of wood the building temporarily rests upon. “I’ve got everything in place now.”

Each two-bedroom unit is about 900 square feet in size. Timmons said the building is in “excellent condition.”

The units are to be held by a community land trust called Homeward Bound. The primary goal of Homeward Bound is to increase and maintain the stock of permanently affordable housing in Jefferson and Clallam counties.

Homeward Bound reformed with a 12-member board in November 2017.

City workers had planned to relocate a water line buried underneath the building, but Timmons said they found an alternative.

“What they did is they just severed the connection on each end. So, they abandoned the line in between. The department got a little creative. We didn’t have to relocate the line,” Timmons said.

Foundation work is to begin “probably within the next 30 days,” he said. Concrete takes about one week to cure.

Once the foundation is ready, the four two-bedroom apartments in the building will be connected to utilities.

“There’s just some electrical change-out they have to do, and some plumbing hook-ups and things, and then they’re good to go.”

Afterward, the plan is to add four studio units in the new basement foundation, doubling the total number of units in the building to eight, with a total of 12 bedrooms.

FINANCING VOTE APRIL 16

Total cost of the project, including interest, is about $1,000,200, working out to $125,025 per unit, or $83,350 per bedroom.

If the value of the land donated by the city for the project – possibly worth somewhere between $400,000 and $600,000 – is included, it could be said 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.

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

In September, Timmons estimated rents at the building might be $533-$756 and the complex would generate $56,922 per year in total rent income.

Timmons said having the city finance the project was the “cleanest way to do it, because it gives the city the most security.”

“We’re going to borrow the money from the bank under a bond. And, then, we’re going to loan it to Homeward Bound,” he said.

The city is to be eventually paid back in full, after 40 years. Renters will ultimately fund the costs.

If something were to go awry with Homeward Bound, “we don’t have a third-party interest in there to deal with it – the city can re-assign the property to another nonprofit.”

The financing plan will require action by the City Council to authorize. The council is scheduled to vote on the matter at its April 16 meeting, set for 6:30 p.m. in the council chambers at 540 Water St.

BARGED FROM VICTORIA

The fourplex was originally located in Victoria, British Columbia, slated to be demolished to make way for a new 53-unit condominium. In April 2017, the City Council worked quickly to seize the opportunity and voted unanimously to loan as much as $250,000 to Homeward Bound to purchase the building and have it barged to Port Townsend.

According to Victoria’s Times-Colonist newspaper, the mayor of Victoria was “very disappointed” and “baffled” her city lost the affordable fourplex to Port Townsend.

The building was barged across the Strait of Juan de Fuca May 10 and placed on a lot near Grace Lutheran Church, located at 1120 Walker St. Due to its proximity to Cherry Street, it is often referred to as the Cherry Street apartment project.

Timmons said in July the cost of making affordable housing a reality in Port Townsend was significant.

“It’s frightening … it is something where the amount of subsidy that’s going to need to go into these projects to make them affordable is staggering,” Timmons told council members July 2017. “It explains why you’re not going to see people just suddenly pick up and build affordable housing. It’s going to take more than just lightening (city) regulations or modifying (city code). It’s going to take more than that; it’s going to take a lot of capital subsidy to do it.

“It’s going to be an eye-opener, that’s the best I can say, in terms of the amount of subsidy that will have to be found to make these projects work.”

Timmons said in September that because of the narrow margins and the risk involved, private developers were not interested in building affordable housing. Additionally, in order to start an affordable housing project, Timmons said, private developers demanded loan subsidies or utility subsidies or free land. Adding to the problem is a labor shortage and the fact that contractors are booked a year out.

In September 2017, the Jefferson County Republican Party said the project was an “extravagantly wasteful scheme” and criticized the city for taking such a long time to put the building on a foundation.

During the November 2017 election, Jefferson County residents voted down a proposal called Proposition 1, which would have raised property taxes over seven years to support affordable housing.

Kathy Morgan, housing director for Olympic Community Action Programs, said in February that had Prop. 1 passed, it could have leveraged county funds to make the county more competitive for Housing and Urban Development dollars, which could have paid for affordable housing projects.

As Prop. 1 failed, the City of Port Townsend’s Cherry Street eightplex project is left as the sole example of anyone making progress to solve the lack of affordable housing in the city.

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