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Debt remains after county sale
An agreement to sell debt-laden Silverdale properties owned by Housing Kitsap was recently reached with a private buyer, however the $2.1 million sale price would still leave the housing authority millions of dollars in debt.
The properties, located in Old Town Silverdale, include a parking lot near Linder Field which sold for $200,000 and a Bayshore Drive building that once housed the Kitsap Consolidated Housing Authority, sold for $1.9 million.
Sale of the properties are pending inspections and restructuring of boundary lines, but county officials said much of that work has already been finished and should be completed by August.
The building and lot have been among properties for sale for three years. Any money garnered from the Silverdale transaction would be required to go to pay off debts totaling $3.3 million owed to Key Bank by the housing authority on the building.
The $3.3 million is part of a larger debt owed by Housing Kitsap that in 2005 amounted to $40.5 million and involved loans involving multiple projects including the Harborside Condominium Project in Bremerton.
To keep the financially faltering agency from defaulting on the loans, the county took out a $40.5 million loan in 2005. As a result of that bailout, the county also assumed responsibility to sell the agency’s property portfolio, which include the Silverdale properties, properties in Poulsbo and Bainbridge Island and properties in the Harborside Condominium Project.
Tony Caldwell, Executive Director of Housing Kitsap, said if the sale of the property in Silverdale is finalized, the housing authority would still owe about $18.5 million of the debt with about $1.1 million still being owed to Key Bank on the property.
Kitsap County has been selling properties involved in the project to pay off the debt, but it is estimated that there will be $10 million shortfall between the sale and the initial cost of the properties.
Although the housing authority is funded in part by money from federal grants, Caldwell said the shortfall will not come out of state or local taxes.
“It is still the agency’s debt and we will still pay it,” he said. “The remainder would have to come from operations of the housing authority. Like any other business we have to figure out how to pay our debts.”
Caldwell said the debt stemmed from deals brokered during a prior housing authority administration, and his administration was focused on balancing the agency’s budget with the least amount of impact to those it served.
“All I know is what we are trying to do to get back on mission,” he said. “And this is part of that. We will not allow it to impact the pricing of our low incoming housing.”
Kitsap County Commissioner Robert Gelder said the sale of the properties represented a sizable step in that direction.
“This sale represents one of the largest transactions in the past several years that will help pay down Housing Kitsap debt,” he said.
Gelder said sales of other properties involved in the debt also continue to lower money owed by the housing authority.
“Sales of the Harborside Condominiums continue at a good pace with less than 10 years remaining on the market,” he said. “All the work over the past few years to address the long term debt has allowed Housing Kitsap to focus on its key mission of affordable housing throughout the County.”
Bruce Harlow, who signed the agreement with the county to buy the property, said he plans to lease the properties to tenants once the deal is complete.
He said he was cautiously optimistic about the sale and, if finalized, he would seek tenants who would be a positive presence in the community.
“You’re always taking a risk when you buy property,” Harlow said. “But, I am an optimist, and I feel there is a great future for Silverdale and Kitsap County.”