POULSBO — In September, Woodcreek Apartments began asking some tenants to leave so renovations could be made to the property.
Woodcreek provided affordable housing and had long participated in a USDA Rural Development voucher program called Section 515. Some renters paid as little as $50 a month, according to Jeff Miller, CEO of Pacific Living Properties, which manages Woodcreek.
Woodcreek’s contract with Rural Development expired, and they began charging market-rate rents. Many of the tenants were priced out of the apartments.
Kim Kinslow was among the first Woodcreek tenants to receive a letter notifying her that her tenancy had been terminated. She’d lived there for 15 years.
Kinslow, 47, is on a fixed income. She had to move back in with her parents on Bainbridge Island.
“I’m being forced to move in with my parents,” Kinslow said. “But still it’s humiliating.”
Mayor Becky Erickson warns there may be other affordable housing units in Poulsbo that opt out of voucher programs and raise rents to market rate.
“This is gonna happen again, alright,” Erickson said. “This is just the first one that you’ve heard about, but there will be more.”
At Woodcreek, 40 households were affected by the switch to market-rate rent.
Rent costs
Two of the most common federal rent subsidy programs are operated by the U.S. Housing and Urban Development, or HUD; and Rural Development, which falls under the U.S. Department of Agriculture.
Both groups offer project-based and tenant-based options.
“Project-based” means a property has entered into a contract with the government requiring it to rent to qualified low-income households.
The property receives a monthly rent subsidy to bridge the gap between the income-based rent paid by the tenant and the market value of the apartment, according to Kurt Wiest, executive director of Bremerton Housing Authority.
“Tenant-based” is a mobile subsidy issued to a household and can be used at any property where the owner is willing to accept the voucher.
Woodcreek was a tenant-based voucher.
Rent costs in Kitsap County have “dramatically increased over the past year,” according to Mike Eliason, CEO of the Kitsap County Association of Realtors.
After the housing bubble collapsed, there was little construction in Kitsap County. Poulsbo was no exception.
“Unfortunately, we’re coming out of a very severe housing recession where there wasn’t funding available for the development community to build housing,” Erickson said at an Oct. 7 City Council meeting. “Effectively for almost four years in North Kitsap County no housing was built.”
On top of that, the county grew from about 240,000 in 2009 to 254,000 in 2013. The result was a housing bottleneck.
The vacancy rate in Kitsap County was 3.23 percent during the third quarter of 2015, according to Chris Rieland, CEO of Pacific Northwest Title. In early 2013, that rate was above 10 percent.
“There’s definitely a lack of inventory,” Eliason said. “After the recession you had pent-up demand and, unfortunately, the supply is not there.”
As it goes, with high demand and short supply, rent costs are high.
The average monthly cost of an apartment in Kitsap is about $1,050, and Poulsbo housing is typically higher than county average. For instance, Woodcreek is asking $1,095 for a one-bedroom, one-bathroom apartment and $1,250 for two bedrooms, two bathrooms.
Real estate is no different. The median cost of a house in Poulsbo is $320,000, compared to the county average of $260,000, according to Eliason.
Making matters worse, incomes in the state have declined by 2.4 percent since 2000, but median rents have increased by 7.8 percent, according to Faith Li Pettis, chairwoman of the state Affordable Housing Advisory Board.
Low-income housing outlook
Low-income housing is scarce in Kitsap. Multiple residents contacted by the Herald said they were told the waiting list for subsidized housing in the county was two years.
Properties opting out doesn’t appear to be endemic.
There are 14 Rural Development properties in Washington state that will reach the end of their contracts between 2016 and 2019, none of which are in Kitsap County, according to Phil Eggman, public information officer with the U.S. Department of Agriculture Rural Development.
Rural Development has 306 properties in the state. They’ve lost about 60 units per year over the last three years, Eggman said.
There are four HUD properties in Poulsbo: three properties owned by Hostmark of Village Cove, and Peninsula Glen Apartments — a total of 149 apartments.
Only one property owned by Hostmark of Village Cove is eligible to opt out of its HUD contract in the near future.
Frank Berry manages Hostmark of Village Cove and several other properties along the West Coast that accept HUD vouchers. He’s an advocate of low-income housing for two reasons: Vouchers are “easy money” for owners (owners also get property tax breaks), and because it helps the community.
He has no plans of doing away with HUD vouchers.
“Opting out of HUD vouchers — that’s crazy,” Berry said. “… I’ve been in low-income housing for over 20 years and there’s no way I’ll stop it.”
