Housing Kitsap has agreed to sell the 550 Madison Apartments to Madison Avenue Development for $1.75 million.
Madison Avenue Development will partner with Housing Resources Bainbridge to preserve affordable housing on the property, and the Bainbridge nonprofit will manage the apartment complex after the purchase is complete.
Commissioners for the Silverdale-based housing authority voted 7-1 at their Tuesday meeting in Poulsbo.
The sole “no” vote came from Housing Kitsap Commissioner Rob Putaansuu.
Housing Kitsap, the current owner of the property, has been looking to sell the 13-unit apartment complex on Madison Avenue, as well as other property it owns, due to the agency’s continuing financial crisis.
Housing Resources Bainbridge said the cooperative purchase of the building would help retain low-cost housing on Bainbridge Island, where affordable rental properties are in short supply. But the potential sale of the 13-unit complex prompted public outcry on Bainbridge, from advocates for affordable housing, elected officials and the public.
At the board’s previous meeting in June, tenants of the 550 Madison Apartments and others criticized Housing Kitsap officials for considering a sale of the building to Bainbridge businessman Mike Burns and his development company, Madison Avenue Development, for more than $2 million.
Housing Resources Bainbridge, a nonprofit that assists families with affordable homes on the island, had offered $1.5 million for the property.
After much community criticism, housing officials decided to give Housing Resources Bainbridge (HRB) an additional 30 days to match the $3 million offer made by Burns, but Burns subsequently withdrew his offer, saying he did not want to compete against HRB for the property.
Earlier this week, HRB announced a partnership plan with Madison Avenue Development to buy the property, which will be redeveloped along with adjacent parcels by Burns’ company, and will include at least 13 affordable housing units.
At Tuesday’s meeting, most commissioners said they supported the sale to HRB and Madison Avenue Development, and Commissioner Robert Gelder called it “a great compromise.”
Putaansuu, however, recalled that Housing Kitsap officials had talked about bankruptcy for the agency just a year ago, and said he had hoped the community of Bainbridge Island would help “close the gap” from the $2 million previously offered by Madison Avenue Development and HRB’s prior offer of $1.5 million.
“We’re taking about a $250,000 haircut,” Putaansuu said.
Commissioner Kol Medina, also a Bainbridge councilman and mayor, said the $1.75 million purchase of the property was only a part of what the developer would spend to redevelop the property.
“This is only a piece of it,” Medina said.
Tom Daniels, a representative for Madison Avenue Development, agreed and noted that the 550 Madison Apartments had an appraised value of $670,000.
Medina added that in a previous Housing Kitsap finance committee meeting, HRB and Madison Avenue Development had offered $1.5 million, but the committee thought the board would not approve that offer, so it was increased.
“It was a tough, tough meeting,” recalled Housing Kitsap Commissioner Becky Erickson.
Gelder agreed that the $1.75 million for the property was just the start of what it would cost to preserve those units of affordable housing.
There would be other expenses, he added, such as maintenance and repairs that Housing Kitsap had not done due to a lack of funding.
Housing Kitsap expects the sale to close by Aug. 31.
On a subsequent vote, commissioners of the housing authority voted 7-0 to keep rents at the 550 Madison Apartments at their current rate.
“Your rents aren’t going to be increased,” Erickson told the handful of 550 residents in the crowd of roughly two dozen at the meeting.
The audience responded with hearty applause after both votes.
“Sometimes crisis makes wonderful intervention,” she added.