Bremerton has decided not to assist the county in paying the debts of its affordable housing authority, Housing Kitsap.
The organization that manages more than 900 affordable units across Kitsap owes just under $13 million to the county government, according to an August 29 letter penned by the Board of Commissioners.
Bremerton mayor Greg Wheeler and councilor Richard Huddy responded to the request for approximately $3 million, citing the over $1 million already paid to Housing Kitsap by the city in 2011 following a lawsuit and its commitment to the city’s own affordable housing organization, the Bremerton Housing Authority.
“After consideration, the City is declining your request,” the September 12 letter states. “The City believes that the most appropriate way for us to support the provision of affordable housing in our community is to support our own housing partner.”
The Kitsap County Board of Commissioners requested Bremerton pay $300,000 annually until 2028 to cover a portion of Housing Kitsap’s debts tied to the Norm Dicks Government Center, which houses the city of Bremerton offices.
“The debt is a direct result of the Housing Authority venturing into redevelopment activities in the City of Bremerton, outside of its service area,” the letter, signed by commissioners Robert Gelder, Charlotte Garrido and Edward Wolfe, states.
Bremerton was a final resort for the county, which had already asked its three other cities – Bainbridge, Poulsbo and Port Orchard – to chip in, the Kitsap Sun reported in July. The housing authority is seeking help from cities after a recent state audit showed the organization to be in dire financial straits stemming from the 2008 economic downturn and subsequent Great Recession.
“Due to a variety of factors, including the housing downturn and implosion of the credit markets, the Housing Authority was unable to pay or restructure” loans made by KeyBank and Bank of America that matured in 2009, according to the county.
The audit, published August 6 by the Office of the Washington State Auditor, reported Housing Kitsap held $41.8 million in long-term debt at the end of fiscal year 2017.
“The Housing Authority’s financial condition puts it at risk for not being able to meet its obligations or maintain operations,” the report states.
A response to the audit stated that Housing Kitsap has never failed to pay its debt obligations. The organization would also be making changes to ensure improved financial management going forward. In June 2018, the Board of Commissioners established a finance committee to monitor cash flow and operations of the housing authority, established in 1982.
Huddy said the city has no legal obligation to pay Housing Kitsap’s debts but also expressed concern about their plight.
“It seems the county is pleading with us to help them keep Housing Kitsap solvent,” he said. “Otherwise it might go out of business, and that could have some pretty tremendous consequences for the county.”
Despite the acknowledgment, the council gave unanimous consent for the letter during a public meeting September 12.
“I don’t think we should have to pay for another organization’s mismanagement and going outside their mission, which Housing Kitsap did,” councilor Tony Hillman said.
If the city had additional funding, Hillman added, it would go towards the Bremerton Housing Authority.
“We have a huge need in the city, and our focus is always city-related,” he said.