Inspection discovers long list of problems at 550 Madison Apartments

The new owner of the 550 Madison Apartments building will face a potentially hefty repair bill.

Housing Kitsap, the cash-strapped housing authority based in Silverdale, is looking to sell the 550 Madison Apartments — one of three buildings it owns on Bainbridge with low- and moderate-income rental units — to raise money so the agency can continue operations.

A potential sale of the apartment complex fell through last week, however, after Bainbridge developer Mike Burns retracted his $2 million offer for the property.

Burns came under harsh criticism on the island for his plans to purchase the property, which opponents claimed would reduce the already rare supply of affordable housing on the island.

Critics instead tried to convince the board of commissioners for Kitsap Housing to sell the 550 Madison Apartments to Housing Resources Bainbridge, a nonprofit that supplies housing to lower income families.

Housing commissioners agreed at their meeting last week to postpone any sale of the apartment complex for a month, in order to give Housing Resources Bainbridge and the city of Bainbridge Island more time to raise funds to match the offer previously tendered by Burns.

Burns completely withdrew his offer last week, though, and said he did not want to compete for the property against Housing Resources Bainbridge.

Burns owns vacant property on Madison Avenue next to the 550 Madison Apartments, and in a letter to commissioners, reminded the housing authority that he had approached Housing Kitsap in the past to explore ways of redeveloping the properties together, while keeping the same number of affordable units intact.

He also noted the 550 Madison Apartments was in disrepair and had reached its “life expectancy.”

A building inspection completed for the sale of the housing complex confirms just that.

According to a 42-page inspection report, prepared by Building Inspection Services, Inc. in February, the apartment complex is in poor shape and is of “marginal quality for age and type.”

“There are significant repair and maintenance items in need of attention. This is a marginally constructed building in poor condition with structural damage to the exterior due to improper trim application, age, and likely some lapses in maintenance,” the report notes.

Parts of the complex were found to contain mold, or host other problems.

“The extensive water damage and large areas of rot in walls has proceeded into the structure, and the condensation leakage into the structure at exhaust fans have effected the structure and will require some extensive repairs,” the report says.

One major problem is the plumbing system. Galvanized steel pipe was used for plumbing, which was phased out in most construction after 1960.

The inspector said the use of galvanized pipe was “very unusual” in a building of the complex’s age — the 13-unit apartment complex was built in 1972 — and is considered to be at a “high probability of failure,” according to the report.

The “popcorn” ceilings in all of the apartment units also contain asbestos.

The driveway and parking areas all need significant work, according to the report, and asphalt is cracking and sunken in multiple areas. Tree roots are also pushing up the building’s walkways and sidewalks, and an examination underneath the structure found “significant flooding.”

“It smells like septage to some extent, which may be just due to long-term standing water in this rodent-fouled area,” the report says.

Rodents have also gotten into the complex’s insulation under the building.

“Complete cleanup is needed, sanitizing the area, and blocking access points. This also significantly effects indoor air quality,” the report states.

Repairs to the apartment complex may cost as much as starting a new building from scratch, the report says.

“Along with the old, obsolete galvanized plumbing, asbestos concerns with the sheet vinyl flooring areas and the popcorn ceilings, number of loose and worn outlets, flooding underneath the building, the rodent fouling, some mold in the attic (though that is minimal overall, considering things otherwise), and areas of rot noted in decks, new membranes needed for decks, walkways, etc., damage to concrete and asphalt walkways and drives, there is a lot of work needed here,” the report says.

“And so, taking this all apart and trying to rebuild and reconstruct and doing remediation of hazardous materials, etc. will be a significant expense to a marginally-constructed building. This will likely end up costing as much as building a new building of similar size, thus eliminating all these caveats that would remain to some degree with reconstruction.”

Housing Kitsap has previously said maintenance has been deferred for some time at the 550 Madison Apartments.

The agency still owes $325,000 on the property, but restrictions that require the complex to remain as a low-income rental property expire July 21.

A total of 13 offers were submitted on the property, which includes an earlier offer of $1.5 million for the apartment complex that was submitted by Housing Resources Bainbridge.

According to a list of offers made on the property, only one of 13 offers was less than the asking price of $1.2 million.

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