Affordable Rural Housing: OPAL’s April’s Grove, San Juan Islands

Affordable rural housing — providing it is a challenge across North America.

An organization located just south of BC’s Gulf Islands has shown it’s a challenge that can be met.

From a small group of idealistic volunteers with a vision of sustaining a healthy community on Washington State’s Orcas Island (pop. 4,500), OPAL (‘Of People and Land’) Community Land Trust has grown into a thriving island resource. Overcoming fundraising obstacles and regulatory roadblocks, and persevering through several “near-death experiences,” as one founder called them, the organization today is responsible for housing 132 Orcas families.

OPAL projects range from clustered homes in small neighbourhoods to scattered individual properties, an apartment complex, a small apartment/office development, and most recently, the April’s Grove rental accommodation project. Whole neighbourhoods have been built from scratch, existing older homes have been renovated and sometimes moved, and modular, factory-built homes have been used to offset rising construction costs.

Since 1989 OPAL has acquired in-depth experience in developing different types of affordable housing, successfully adapted to the island’s needs and changing economic climate, and masterfully managed the challenges of each new project.

In August 2017, OPAL purchased nearly four acres on North Beach Road – across from Children’s House and north of the orchard – in order to build approximately 45 affordable rental townhomes.

The plan is that the April’s Grove property will be developed over the next several years. Jim Nelson, the prior owner, said “Betsy and I are happy that this property will be serving a community purpose. There is a real need for more affordable rental housing on Orcas Island.” The Nelsons have retained ownership of the adjoining orchard, which will remain as open space. When developed, a stormwater drainage tank will be located under the orchard.

The lack of affordable rental housing for low-income rural residents in British Columbia is as daunting a challenge as it is south of the border. As the BC government moves to address the province’s affordable housing situation, it is useful to examine the Orcas Island experience.

The Need in San Juan County, Washington

The 2015 Washington State Housing Needs Assessment reported there are houses with affordable rents for only 15% of renters with extremely low-incomes, or 26% of those with very low-incomes. Over half of San Juan County renters (54%) are unable to afford the fair market rent for a two-bedroom unit.

There’s a similar troubling trend in terms of homelessness in San Juan County. A San Juan County Housing Bank Commission Report in October 2015 pointed to a more than 100% increase in the un-sheltered homeless count between 2012 and 2015 from 32 to 74 individuals. Similarly, the homeless living with family and friends has increased from 27 to 60 in the same time period.

The April’s Grove Design Team

OPAL’s Board of Trustees and staff have selected the following design team:

• Architects: Bill Singer , Environmental Works Community Design Center, Seattle
• Landscape Architect: John Barker, Barker Landscape Architects, Seattle
• Civil Engineer: Gregg Bronn, Hart Pacific Engineering, Eastsound
• Surveyor: Curt Johnson, Islands Surveying, Eastsound
• Arborist: Carson Sprenger, Rainshadow Consulting, Eastsound
• General Contractor: Dawson Construction, Bellingham.

The building designs and site plan for a 30-home plan are available here: ‘ Aprils’ Grove Renderings and Site Plan.

OPAL’s timeline for the project:

• 2015: Purchase and Sale Agreement for property, held community design meetings and completed the preliminary design.
• 2016: Supporters donated $750,000 in support of the project. The next steps in funding were a grant from the Washington State Housing Trust Fund and an allocation from the Low Income Housing Tax Credit program.
• 2017: Purchased the property.
• 2018: If funding is awarded, proceed to final design and construction.

In a recent conversation with OPAL Executive Director Lisa Byers, it emerged that the Washington legislature has delayed funding for capital projects. As she and her colleagues follow up on various possible paths toward securing needed funding for the April’s Grove development, she noted that, “community support here is compelling state politicians to take a fresh look at the OPAL proposal.”

Frequently Asked Questions

Why is there so much less rental housing on Orcas now than in earlier years?

The market is changing. In the past, more cabins and houses were rented year-round. We believe that the proliferation of online rental accommodation companies, such as Airbnb and VRBO (vacation rental by owner) may be a factor. As one of the local young people searching for suitable housing said, “The days of the funky cabin in the woods are basically over.”

Who are the people who need rental housing? 

Islanders who need affordable rentals are people who work – mostly in public service or the retail service trades. They live here now, but are constantly having to move because their rental is sold or turned into a transient rental. There has also been an increase in the population of people who are homeless. And adults with disabilities – who could live on their own with support services – need more options than are available on the island. Finally, larger employers, such as the School District and OPALCO, want reliable year-round rentals for new employees. Without access to housing, they are losing qualified prospective employees, who choose not to accept positions when offered.

How many people would be housed?

There will be 45 residences ranging in size from studios (384 s.f.) to 3 bedrooms (1,280 s.f.). OPAL estimates that between 100 and 140 people will live in the new neighbourhood.

