An Eastside organization that provides housing for people earning below the King County median income plans to add staff members and toughen its enforcement plans at the recommendation of an outside consulting firm, which found that some homeowners aren’t complying with the rules of the nonprofit.
Owners of at least 24 Eastside homes administered by A Regional Coalition for Housing (ARCH) violated the rules by renting out their residence, using it as a nonprimary home or leaving it empty, according to a report released this month by Street Level Advisors, a consulting firm hired by ARCH. All are against the rules of the agreements they signed with ARCH. Additional homes are currently under review.
The 94-page report comes months after ARCH first said the nonprofit planned to hire a consultant and conduct its own audit of roughly 700 homes across the Eastside in response to media reports of homeowner violations. ARCH works with affordable-housing providers to build and preserve condos, townhomes and houses for people who might not otherwise be able to afford a market-rate home on the Eastside, where the median cost of a condo is $489,250 and a house is nearly $1 million. The agency is partially funded by taxpayers and receives contributions each year from 15 Eastside cities, according to its administrative budget.
The homes confirmed to be in violation of ARCH rules represent about 3.5% of the total homes under ARCH’s purview. It’s a small number, but still significant, said Rick Jacobus, principal at Street Level Advisors, an Oakland, California-based consulting firm that specializes in affordable housing.
“It’s a troubling thing and it’s a big deal, but it’s still a manageable problem,” Jacobus said in an interview, adding that it’s not uncommon for similar organizations to have compliance issues. However, taxpayers “should hold them [ARCH] to a higher standard that what you see in the report.”
ARCH plans to hire two positions that will start immediately, said Kurt Triplett, ARCH’s board chair and Kirkland city manager. One is a compliance-monitoring position focusing on the agency’s home-ownership program. The other position will provide administrative support for the home-ownership program and ARCH-administered rental units. Those employees will be paid with reserve funds through the end of the year, with the possibility of future funding coming from additional city funds or a small transaction fee for each home purchase.
ARCH has contacted each homeowner confirmed to be violating the rules. Some have decided to sell the home back to ARCH, and others have moved back in to comply with the requirement that it be their primary home, ARCH Executive Manager Lindsay Masters said. The owners who had rented out their homes are required to pay back to ARCH any revenue they received in rent.
Triplett said a lot of the owners weren’t even aware of the requirements.
“They said ‘I didn’t know I couldn’t rent it out,’ ” he said. “While we would like to believe they should have known, anyone who does buy a home signs a lot of papers and may not read them all.”
The agency also plans on having a better system of verifying income — currently, owners can say their income meets the requirement but there’s no formalized verification — but that hasn’t been finalized.
Triplett said the nearly 30-year-old organization has realized it needs to not just provide housing, but be a full-service agency. It’s also moving forward with more funding than it had during the investigation — last month, the Bothell City Council approved $136,800 in total funding for ARCH, said Bothell City Manager Jennifer Phillips. That contribution had been temporarily withheld because city officials were concerned about the allegations of violations.
“We are learning a lot from this and we are taking action,” Triplett said. “We don’t want people to think that ARCH has outlived its purpose. It’s needed now more than ever.”