"550 Madison dispute endsWith a suit settled, the apartment goes to the housing authority. "
June 9, 2008 · Updated 3:47 PM
"Four months after a lawsuit threatened the deal, the Kitsap County Consolidated Housing Authority will finally close the deal to buy the apartment building at 550 Madison Avenue from long-time owner Vicki Holmstrom of Kingston.The purchase means that the building's mostly modest-wage tenants will be able to stay in the 13-unit complex at rents adjusted to their income.We feel Mrs. Holmstrom has done the bulk of the work, said Roger Waid, deputy executive director of the housing authority. We're really quite grateful to her and her concern for the tenants. She did not give up. The purchase, which will become final when Holmstrom signs the closing documents, follows a settlement of a lawsuit filed by Bainbridge realtor Craig Clark, who claimed that he had a contract to buy the building from Holmstrom.For years, Holmstrom had kept rents lower than market rate in what one tenant called her Christian ministry to the needy. She told the Review in October that she was selling the place because she was getting too old to do the necessary work.Clark, his wife and another investor offered to buy the building for $800,000.Based on comments by one potential buyer who toured the building, tenants feared that they would see dramatic rate increases if it was sold to a private investor.At the urging of Mayor Dwight Sutton, who read a Review story about the situation, the housing authority submitted a backup offer to Holmstrom for $825,000. And in December, when Clark reportedly failed to perform on his contract, Holmstrom accepted the housing authority's offer instead.But on Dec. 18, Clark sued Holmstrom. He denied breaching their purchase and sale contract, and demanded that Holmstrom sell to him.The lawsuit prevented any sale from going ahead by calling into question Holmstrom's right to sell to the housing authority. Although settlement talks began almost immediately, they did not initially prove fruitful, and the authority announced in late January that it was abandoning the effort to buy the property.Word that the housing authority was pulling out of the deal rekindled settlement discussions, though. Then earlier this month, the Clarks and Holmstrom reportedly reached an agreement under which Clark released his claim to the property in exchange for an unspecified payment from Holmstrom.To recoup at least some of the money being paid to Clark in settlement, Holmstom is increasing the price to the housing authority by $10,000, meaning the authority will pay $835,000 plus closing costs for the 13 units.As soon as all the financing is in place, Waid said, the authority will begin fixing a number of deferred-maintenance items.Tax-free bonds will be sold to to raise the money needed to pay for the apartment purchase. The bonds will be repaid from a number of sources, including rent payments from the tenants.We will look at energy-conserving things like windows and patio doors, Waid said. It can take a while for improvements like that to show up on the bottom line in terms of energy savings, but they make the inhabitants' lives better almost immediately. It's much nicer to live out of the drafts, he said.Waid said that despite its age, the building appears to be in good shape structurally, save only for a few minor problems in the foundations.Waid said a number of people deserve thanks for making the purchase happen.We're really happy with the support we received from the mayor and the city, he said. And the final thing that got us moving was a boost from County Commissioner Chris Endresen, who told us to get on with it and find a way to solve the problem. "