The San Juan County Council on April 18 unanimously selected the San Juan Community Home Trust to negotiate a developer agreement for 42 affordable housing units on 1.75 acres on Argyle Avenue in the town of Friday Harbor. The decision to proceed with the Home Trust rather than the private investor group Favor 34 comes nearly 20 years after the county’s purchase of the lot.
In the final decision, council member Jane Fuller (Lopez) said her vote for the Home Trust came from her concern with long-term stewardship, and that the Home Trust “establishes a robust partnership with the County and the Town.”
Council member Christine Minney (San Juan) said she came to her decision after closely examining the qualifications of each developer, and perceiving greater experience on the part of the Home Trust in the arena of affordable housing.
The Home Trust proposes to build attached single- and multifamily rental units at an estimated cost of $15 million, funded through public loans and grants. The development is proposed to have a historic look to match the town’s aesthetic, which they say will meet historic preservations requirements. The group expects to finish the project by 2027.
In response to Tuesday’s decision, Jim Goetz, board president of the Home Trust, wrote, “This opportunity is a game changer for the Home Trust and Friday Harbor. It allows the HT to continue doing what we do best: provide permanently affordable housing to the people most important to our community.”
Public versus private
San Juan County, like many other jurisdictions, faces an affordable housing crisis affecting fixed-income residents and lower-wage workers. (“By the numbers: wealth gap grows in the San Juan Islands,” Salish Current, Dec. 16, 2022).
The Argyle Lots housing proposal became a flashpoint in the community’s discussion of financing, transparency and efficiency in meeting affordable housing needs.
Laura and David Flaum, residents of San Juan Island for 13 years, said they formed Favor 34 to help their community. Laura Flaum, a small-business owner, expressed dismay over the loss of workers due to cost of living and said they were motivated to pursue the project “to help businesses stay open and the economy thrive.”
Favor 34, comprised of architects, lawyers and developers from the mainland, presented a proposal with an estimated $20 million cost entirely financed privately and with a projected completion date of 2025. “We don’t have the uncertainties that come with trying to line up money from a variety of sources,” said Rob Spitzer, a lawyer and real estate developer with the group.
Favor 34’s proposed design was a three-story apartment-style building, with half of its 48 units available to tenants qualifying as extremely low- to low-income. The other half would be for households earning between 80% and 115% annual media income, as required by the request for qualifications.
For residents, discussion and debate on the proposals were divided and heated.
Mayor Raymont Jackson of Friday Harbor offered his endorsement of Favor 34, citing time and money as major factors. “Time is a luxury we do not have,” he said, arguing for the tighter timeline the group offered. In an impassioned plea to the council at the April 18 meeting, Jackson contended that without the help of private funders, who won’t take from the town’s tight budget, “we’re not going to make it.”
While some found Favor 34’s zero-dollar cost offer not to be passed up, others found the Favor 34 proposal unrealistic and were skeptical that the project could be free.
On March 7, San Juan County Housing Advisory Committee (HAC) unanimously supported the Home Trust proposal in its recommendation to the council. County staff also recommended to council the Home Trust proposal.
Sandy Bishop, a housing committee member and executive director of the Lopez Community Land Trust, advised that no one has ever been able to successfully build long-term housing solely with private funding in the islands, and rarely elsewhere.
“Why would a for-profit developer group want to be entangled and encumbered by public restrictions for covenants?” asked Bishop. In their decision, the council affirmed their trust in the HAC’s decision, which they said helped guide their decision.
County council members were also alerted to San Juan County court cases against the Flaums related to other business dealings.
Nancy DeVaux, a member of the HAC, wrote in an email to council member Cindy Wolf (Orcas), “It appears from court records that they [Flaums] do not handle money well and do not follow through on their commitments.” (Editor’s note: DeVaux is a freelance reporter who writes for the Salish Current.)
Deliberations during the six-month application process were often tense. David Flaum alleged that discussion had turned into a hate campaign against Favor 34 and a personal attack on his family’s character.
For the council, however, the decision ultimately came down to a lack of information and transparency around how Favor 34 would finance the massive project. Though neither developer has yet secured the funding, the Home Trust offered a more precise picture of how funding would be attained. Favor 34 said they would reveal their investors only after an agreement was made with the county.
The Home Trust will rely primarily on low-income housing tax credit, private equity financing and public funding, with just $2.5 million expected to come from private donors. Executive director Amanda Lynn described accessing public funding primarily through multiple grant resources. A USDA guaranteed loan will provide most of the long-term financing at a low-interest rate.
At an April 4 council meeting, Minney addressed Favor 34, noting that the council has been “repeatedly asking for financial information that details funding. As somebody who has to evaluate the eligibility of an applicant who provides this information, I have to say that I don’t see this information.”
In the end, the decision came down to trust and a known versus an unknown entity.
Wolf thanked the Flaums for their proposal. “It takes a lot of courage to challenge an established model,” she said. “What I learned in this process is that there is room for more than one model for affordable housing.”
“There are a lot of choices in this world, and I think that we need to be tolerant of exploring new ideas,” she said.
— Reported by Kathryn Wheeler