Affordable homeownership project proposed on city-owned land in Bellingham
An unused plot of city-owned land near downtown Bellingham could be the site of an affordable homeownership project being proposed as a way to address local housing concerns and bridge the affordability gap.
A Bellingham-based company, Madrona Community Development, sent a memo to the city in July detailing its proposal to redevelop the public land on the corner of C Street and Halleck Street across from the Municipal Court in the Lettered Streets Neighborhood.
“The basic idea is the reuse of underutilized, publicly-owned property taking into account what the community needs and what the neighborhood needs but not just sitting on property that could be doing better, doing more, doing good,” Madrona Managing Director Paul Schissler said.
The project would include permanently affordable apartment units available for purchase on the upper levels of the development. The street level of the development would feature non-residential, neighborhood-oriented space.
The non-residential space could include things like public office space or childcare classrooms — something that would benefit the neighborhood and larger community, according to Schissler.
“It would look like other apartment buildings that are being built now except this one would be resident-owned,” Schissler said.
Homeownership affordability could be created by operating the development as a limited equity cooperative (LEC), Schissler told The Bellingham Herald. That is a model in which residents purchase a share in the development, rather than an individual unit, and commit to resell their share at a price determined by a formula. This maintains affordability at purchase time and over the long term.
Government financial assistance for development often helps create initial affordability. Some limited equity cooperatives allow little or no build-up of equity by homeowners, while others adopt a shared equity approach, balancing long-term affordability and individual wealth creation.
LECs are frequently found in multifamily buildings in urban areas.
In a statement to The Herald, Mayor Seth Fleetwood said he received the proposal letter from Madrona and was open to exploring the idea as it is consistent with the city’s goal to actively pursue creative ways to increase affordable housing in the community.
“The city has multiple needs in the realm of master facility planning. Consideration of this project would need to be in the context of a broader analysis of city needs,” Fleetwood said in the statement. “In order for the City to approve something of this nature, it would require us to complete a master plan for the city-owned lots in that area to identify how this proposal would fit into that mix.”
It’s too early to know how many units would be available in the development or at exactly what cost. But there is a demand for affordable homeownership opportunities locally as home prices continue to climb at a much higher rate than incomes. A large segment of the workforce can no longer afford to buy a market-rate home and is also struggling to find affordable places to rent.
“Paying that monthly — a significant amount of money every month — that same amount could be going to paying the co-op’s operating expenses instead of the absentee owner who is motivated by profitability and capital gains,” Schissler said.
People in Bellingham are earning more, but not enough to keep up with the increased cost of housing. As home and rent prices continue to escalate dramatically, many people are paying more than they can afford for housing.
The median home price has increased 52% in the last five years while the median income has increased just 18% in that same amount of time, according to the city of Bellingham’s Consolidated Housing Plan.
At least 24% of homeowners in the city are considered cost-burdened.
By 2044, Whatcom County is estimated to need almost 35,000 new housing units to meet growth demand. About 22,000 of those units, more than 60%, need to be affordable, according to Blake Lyon, Bellingham’s director of planning & community development. In order to be considered affordable, housing costs can’t exceed 30% of a family’s gross income and must serve families making 80% or less of the area median income, according to the city of Bellingham.
Bellingham makes up about 48% of the housing production in the county. So the city will need to produce almost 17,000 total housing units to help meet the goal. More than 10,000 of those need to be affordable. To stay on track, the city needs to build more than 500 affordable housing units every year.
Washington needs to develop more than one million homes over the next two decades to keep up with population growth, according to the Washington State Department of Commerce. More than half of them need to be affordable for residents at the lowest income levels.
This story was originally published August 18, 2023 at 9:55 AM.
