Cherry Street Project Costs Soar In Bayside Housing Proposal

Cherry Street Project Costs Soar In Bayside Housing Proposal

by | Jun 23, 2021 | General

Bayside Housing wants $1.8 million from Jefferson County to complete and expand the Cherry Street Project. $1.6 million more than has already been spent would go into finishing the 70-year old Carmel Building, which has been sitting vacant and open to the elements for over four years. The total final cost of that building alone would exceed $3 million. In addition, Bayside wants $300,000 from the City of Port Townsend, and $500,000 from an unspecified block grant.

Bayside proposes to contribute $200,000 of its own money, for a total cost of $2.8 million for its new vision for the 1.5 acre property. Bayside’s proposal was submitted with supporting documents to the BOCC for its 6/21/21 meeting, and may be read at pages 457-462 of the correspondence file. Here is the cover letter:

The Carmel House would provide 12 bedrooms through 4 two bedroom units and four small one bedroom units. The total square footage of the building, as reported by the Port Townsend and Jefferson County Leader, is about 5,000 square feet. The Port Townsend Free Press previously reported that this “affordable” housing project was already one of the most expensive developments on the Quimper Peninsula. Under Bayside’s proposal, the cost would exceed $600 per square foot.

Bayside’s estimate of what it would take to rehab the Carmel House is $600,000 higher than the estimate provided by Homeward Bound Community Land Trust to the Port Townsend City Council in November 2019, when it said at least another $1 million was needed. Homeward Bound had been given the land and building in 2017 and a generous loan from the city. It defaulted in July 2020 and the city reclaimed the project. City taxpayers remain on the hook for the more than $1.4 million in principal and interest on the bond the city floated to raise the funds. Public records show that the loan to Homeward Bound contained a hidden interest subsidy of more than $400,000. Because Homeward Bound never paid a cent of its debt, taxpayers have been paying down the full indebtedness since 2018.

The project would be transferred free of any debt to Bayside. With the additional $1.6 million of county money going into the building plus the $1.4 million city-absorbed indebtedness factored in, the total cost of rehabbing the old building would come to more than $3 million. The city has already sunk over $500,000 in the building to bring it here from Victoria, B.C. and to put it on a foundation. That amount would be included in the $3 million final cost for the Carmel Building.

These figures do not include the cost of the land, valued in 2017 at $600,000, or other miscellaneous expenditures by the city for utility and project management work. In an October 2, 2020, report we calculated the cost of the project as of that date at $2,329,961. That was still $1 million short of the Homeward Bound’s estimated cost to complete, and is $1.6 million short of Bayside’s latest estimate of cost to completion. Our figure included the $600,000 value of land given by the city to Homeward Bound, which would again be donated, this time to Bayside Housing.

In addition to rehabbing the Carmel House, Bayside proposes to build two six room “boarding houses” on the property, at a combined cost of $850,000. That is the same number of rooms, newly constructed, as would be available in the old Carmel House, but for $2.15 million less. 

Bayside is not proposing a contract, under which it would be responsible for completion of the building by a date certain and built to plans and standards approved by the county. It is simply asking for millions of dollars with the promise that it will provide “affordable” housing. Its contractor estimates that if the money is provided promptly the proposed project would be completed within the first half of 2022. Bayside’s letter does not identify the contractor or reveal whether it has gone through any sort of competitive bidding process.

Bayside submitted letters of support from Dove House, Jefferson Community Foundation and Oxford House, an international program of sober living communities.  The organizations did not commit to any financial support.

At present, the land and the building are owned by the City of Port Townsend. City Council directed the City Manager in September 2020 to negotiate a handover to Bayside Housing of the Cherry Street Project. The City Manager ignored a $1 million cash offer from Keith and Jean Marzan of Port Townsend to bail the city out of the failed project, with the pledge that they would construct affordable housing at their own expense on the site. The City Manager told them he had been directed to deal exclusively with Bayside.

