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County agency buys Island apartments for $3.6 million
The 35-year-old Island Crest Apartments in the 3000 block of Island Crest Way has been sold to the King County Housing Authority for $3,560,000. The sale closed on July 20. The 30-unit building went on the market in early June.
KCHA buys, develops and maintains housing for low and moderate income residents in King County.
As older apartments are being purchased and either refurbished or demolished, the inventory of affordable housing is diminished. KCHA’s goal is to obtain and preserve buildings such as Island Crest.
A letter delivered to tenants on the day the ownership transfer was complete said in part:
“KCHA was concerned that Island Crest would be lost as an important housing resource for renters on the Island.”
According to Tim Walter, director of acquistions for the the agency, KCHA is committed to the building and its tenants.
“We are a long term owner,” he said. “Our goal is to try to insure, to the extent that we can, that there is affordable housing available throughout the county.”
Affordability is measured by the level of rents in a particular community, he explained.
“An affordable apartment on Mercer Island is $1,100,” he said. Keeping this building will ensure that units at that level of rent will remain.
KCHA is an independent municipal corporation established under Washington state law. A five-member volunteer Board of Commissioners appointed by the King County Executive and approved by the Metropolitan King County Council governs KCHA.
The Authority receives no operating funds from the state, King County or the region’s suburban jurisdictions. Operating costs are covered by rents charged to tenants and direct support from the federal government.
No public money was used to purchase the property. The purchase was made through bank financing.
The agency is constantly on the look out for apartments like the Island Crest. They are focused on buildings such as Island Crest that may be attractive to investors to upgrade, then sell as condos when the market becomes better.
“We thought that if it was sold, there was a possibility it would go high-end, a new owner would come in and upgrade the units and push the rent to the max,” Walter explained.
Each purchase of a building must be approved by five person board of directors that includes Islander Richard Mitchell, an attorney with the Summit Law Group in Seattle. He is also a candidate for Pos. 6 on the King County Council.
“I’m particularly proud of KCHA’s ability to identify and seize this rare opportunity, said Mitchell. “There is a noticeable lack of affordable housing on the Eastside for working families and low income individuals as compared to other King County communities. KCHA’s acquisition of the Island Crest Apartments is intended to address this problem.
The building is one of the very few affordable rental apartment complexes on the Island, he noted.
“Historically, when rental housing is sold on the Island, the new purchasers invariably raise rents or convert the apartments to condominiums,” he said.
KCHA staff moved quickly to purchase the building. When the Island Crest property was listed “there was a crush of interest,” Walter said. There were 12 offers in three weeks
The agency had also tried to buy the nine-unit Mercer Park apartments which stand directly in front of the Island Crest, but lost out to another buyer. It sold for $1.3 million, also within a matter of weeks.
As the long-term financial structure of the acquisition has not been determined at this time, it is not clear whether the structure will involve public housing or project based Section 8 funding, or run as unsubsidized workforce housing, Mitchell explained. “But to be clear, existing residents will not be relocated as a result of KCHA’s acquisition. If there are new vacancies in the complex following the acquisition, they will be filled from KCHA’s waiting list, with preference given to eligible families who have a child in the Mercer Island School District.”
The agency plans to do some repairs and maintenance that are overdue at the building. They will replace or repair the roof as it was improperly installed last year. The letter to tenants explained that the new property manager will be going door to door to answer questions about the transition and to develop a list of needed upgrades and improvements.
Walter believes that on Mercer Island there have been 10 buildings over five years that have sold on on the Island that have been upgraded beyond affordability.