EVERETT — About three years ago, city leaders started taking a new stance on homelessness.
They decided Everett’s government should become involved in providing housing to those who need it most: the chronically homeless, many of whom live with addiction and mental illness.
The movement was part of a renewed energy to build affordable housing across Snohomish County.
In the county’s largest city, that energy has created a logjam of what some might see as too much of a good thing. Three major projects in Everett, with a total of 170 units, have been competing for funding. The city has worked with the local nonprofits on ways to keep all three projects on track. The latest twist is a proposal to allot $400,000 in city money to a nonprofit housing initiative. That proposal has raised questions from City Council members, who are taking another look Wednesday night.
The three projects are:
- HopeWorks Station II on Broadway, a Housing Hope design for affordable housing and workforce training space. The estimated cost is $29.3 million.
- A new, expanded center on Colby Avenue for Cocoon House, which serves homeless youth, with an estimated cost of $12 million.
- Low-barrier housing, at 6107 Berkshire Drive near Evergreen Way, which is a combined effort by the city and Catholic Housing Services. The location, which the city calls “Safe Streets supportive housing,” has been the most controversial, drawing criticism from neighbors. The construction budget is $10.5 million.
The low-barrier project was something new for Everett. Along the way, city staff learned it takes an immense amount of documentation and collaboration to turn an idea into a building, said Hil Kaman, Everett’s public health and safety director.
Getting ready for construction requires local, state and federal dollars, and each step hinges on various stipulations and deadlines.
Figuring out funding
The key funding sources for affordable housing are Section 8 vouchers, state money and federal tax credits from investors. At the state level, Washington’s Housing Trust Fund offered assistance to only the low-barrier site and HopeWorks.
As part of its application, Catholic Housing Services reserved 10 units in the Safe Streets project for people ages 18 to 24 who are homeless. There is talk of working with Cocoon House on those units, but the details aren’t final.
The federal level of funding happens when corporations invest in affordable housing in exchange for tax credits. HopeWorks and Safe Streets were eligible. They asked for about $15.6 million and $12.6 million, respectively. Both requests later were reduced.
Snohomish County projects compete for the federal funds in a category with four other Washington counties. That’s where they hit another roadblock: New rules for 2017 limited how much each county could seek in a single year.
HopeWorks was ranked first, followed by Safe Streets. As a result, the low-barrier site would not receive its total request, which would have postponed construction.
To make it work, HopeWorks agreed with the city and Catholic Housing Services to split the total tax-credit allocation. They reduced each project’s budget by more than a million dollars. Safe Streets went from 70 to 65 units, and HopeWorks from 76 to 65. It was an unusual, but remarkable arrangement, said Fred Safstrom, chief executive officer for Housing Hope.
Both sides understood that HopeWorks, by giving up some of its funding, would create a seven-figure shortfall for Station II. The tax credits also wouldn’t be the last piece of the puzzle for Safe Streets.
Affordable housing projects always compete for funds, Safstrom said. But the three Everett projects all serve different needs, said Ed Petersen, Housing Hope’s chief strategic officer.
Delays for any of them would have been a loss, so it made sense to work together, Safstrom said.
Then HopeWorks and Safe Streets asked for a variance from the commission that oversees distribution of federal tax-credits. The commission agreed to advance 2018 dollars, if all Snohomish County affordable housing developers were on board.
In March, a letter of consensus was sent to the commission. It was signed by the Everett mayor, the county executive and the local housing authorities. They acknowledged that an advance means less money will be available next year.
Still a need
After all of that was worked out, low-barrier housing still needed $600,000, and HopeWorks was short $1.1 million. Sharing the tax credits was a factor in HopeWorks’ deficit, officials said. By then, it was May.
Kaman put his mind to another fix.
The city’s general fund budget set aside $200,000 a year for 2017 and 2018 for the Safe Streets project. Catholic Housing Services said the building needed a certain level of staffing, for the well-being of tenants and neighbors. The city allocated the money to assist with staffing for at least two years.
The Safe Streets project isn’t far enough along to start hiring people, though. When it opens, the plan is still for around-the-clock staffing, according to the city.
Kaman suggested the city shift to HopeWorks the $400,000 it had set aside for staffing. Safe Streets won’t need staff in 2017 and 2018 because the building won’t be open yet.
Furthermore, Safe Streets’ funding gap, $600,000, is likely to be covered by the county’s mental health sales tax. Construction is considered fully funded, according to the city and Catholic Housing Services.
However, Kaman’s proposal has raised questions from council members about how the city budgeted for the low-barrier site. They also wanted to know whether a commitment had been made to HopeWorks.
Kaman wrote an Aug. 30 letter in response. The Daily Herald obtained the letter, council emails and other documents about the topic through public records requests.
Without HopeWorks’ collaboration on the earlier rounds of funding, the Safe Streets project would have been pushed back at least a year, Kaman wrote. In addition, other funding could have been compromised because of the delay, including Section 8 vouchers.
There is some discretion in how the general fund can be spent, though the state Constitution prohibits governments from “gifting” public money. Kaman suggests his idea for HopeWorks would be allowed because it falls under an exemption that cites “the necessary support of the poor and infirm.” City attorneys looked into his logic, and said it checks out, he said.
Initially, redirecting $400,000 to HopeWorks was part of a budget amendment that was scheduled to go before the council earlier this summer. That was the first time Councilman Scott Murphy, the budget committee chairman, had heard of the proposed transfer.
“It needed to be broken out for some additional discussion and due diligence,” Murphy said.
The council asked for a better explanation of what was happening, he said. He also wanted an accounting of the city’s spending on the Safe Streets initiative so far, particularly its commitment to low-barrier housing, both for construction and operations.
Depending what happens Wednesday, the proposed transfer to HopeWorks could be scheduled for a full council vote in the coming weeks.
In the meantime, all three projects keep moving along.
The City Council could vote as early as October to transfer its Berkshire Drive property to Catholic Housing Services. Groundbreaking is expected before the year is out. Catholic Housing Services is paying for construction, though the city provided property it already owned.
HopeWorks expects to open Station II in 2019, with groundbreaking in early 2018. If the city’s $400,000 comes through, Housing Hope believes other sources of revenue will cover most of the remaining amount. If everything works out as planned, about $100,000 is left to secure, Petersen said.
On Sept. 7, Gov. Jay Inslee stopped by HopeWorks, the commercial enterprise next to the proposed housing location. He was drumming up support for the state capital budget, which failed to pass this year.
Both HopeWorks and Cocoon House are waiting to see what will happen with the capital budget. Cocoon House was supposed to be allocated about $2 million, mostly for construction but also operations. For HopeWorks, the amount is $2.8 million. The low-barrier project does not rely on the capital budget.
Cocoon House aims to open its new location at 3530 Colby Ave. in early 2019. Designs call for 40 units.
Organizers behind all the projects say they still hope to see 170 new units of affordable housing open in Everett by the end of 2019.