The original estimated cost of rehabbing the Carmel House with the addition of the four basement apartments was under $400,000, with a projected completion date in September or October 2017. That estimate and schedule were known to have been “bogus” by Homeward Bound’s leadership and city officials. See also, “Multimillion Dollar Fraud on Taxpayers: The Cherry Street Project Unmasked,” PTFP, 7/27/20.

In a May 28, 2018 article we identified a 36 bedroom Port Townsend apartment building, built in the 1990s, on the market for $1.5 million. That now looks like an even better bargain. But instead of securing that property, or pursuing less costly approaches, such as manufactured housing, the city kept sinking more money into the old Carmel Building structure.

The COVID Funds: The County’s, Not the City’s

Bayside is seeking $1.8 million of the county’s “COVID funds.” The county received $6.3 million under the American Rescue Plan Act. These funds are restricted to being spent on five categories of projects: (1) public health, including COVID-19 mitigation efforts, behavioral health care, and public health and safety staff; (2) negative economic impacts caused by the pandemic to groups including workers, households, industries and the public sector; (3) to replace public sector revenue lost to the pandemic; (4) premium pay to support essential workers whose health is at risk from exposure in critical infrastructure areas; and (5) investment in infrastructure such as water, sewer, wastewater, storm water facilities, and broadband access and infrastructure.

The City of Port Townsend has not offered to spend any of its $2.744 million in ARPA funds on its Cherry Street Project. The City Manager has indicated that at least half the funds will be used to make up for lost municipal revenue. Bayside’s proposal does not seek any of the City’s “COVID Funds.”

The $1.8 million requested by Bayside would be close to a third of the county’s ARPA funds. Jefferson County would be bailing the city out of its troubled Cherry Street Project, after the city had already rejected a $1 million cash offer to do the same.

Red Flags

There are certainly legal questions about whether the county can simply give $1.8 million to a private entity for a construction project on land it does not own. Where are the legally binding guarantees, the enforcement mechanisms, the claw-back provisions, the security for county taxpayers? If Bayside fails to perform, what recourse is there? How is the county assured it is getting the lowest price from a qualified contractor without a request for proposal and a competitive bidding process?

Bayside’s executive director, Gary Keister, is a convicted felon, who served time in federal prison for a complex scheme involving bank fraud, conspiracy and money laundering. After release from prison he was involved with an illegal slot machine business that drew raids and enforcement action from Texas authorities and the Security and Exchange Commission. Port Townsend Free Press was contacted by two former Bayside employees who raised ethical concerns about Bayside’s operations. One former employee has filed a complaint with the State Attorney General about Bayside’s business practices and its conflict of interest with another business owned and managed by Kiester. We wrote about those issues here, here and here.

After those articles were published, we received from a man identifying himself as a former business associate of Keister a list of more than 60 lawsuits brought by or against Keister personally, or by or against corporations he owned or managed or in which he was an officer or director. The list was the product of a search of records of nineteen Washington county court systems conducted in 2013. Mr. Keister and/or those corporations were a defendant or third-party defendant in 36 of the listed cases, plaintiff in four. In the remainder of the listed cases he or his controlled or affiliated corporations were identified as a subject of judgment, garnishment, abstract of judgment or tax foreclosure.

Preliminary Talks, Conflict of Interest

Bayside’s letter refers to previous discussions with Kate Dean, Chair of the Board of County Commissioners. Dean has been a member of the Board of Directors of Homeward Bound since 2017, during the time that organization was the owner and developer of the Cherry Street Project. She was a Homeward Bound director when it defaulted on the city’s loan and remains a director to this day. Details of the discussions between Bayside and Dean were not disclosed. In a previous Port Townsend Free Press article, Keister was quoted as saying that Bayside was being pressured by Homeward Bound to get involved in the failed Cherry Street Project.

