By Kelley Balcomb-Bartok
UPDATE: On April 18, after listening to public comments, the San Juan County Council voted to direct staff to enter into negotiations with the San Juan County Home Trust. Council member Jane Fuller noted she had heard from and reached out to a number of members of the community as well as the Prosecuting Attorney Amy Vira, asking questions, and gathering information until she felt comfortable deciding to move forward with one of the applicants. That applicant in the end was the Home Trust.
Council member Christine Minney mentioned key reasons she felt the Home Trust met the application requirements and also stated that the recommendations from both staff and their advisory committees are important to listen to. In this case, staff and the Housing Advisory Committee had both recommended the Home Trust proposal.
Council Chair Cindy Wolf wanted to make sure that it was stated clearly in the motion that they were directing staff to enter into negotiations only, and had not agreed to anything yet.
Two proposals for future affordable multiple housing rental units that may one day be located at the corner of Malcolm and Argyle in Friday Harbor were presented to the San Juan County Council Tuesday, April 4. The competing proposals were presented to the council by the San Juan Community Home Trust and the newly formed Favor 34 LLC, managed by David and Laura Flaum.
At stake is the future of a 1.75-acre county-owned property and what will ultimately be built and located on the land for decades and generations to come.
The proposed building site is located in what is defined as a transitional neighborhood by the Friday Harbor Historic Preservation District. Board president Jim Goetz, project manager Karl Eberhard, and trust Executive Director Amanda Lynn led the trust’s presentation. Team members also include project architect Bill Singer, contractor Bernie Hansen, civil engineer Tom Bennett, Starr Surveying owner Bob Anderson, along with board members Lisa Bennett, Rob Littauer, and former County Commissioner Darcie Nielsen.
The trust proposes to build a neighborhood of single and multi-family homes that retain the historic character of Friday Harbor while providing 40 units. The project comes with a $15 million dollar price tag, could be built in stages, and is anticipated to be fully occupied by summer 2027.
Favor34 LLC proposes a three-story apartment building complex with a total of 48 units, costing just shy of $20 million dollars. Occupancy target date is September 2025. The proposal provides 50% rentals for extremely low, very low, and low income tenants. Laura and David, along with legal council and development advisor Rob Spitzer, Mercer Island architect Suzanne Zahr and project manager Joel Bruck addressed this project.
H O M E T R U S T PRESENTATION
Goetz began by praising key project team members. “They have strong experience in San Juan County working with county and Town of Friday Harbor building officials,” he said, adding “They understand local building codes, realistic timelines and costs for island design, permitting and construction.”
Eberhart spoke about the design the trust submitted explaining that they looked at the historic Argyle neighborhood, the patterns of development setbacks, and rhythms in the sense of space between buildings attempting to create a project in keeping with the historic context.
The design, he pointed out, is characterized by front porches and front doors. The houses include primarily one-bedroom and studio units with a small number of two-bedroom units mixed in. “We selected that unit mix based on the market study that we expect will say that’s the demand,” added Eberhard. “That’s certainly what we’re hearing, and it’s also the trend in affordable housing at the moment.”
The budget, according to Eberhard, is $15 million dollars, based on summer construction costs, adding “We think it’s a realistic budget.”
There are three roads ahead, Eberhard explained, before construction: an approvals and agreements process; a planning and design process; and a funding process. Eberhard also emphasized timelines, “we’ve allotted a fairly lengthy amount of time for a community outreach process … so that we get a good project for Friday Harbor. We have built into our schedule with regard to the timing of funding.
We have the resources at this time to get started, but certainly, we don’t have the full 15 million acquired yet. But we don’t actually need to have the money today, it’s needed before construction starts.”
“I am really thrilled to be here and sharing a project concept,” said Home Trust Executive Director Amanda Lynn. “The Home Trust has been thinking about getting into rentals for a long time, and it’s exciting to be making it a reality,”
Lynn enthusiastically added that the trust takes community development seriously. “We believe in the process of creating something that our entire community can be proud of. Putting together our qualifications for this project, we created a concept design that illustrates our ability to meet Historic Preservation requirements and actually fit 40 units on that lot comfortably.”
The next steps will involve an in-depth community design process, she added, “That’s what the home trust does best. As the hub of housing issues for our community and the only nonprofit housing provider on San Juan Islands, we’re very tuned in to need.” Lynn explained they stay tuned in by maintaining strong relationships with local government, homeowners and potential homeowners, and larger stakeholder groups. By staying tuned in to those wider needs and listening to community input before beginning, the trust uses a true community development process to design every project that they create.
