Downtown Kirkland - where condos sometimes sell for $1 million a pop - is about the last place most people would look for affordable housing on the Eastside.
It's there, though, and thanks to the combined efforts of city officials, county and state housing agencies, church groups and willing owners, the 66-unit Plum Court Apartments at 451 Fourth Ave. S. was recently sold to a nonprofit organization that will continue to offer inexpensive rents for the foreseeable future.
The situation could have turned out much differently, conceded Rick Whitney, managing partner of the 19-member Plum Court Associates Limited Partnership, which owned the seven-building complex. The place could have been sold to a developer who might have torn it down to make way for a pricey condo development or super-expensive houses, he said.
That's assuming the Plum Court partners were willing to sell in the first place. They weren't - at least initially, Whitney said. "My partners were very, very happy with the way the property was operating."
Factor in a soft housing market caused by a regional downturn in the economy, and there was even less reason to sell.
DASH to the rescue
Then the Downtown Action to Save Housing group stepped into the picture. DASH is a Bellevue-based nonprofit organization whose mission is to create affordable housing opportunities on the Eastside. The group responded to a Kirkland request to look at the city as a potential site for an affordable housing project, said DASH director Mark Thometz.
The request was funneled through A Regional Coalition for Housing. Created by King County and Eastside cities such as Kirkland, ARCH strives to preserve and increase the housing supply for low- and moderate-income households.
"Basically, we were looking for a project with lots of three-bedrooms," Thometz said. DASH also wanted to find an apartment project with outside entrances to each unit.
"We happened to find Plum Court." Problem was, he noted, Plum Court wasn't on the market. But that didn't stop Thometz from trying to work a deal.
"DASH approached me," Whitney remembered, "but we rebuffed their initial attempts topurchase the property." In normal circumstances, Whitney said, he couldn't have justified to his partners selling the complex because property values had been appreciating so much in recent years.
The growth in value had slowed, however, and there was the possibility that property values might actually decline before the deal with DASH went through. Whitney said it took around a year before the sale was finalized.
He solved that problem at the front end. "I locked in the price at the beginning of the process," Whitney said of the $7.2 million DASH paid for the property.
Whitney said he and his partners bought the Plum Court Apartments for $3 million in 1992. "At the time, it was a good price, but the property was not in very good condition," he said.
So the partnership spent a fair amount of money over the years on substantially upgrading the complex, he said. The upgrades included a new roof, work on the parking lot and refurbishing the interiors.
DASH also plans to upgrade the complex, and work will include improvements to the swimming pool in the complex, new playground equipment and improvements and an upgrade at the computer center. That outlay combined with other costs, such as financing, increased the total price by more than 35 percent. "Basically, I had to raise about 10 million bucks," Thometz said.
DASH kicked in $900,000 of that, and the rest was financed by Kirkland ARCH, the state, the King County Housing Authority and Banner Bank.
A dream
come true
Kirkland City Councilmember Joan McBride said she first became aware of the Plum Court Apartments 11 years ago when she was working with the Kirkland Interfaith Transitions in Housing group, which was trying to find housing for a refugee family from Bosnia.
"We were definitely gentrified back then as a community," she said of a status reflected in generally high rents. By contrast, rents at Plum Court were much lower. "We immediately got [the Bosnian family] an apartment there."
Promoting affordable housing in Kirkland has always been important to McBride. "This was one of my goals when I came to the council," she said. It's a goal shared by the rest of the City Council, which has set up a Housing Trust Fund to help pay for affordable housing projects.
The council also made a priority out of keeping Plum Court as affordable housing a little over a year ago, she said, adding that the DASH deal is "a dream come true."
Describing him as the real hero in the story, McBride said Whitney had also been a fan of keeping rents at Plum Court affordable. "In my heart, I was always hoping to keep that as affordable housing," said Whitney, who pooh-poohed the idea of being a hero.
He explained that he was responsible for getting the best return he could on the investment he and his partners made in the apartment complex. "I rented those apartments at whatever the market could bear," Whitney said.
A mixed approach
Current market conditions mean that rents at Plum Court are still a bargain, and DASH is keeping rents close to same level they were before the purchase.
A three-bedroom apartment costs $995 a month, a two-bedroom goes for $895 and a one bedroom for $735. Those rents will change, however, when the upgrade is completed in the next six months or so and when tax credits kick in, Thometz said. "In some cases, it will go down substantially."
That's because rents will be based on how much tenants make compared with the region's median income, which is hovering around $49,000 a year for a single person. Thometz said the goal is to rent 40 percent of the apartments to those making 30 percent of the median income, and half to those making 50 percent of the median.
Depending on income levels, some of the three-bedroom apartments will be rented for as little as $550 a month, while a one-bedroom unit could cost as little as $370 a month, he said.
The remaining 10 percent of the units will be rented at market rate, Thometz added: "What that does, it doesn't ghetto-ise the community."
Current tenants aren't quite sure what to make of the change, according to one tenant who didn't want to be identified. And some of them were panicked by news the complex had been sold to DASH, said JoEllen Welch, who will manage the apartments with her husband.
"Mark (Thometz) had a meeting, and they thought they were going to get an immediate 90-day notice to move," she said. That didn't happen, although some tenants will have to temporarily move into other apartments while their units are refurbished, Welch said.
Many of the tenants already fit the income profiles, she added. "We have several people qualified at 30 percent and some at 50 percent of median income."
They include tenants who work at local restaurants, and a single mother with three kids who works at a local grocery store, Welch said. "She really appreciates having a nice home, and she appreciates being able to pay rent."
Welch said she rented an apartment in August to a doctor moving here from Connecticut, and he'll pay market-rate rent. There are also several different nationalities represented at Plum Creek, and the ages of tenants range from early 20s to late 70s, she said.
Word on the street
Plum Court is surrounded by some pretty expensive real estate, but the reaction to the DASH takeover has been generally positive, Welch said. There was, however, one exception.
A man who recently spent $1 million on a nearby condominium called Plum Creek worried that the complex was being turned into a low-income housing project like the ones on the East Coast, Welch said. "He wanted to know if police knew about it."
McBride doesn't think the condo owner has to worry. "We have always been a more diverse city than most people will acknowledge," she said.
As for Thometz at DASH, he's pleased the deal went through for the Plum Creek Apartments. "I think it's going to be one of our flagship properties," he said.
Staff reporter Russ Zabel can be reached at rzabel@nwlink.com.