At the same time that Bayside is seeking nearly a third of the county’s ARPA money, other nonprofits and critical needs are competing for the same funds. Dean will be one of three commissioners deciding how to allocate those significant, but nonetheless limited resources.

 

 

 

 

Eviction Moratorium and New Regulations Reducing the Supply of Rental Properties

Eviction Moratorium and New Regulations Reducing the Supply of Rental Properties

by | Jun 16, 2021 | General

Governor Inslee’s eviction moratorium is having the unintended consequence of keeping rentals off the market. That’s according to Christina Nelson, property manager for Townsend Bay Property Management, Inc., which manages over 175 rental properties–“doors”–in Jefferson County. It is the county’s largest property manager.

“Houses are sitting vacant,” says Nelson, “for fear of squatters,” occupants who do not pay rent. “Owners are also letting ADU’s go unrented because of the moratorium.” Owners fear that if they accept a tenant who then exploits the moratorium and refuses to pay rent, “you’re stuck. There’s no protection for landlords.”

For some landlords, their rental properties “are what they depend on for their own needs, to pay their own mortgage or maintain their own home.” Some landlords live off their rental income. Under the moratorium, they face losing their own homes or falling behind on mortgage payments and taxes.

Will there be a nightmare of evictions when the moratorium ends? Some Jefferson County “advocates for the unsheltered” in comments to the Jefferson County Board of County Commissioners have predicted 1,500 evictions and demanded an extension of the moratorium.

Nelson says that of the properties they manage, only one or two tenants have not been paying and possibly face eviction. One of them, after refusing to pay rent during the moratorium, showed up in the office and paid $1,200 of past due rent and promised to bring a similar amount next week as he pays off a $4,600 balance.

“I expect to see more properties becoming available once the moratorium ends,” says Nelson. Right now Townsend Bay has zero vacancies, “and as soon as one opens up, we rent it.” With landlords no longer fearing the moratorium and its risks, properties that have been kept off the market will return and there may be additional “doors” made available to tenants.

Why have so few of Townsend Bay’s tenants not fallen behind on rent, despite the Governor’s shutdowns and the impact of COVID fears on the economy? “Nobody has had a reason to not make their rent,” says Nelson. “We have wonderful resources in Jefferson County to help those in need. And we have job openings everywhere. I do not accept unemployment as a source of income [in the application process]. There’s no reason to be on unemployment when there are jobs everywhere.”

One more thing is necessary to bring more rental properties on the market, according Nelson: “As long as we don’t keep getting laws that favor tenants so much over landlords.” For instance, measures passed by Seattle City Council have resulted in a huge loss of rental properties, especially single homes. Regulatory risk and the burdens imposed on owners have made selling into a rising market an alternative too attractive to pass up. Windermere Property Management/Lori Grill Associates in Seattle saw a 48% increase in rental clients selling their properties from 2019 to 2020. A poll of clients taken in January 2020  showed that 35% of property owners were looking to sell because of new regulations, and the fear that more will follow.

Seattle regulations passed by City Council include a ban on evictions during the school year if the household includes a child or parent–or if anyone in the dwelling works on school property, including a contractor. Seattle City Council has also required mandatory lease renewal.

The Washington Legislature recently enacted its own set of landlord-tenant laws that make the business of renting, particularly for mom-and-pop landlords who rent out one or two properties, more burdensome, risky and costly. Tenants who did not pay rent during the moratorium must be offered a repayment plan that requires no more than 1/3 of past due monthly rent to be paid during each month going forward. The result is that it could takes years to make up all the past due rent. Low income tenants get a lawyer at taxpayer expense–landlords either face the lawyer themselves or pay thousands to get their own legal representation to slug it out in court. Landlords are prohibited from evicting tenants except for one of 17 specified reasons and face legal liability if their reasoning is challenged. Already, landlords are prohibited from using a felony conviction–other than a sex offense–as a reason for denying a rental, and must research the facts of the offense and be able to provide a reason why the crime should disqualify the renter. They again face legal liability, and a taxpayer-funded lawyer, for turning down a convicted felon and renting instead to someone with a lifetime of lawfulness.

