Spokane Housing Authority sells its portfolio of homes to raise funds for affordable housing

There’s a four-bedroom, two-bath home in the Minnehaha neighborhood for sale at a price – $215,000 – that’s hard to find in Spokane’s increasingly tight housing market.

The sale is already pending, but about 45 similar houses in a similar price range should be coming on the market soon and about 25 have already sold, all from the same unlikely seller: the Spokane Housing Authority.

While it may seem counterintuitive, Brian Jennings, housing development director for the Authority, says the agency’s decision to sell its supply of houses in the middle of a housing crunch make perfect sense.

For one thing, the 58 homes and eight duplexes the agency owned before the sales started are spread out all over Spokane County and are “incredibly expensive to operate and maintain.”

For another, Jennings figures the housing authority can raise $12 to $13 million by selling them off.

And that money can be plowed back into Spokane Housing Authority’s coffers, where it can be used not only to house many more people in more efficient multi-family housing but also to create a fund for future affordable – not public – housing needs.

The difference between the two is that, while “public housing gets its funding from the federal government to maintain and operate it,” Jennings said, affordable housing is built with tax credits and subsidized to allow low-income families a place to live below the market rate.

Jennings said the millions made from selling off the scattered homes will help create “a fund that we can use to recycle and repurpose (the money) into the community to build more affordable housing in the community,” Jennings said. “And the format is most likely apartments. That’s really the motor behind this.”

While the homes being sold were operated as public housing for decades, they were converted to affordable housing on Oct. 31, 2019, officially divesting the Authority’s ownership of public housing. In January, the Authority started selling those homes off and expects to complete the process of the selling all 75 units by next summer.

The Authority’s transition out of the public housing business started in January 2016, when it converted the 50-unit Parsons Apartments in downtown Spokane from a public-housing project to a Section 8 rental-assistance property.

The project, like scattered sites sales underway now, was conducted as part of the U.S. Department of Housing and Urban Development’s Rental Assistance Demonstration, or RAD, Program.

While the conversion helped fund a $2.1 million makeover of the building and maintained the building as a place for low-income residents, HUD dinged the Spokane Housing Authority for how it went about the project.

According to a 2018 HUD audit, the Spokane Housing Authority “did not properly plan and execute permanent tenant relocation.”

“The Authority’s conversion plans did not specify that tenants would be permanently relocated, and the Authority permanently relocated tenants without their required written consent,” the audit stated. “As a result, two tenants did not have the right to return to the property after the RAD conversion, and the U.S. Department of Housing and Urban Development (HUD) was not aware of the permanent relocations.”

While Jennings wasn’t around for those 2016 conversions, he said the housing authority has been “working really closely with HUD” on its current process of selling its scattered home sites.

The aim, Jennings said, is “to ensure” that those whose homes are being sold are “protected.”

“What we did is sat down and interviewed all households and had a conversation to understand what they’re needs were,” Jennings said. “And we’ve slowly been trying to find housing for them.”

Residents have three options, he said. They have right of first refusal to purchase the house. They were able to use their subsidy at either one of two multifamily properties where they were “guaranteed” to find a home. Or they could take a voucher and “we would help them find comparable housing,” so they could ensure they didn’t leave their existing school district or other neighborhood amenities.

“Most people just want to take the voucher and find comparable housing,” Jennings said.

While some residents lives have been disrupted by the process, Jennings said it will end up as a net gain for a region sorely in need of more low-income housing.

“It’s just, we felt, an effective way to bring more affordable housing to the community than what we were currently participating in,” Jennings said.