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KCCHA must sell properties to pay debt
PORT ORCHARD — The Kitsap County Consolidated Housing Authority (KCCHA) has been directed by the Kitsap County Commissioners to unload surplus holdings in order to meet its previous financial obligations.
“The Housing Authority will put several properties on the market with the proceeds used to pay down this debt,” County Administrator Nancy Buonanno Grennan said.
In a news release, the county announced the new strategy is part of “an aggressive plan to protect the county and its taxpayers. The workout strategy includes a direct oversight role by county leadership in the sale of Housing Authority property and, as part of an agreement reached today between the county and the Housing Authority, a guarantee that proceeds will be used to pay down the Housing Authority’s debt.”
The action includes 12 properties of varying sizes and types located throughout the county.
The sale will go toward an estimated $50 million debt.
All three commissioners expressed strong support for the action, which was taken at a special meeting on Monday.
The resolution was approved by the KCCHA board earlier that day.
The issue was pushed to the forefront by a Sept. 11 letter from North Kitsap Commissioner Steve Bauer to the KCCHA board concerning the Harborside Condominiums in Poulsbo.
Bauer warned, “We cannot afford to carry (the property) until the economy improves and the price increases (and) won’t have the financial reserves to undertake another highly speculative development.”
The move was motivated by the severity of the housing crisis, which underscored the theory that if the properties were sold several months ago they would have drawn a higher price than they are likely to earn today.
“The market has changed and their property has become less valuable,” said Port Orchard commercial real estate broker Richard Brown. “These decisions cost them as much as $2 million.”
Brown, who said he did not believe the county commissioners were aware of the situation prior to last month, said, “The Housing Authority has been operating without any oversight for a long time.”
Grennan disagreed, saying, “If we had a crystal ball and could have predicted the downturn in the economy, we would be in a better spot today.”
She said the commercial properties will still be able to draw a substantial amount, so the county — and by extension, the taxpayers — can recoup some of its investment.
The commissioners did not acknowledge a position put forth last week by the Kitsap County Association of Realtors, calling on the county to form a real estate board of advisors to assist KCCHA in the protection of its assets and the settlement of its multi-million dollar liabilities.
The group sent out a release which said, in part, “County taxpayers are at significant financial risk and the current crisis calls for sound management, transparency, and accountability by the professional staff and governing board.”
According to the resolution passed on Monday, the debt will be paid off as properties are sold.
An inventory of the properties and a schedule for the sale will be finalized by Oct. 31.