City bars new residents at tiny home camp during HomesNOW! misconduct investigation

Bellingham’s planning department has put things on hold with HomesNOW! in light of allegations that managing members of the nonprofit misappropriated funds.

The organization must update its policies and procedures to prevent future misconduct, repopulate its board and the criminal investigation must end before discussions can take place, according to Rick Sepler, Planning and Community Development director for Bellingham. In the meantime, the city continues to work closely with the nonprofit to support the successful operation of Unity Village consistent with the requirements of its permit, Sepler said in an interview with The Bellingham Herald.

“Things are in general on hold at this point pending the outcome of both matters. … Since something is pending, we’ll wait until it’s over before we decide to proceed,” Sepler said.

The Bellingham Police Department announced Sept. 30 that it has opened an investigation into specific managing members of HomesNOW! for misappropriating funds. Doug Gustafson, who is a co-founder of HomesNOW!, said he came forward with the allegations after noticing discrepancies with the organization’s funds. Gustafson said money meant for the organization was being spent at a casino and on marijuana.

Three managing members have been removed from the nonprofit’s board. The Bellingham Herald is not naming the board members referenced in the allegations because they have not been arrested or charged with a crime.

HomesNOW! operates Unity Village, which is an encampment with 22 tiny homes for homeless people. The encampment sits on a city-owned parking lot at 210 McKenzie Ave., near the Post Point Water Treatment Plant in the Fairhaven neighborhood, and is permitted to operate through April 2020.

The encampments were allowed under rules the City Council adopted in October 2018. Tiny home encampments are permitted to operate for up to two years at a specific location, Sepler said.

HomesNOW! co-founder Doug Gustafson discusses the permitting process for the tiny home community Unity Village in Bellingham on Tuesday. Lacey Young The Bellingham Herald

Additional locations

HomesNOW! had requested the city, Whatcom County and the Port of Bellingham look into additional properties that may accommodate tiny home encampments. But due to the criminal investigation, the city isn’t moving forward with that request, Sepler said. He said the focus for HomesNOW! needs to be on filling their board and adopting policies and procedures to prevent future abuses.

“It is premature to consider any subsequent locations — either on public or private sites — until the investigation is completed and appropriate procedures/policies are implemented,” Sepler said in an email sent to City Council members Friday morning. “The recent events that led to the investigation highlight the need for organizational capacity and adoption of basic business practices by the operators.”

Sepler said the city’s greatest concern is the welfare of Unity Village residents.

“We will continue to work actively with the current board to ensure that the residents’ safety is provided and that the organization can develop those policies needed to be able to continue their mission. That’s the bottom line,” Sepler said in an interview with The Herald.

In a separate email sent Thursday to the council, Sepler said the city and HomesNOW! agreed that the number of residents at Unity Village would remain at 14 until both the criminal investigation ends and new policies and procedures are adopted. If any of the residents leave for permanent housing, they won’t be replaced, Sepler said. The permit allows for up to 28 people to be housed.

More than a dozen of 22 tiny homes were occupied at HomesNOW!’s Unity Village Tuesday. Lacey Young The Bellingham Herald

No permit extension

Gustafson, one of the co-founders of HomesNOW!, said he previously was considering asking the city for an extension on its permit, but the city has told him that won’t be possible. The nonprofit is now pursuing other options, Gustafson said.

In HomesNOW!’s temporary encampment permit, it states that the permit can’t be renewed or extended at its current location past the April 30, 2020.

“A key component of the successful approval process for this project was the assurance to neighbors that the project end-date was firm and could not be extended. This fits with the city’s approach to fairly distribute temporary encampments across the community such that no neighborhood would be the site of a disproportionate number of these facilities,” Sepler said in the Friday email to the city council.

Sepler said every resident of Unity Village was informed of the limitation and was required to sign an acknowledgment stating they were aware the permit expires next spring. Sepler said his office is required to review any application for temporary shelters that come in, and that HomesNOW! is entitled to apply. He said his office has no pending applications from the nonprofit at this time.

Gustafson said the organization will try to find private land, or a donor with space large enough for the tiny homes. If they can’t, Gustafson said the Lummi Nation has agreed to provide a spot for the encampment.

“I don’t think it diminishes our chances of trying to relocate, but what it does diminish is working with the city,” Gustafson said of the allegations. “Basically, we’re looking for other options, and I think maybe we have to look outside the city for trying to get that. I hope not though.”

Gustafson said there’s a lot to worry about regarding the logistics of moving the tiny home encampment, and said the organization is actively seeking options for how to do that.

He encouraged the public to come to the encampment to see it for themselves.

“I want the community to know that this model is working in general and residents feel like they’re part of a community, and we want it to continue and want it to increase,” Gustafson said. “Come down and visit Unity Village and see for yourself.”

Reporter Denver Pratt joined The Bellingham Herald in 2017 and covers courts and criminal and social justice. She has worked in Montana, Florida and Virginia.