As these new regulations have been considered and passed by the Legislature, Nelson has seen the number of rental properties under management decline from over 200, to its current level, a loss of about 12.5%.

New Wrinkle in Jefferson County’s “Fourth” COVID Death

New Wrinkle in Jefferson County’s “Fourth” COVID Death

by | Jun 2, 2021 | General

A Jefferson County woman in her mid-60s tragically died in Seattle “after a prolonged hospitalization for respiratory failure due to COVID pneumonia” contracted out-of-state the week following her second experimental gene therapy (“vaccine”) shot. The woman also suffered from “serious underlying health conditions including a lymphatic malignancy that required ongoing chemotherapy and immunosuppressing medications,” according to Jefferson County Public Health Officer Dr. Tom Locke.

Despite the proximity to her vaccine shot, her multiple serious comorbidities, and all events surrounding her demise having occurred out-of-county, this sad passing is being headlined as “the fourth to die from COVID-19 in Jefferson County”. Like the previous three such deaths, there is serious room for doubt given special CDC instructions “that COVID-19 be recorded as the primary cause of death even if the decedent had other chronic comorbidities”.

Contrary to recent undercounting claims by debunked forecasters, Jefferson County’s own experience with doubtful COVID deaths is a microcosm of national overcounting concerns. The CDC data shows 95% of deaths “with” COVID had an average of 3 extra comorbidities and contributing causes (nearly half having flu or pneumonia), despite only COVID being blamed.

That’s even assuming most of these deaths ever had COVID in the first place, which is uncertain given 90% false positives seen with PCR testing using typical 40+ Cycle Thresholds. (Note Jefferson County uses an absurdly-high 45 Ct.)

The new wrinkle in this fourth-claimed county death is its close association with a second vaccination less than a week before her infection. The CDC received 10,262 reports of such vaccine breakthroughs through April, which it considers “a substantial undercount”.

Beyond breakthroughs, a May 20 Harvard study found SARS-CoV-2 spike proteins circulating throughout body plasma for 2 weeks immediately following mRNA vaccination. Virginia researchers “found that exposure to the SARS-CoV-2 spike protein alone was enough to induce COVID-19-like symptoms including severe inflammation of the lungs”, eerily similar to the COVID pneumonia blamed for this fourth county death.

Such a process might explain some of the many reports of high-risk elderly dying after vaccination, such as 14 nursing home patients “dropping like flies”, and 32 dying in an a New York nursing home, and  23 frail elderly patients dying in Norway shortly after receiving vaccine.

Dr. Locke acknowledges that “most vaccinations, including the new COVID vaccines, are ineffective in those who are profoundly immunosuppressed.” Moreover, according to Peter Doshi, associate editor of the British Medical Journal, since the immunocompromised and frail elderly were not “enrolled into vaccine trials in sufficient numbers to determine whether case numbers are reduced in this group, there can be little basis for assuming any benefit”.

Given the 4,863 VAERS-reported deaths associated with COVID vaccines through May 24, and given they are “ineffective” and have no demonstrated benefit for profoundly immunosuppressed patients such as the decedent, it’s strange that Dr. Locke says “she was appropriately vaccinated”.

Also not included in the vaccine trials were children and adolescents, yet they are likewise being pushed toward risky vaccinations from which they can expect negligible benefit. Lancet shows the Number Needed to Vaccinate to prevent one COVID case is between 76 and 117 for the various vaccines, while the CDC estimates Infection Fatality Ratio of 0.002% under age 18. That means it takes 5 million vaccine doses to save a single young life, while risking many more young deaths in the process – a recklessly dangerous gamble.

Health officials promoting these vaccines in schools need to take care lest the next COVID-related death in Jefferson County might be a child dying days after receiving the vaccine.