Lynn added that as an organization the trust knows how to meet eligibility requirements, compliance requirements, contracting standards with local state and federal government and believes the trust will be an excellent partner in the county’s desire to leverage those types of funds.
Funding for the project is primarily through low-income housing tax credits, and a variety of grant resources they’ve successfully used in the past. Up to 97% of the project can be funded through long-term financing via a USDA-guaranteed loan at a low-interest rate, or similar guaranteed loan programs, according to Lynn.
The trust assessed how to make this project work financially, meet target rent levels, planned capital reserves to maintain the building over time, and additional contingencies into every line item during construction with an understanding of how rapidly the environment can change on the island, she added.
“The Home Trust shares the same risks as the county and we have the same mission in this project, to provide permanently affordable housing. There is inherently no profit motive for either of us. As a nonprofit, we have a different relationship to the community than a private firm. Our investors are donors who also share our mission and their expectation of a return on their investment is community stability rather than monetary. We have a history of achieving major donations where needed.”
Lynn ended with “We’re creative, we’re nimble, we’re successful, and we’re committed.”
F A V O R 3 4 PRESENTATION
Laura opened their presentation stating, “We are long-standing members in this community and are genuinely concerned and we care deeply about the economy of this island and the progression of our economy in this island as far as it pertains to affordable housing.”
As former business owners and renters on San Juan Island, Laura acknowledged the challenges islanders face, including the difficulty of retaining employees due to current housing shortages. Their proposal for 48 units exceeded the County’s RFQ request, and the Town’s maximum density codes.
Zahr explained that by organizing the planning of this development the project is less about giving smaller areas around singular units and more about offering generous community spaces for all the residents that live there. The unit count is higher, housing 48 families. That number could be dropped down if need be, and they could offer larger unit sizes.
Bruck said “It’s an imperative way to build those relationships with potential tenants from the outset of the project. During the development phase we will be strongly engaged with [local nonprofits and community agencies] to understand what’s happening on the ground, and where the needs are, and to be dynamic with how the project is evolving to accommodate potentially quickly changing needs.”
A significant portion of workforce housing is contained in this development, according to Bruck, and they intend to partner and communicate with local employers to understand their needs to help businesses stay open and to help the economy thrive.
Spitzer said “I was attracted to the Favor 34 project because I know that that this is an expression of their love for the community and their understanding of the role that giving normal people housing is critical to the fabric of a community and also to its business community. That there are many businesses that have expressed a real problem in hiring people. If normal people can’t work, and industries like the hospitality industry don’t have places for their workers to live comfortably and nice surroundings, then it doesn’t bode well for this island and the whole county in the long run.”
Spitzer explained that the proposal is a different financial model than the trust. While Favor 34 has not disclosed where funding for their proposal would come from, he stated private funding has been lined up from people on the island who want to see places for their employees to live.
A major difference from most of the projects he has seen, Spitzer said, is that typically bank financing loans are part of the project. Favor 34 are not planning on attaining a loan, although it’s a possibility as a backup. As a result, he said, they are able to charge less, reiterating that half the units will be low-income to extremely low-income tenants.
According to Spitzer, they will demonstrate funding for the permit and development and entitlement cycle within 10 days of actually having a lease. “And as part of the lease we’re also suggesting that the county get in effect a security interest in all the permits, in all the designs and basically all the entitlements so that if for some reason the project stalls the county will be in a position of having the completed designs and the entitlements, which that package alone is extremely valuable. And if in the unlikely event that the rest of the funding hasn’t come through the county can then go to another builder and really nothing will have been lost.”
“I’m going to have to be really honest,” said Council member Christine Minney following the Favor 34 presentation. “In several iterations of questions being asked over time, the number one has been repeatedly asking for financial information that details project funding, which includes funding sources, funding types and commitments or guarantees. As somebody who has to evaluate the eligibility of applicants who provides this information, I have to say that I don’t see this information.”
David responded, “People don’t want to put their money forward because we don’t have anything. We don’t have a signed lease or a verbal agreement with the county.” Once Favor 34 has the lease, he continued, the county will be provided signed financial commitments from donors. David also confidently added that he has commitments totaling $20 million dollars in soft circle funds for this project.
At the end of the presentations, Council Chair Cindy Wolf thanked the applicants for the “passion by which this has been approached by both groups.” The council will spend the next two weeks deliberating on the proposals, and plans to return April 18 to consider the proposals.
To learn more visit https://www. sanjuanco.com/903/Council-Agendas-and-Recordings and click on the April 4 San Juan County regular meeting link. To share thoughts or comments on these proposals email council@ sanjuanco.com or attend a San Juan County Council meeting in person in the Council Legislative Hearing Room located at 55 Second Street, Friday Harbor.