Will this compete with other rental housing being developed by private developers?

The need for year-round rental housing is so deep that even OPAL’s efforts will not solve it. A number of other projects are in the planning stages for the region. Some will be available for year-round rental and others will be for seasonal or transient accommodations. The houses created by OPAL will always be available for year-round tenancy and will always be affordable for people with low to moderate incomes.

How is this different from what private developers are doing? 

The rents in OPAL’s development will be significantly lower than what is possible for private developers. Rents will range from $300 to $1400 and average about $600 per month. This is possible because the project will have a mortgage of only about $1 million, even though it will cost $12 million to build. A private developer does not have access to the grants and donations that help to reduce debt service and thereby keep rents affordable. Put another way, private developers can’t make a project like this “pencil out.’’

Where will the money come from?

The funding plan has four elements: (1) donations and 3-year pledges from islanders and other supporters; (2) a grant from the State Housing Trust Fund; (3) Low Income Housing Tax Credits from the Washington State Housing Finance Commission; and (4) a mortgage small enough to be repaid with rental income. Each successive source of funding relies on the previous one. OPAL needed local support to help make the application to the Housing Trust Fund competitive, and wouldn’t get the Tax Credits without the Housing Trust Fund grant.

Why does it cost so much?

Construction on Orcas Island is more expensive than on the mainland, but even on the mainland, construction costs have risen dramatically in the past couple of years. Add to that the cost of complying with permitting regulations, and also the legal and transaction costs to abide by the requirements of grantors and the IRS standards for tax credit investors. Two other factors add cost: (1) OPAL strives to build homes/apartments that are healthy and durable, which means spending a bit more up-front (but saving money on maintenance later); and (2) The plans include a “commons building,” housing both the laundry and a gathering room where tenants may have larger gatherings or take classes.

The land has a beautiful stand of trees.  What’s their future?  

OPAL has hired Carson Sprenger, a certified arborist, to identify the large and beautiful trees that have the greatest likelihood of living at least another 50 years. The site plan has been designed to preserve these trees. OPAL also plans to maintain a screening of trees along North Beach Road. That being said, there are still a significant number of trees that will need to come down to make room for buildings. OPAL hopes to make use of some of the wood harvested from the property to make benches, and possibly some elements on the buildings.

Were there other choices for land that didn’t involve taking down so many trees?

OPAL looked at several other plots of land, but none met their needs. This location is ideal from a great many perspectives. It is close to all the island’s schools; it is walking distance to all Eastsound services so it works for seniors as well as for families with children; it is within the Eastsound “urban growth area,” which is designated for higher density.

Will the rentals be open to anyone who applies, or are there restrictions on who will be eligible to live there?

There will be income restrictions for 41 of the 45 residences. That is part of the bargain OPAL makes when using State and Federal funds. The income levels vary by household size. For the 41 residences that are restricted, the average annual income will be around $30,000 and it will range from a low for a single person of below $14,000 to a high for a family of 4 of about $54,000. Four of the residences will not be restricted by income, and are designed to serve the needs of newly hired employees for some of the island’s larger employers, such as the School District and OPALCO.

How has OPAL managed to be so successful over the years?

The answers lie in both the tenacity  dedication of OPAL’s early organizers, and the organization’s decision to hire staff with outstanding community housing skills and experience.

Lisa Byers has been OPAL’s Executive Director since January 1996 — she’s OPAL’s  only full-time staff person. Prior to working for OPAL, she worked as Land Steward for the San Juan County Land Bank, and for 10 years as a land and property manager for the Society for the Preservation of New England Antiquities (now Historic New England), based in Boston, Massachusetts. Lisa has an A.B. from Vassar College and an M.B.A. in public and nonprofit management from Boston University. In 2006 she was elected to serve as the first president of the National Community Land Trust Network and was awarded the Friend of Housing Award from the Washington State Housing Finance Commission.

Summary

Over the decades, OPAL has shown it is possible for a group of determined rural residents to make a significant impact on the affordable housing needs of small, isolated communities. Over times, island residents have come to understand that OPAL fills a crucial community housing need — while outside the traditional commercial real estate market, its projects have come to be seen as complementary rather than competitive, providing working residents unable to qualify for a commercial mortgage or rental agreement with an opportunity to put a solid roof over their heads — and in some cases, build equity that eventually allows them to move into a larger, traditionally financed home.

While the regulatory and funding landscape in Washington State is quite different than that in BC, there are nonetheless lessons to be learned — and confidence gained — from the OPAL experience.

For more information on community land trusts in the San Juan Islands, see Creating Community: Providing Affordable Housing on the San Juan Islands, a joint SIBAC/Real Estate Foundation of British Columbia report.