Ah, beautiful Nantucket. It’s the place to be: the median home value is $1 million, and a few hundred workers ride the ferry or fly to the island to work each day. If the free market has its way, San Juan County is well on its way to becoming a similar elite vacation destination, based on current and projected population demographics. A 2009 county Housing Needs Assessment projects that by 2025, over 3,000 workers will need to commute daily to the islands to fill employment positions – even if a minimum of 1,095 affordable housing units are built.

“The picture the county has painted; it’s not unreasonable to expect that that’s already happening, if the trend we’ve seen for the last 30-40 years continues,” said Lisa Byers, director of OPAL Community Land Trust. “This is a very desirable place, and if people have the ability to bring their purchasing power from anywhere in the world, housing prices are going to continue to be influenced by that global economy.”

Senior planner Colin Maycock says the county has met requirements for affordable housing under the growth management act, while others argue the county is doing too little, too slowly to stem the diaspora of the blue collar worker as the area’s demographics change and housing prices rise. Meanwhile, a county-led group of about 25 islanders have formed an Affordable Housing Critical Needs Task Force to address the situation.

Wages vs. home prices

According to U.S. department of labor statistics the average wage in San Juan County is $29,796 annually, compared to the statewide average wage of $47,632.

The WSU Housing Affordability Index puts the 2010 median price of a San Juan County home at $328,800, and estimated a 5.07 percent monthly mortgage payment of $1,423. Based on a U.S. Department of Housing and Urban Development rule of thumb that considers up to 30 percent of income spent on housing as “affordable,” and allowing for a monthly utility bill of $300, such a home would be out of the reach for families making less than $68,920 annually. A dual-income household in the county could expect to bring in just under $60,000 annually.

Perhaps adjusted for the additional costs of living on the islands, a June 2009 San Juan County Comprehensive Plan Housing Needs Assessment paints the picture even bleaker, calculating that to purchase a median priced home, a family would need to earn $150,000 a year and have $100,000 for a down payment.

“A down payment is traditionally one of the biggest barriers for people – they really don’t have the slack to set aside the savings,” said Byers. The San Juans multiple listing service currently offers homes as low as $200,000 (manufactured) and $250,000 (stick-built).

Changing demographics

A 2009 county document called the 2008-2025 San Juan County Community Development and Planning Housing Needs Assessment testifies to a population influx by in-migration rather than natural increase: the county from 1997 to 2007 saw an annual average of 103 births, 104 deaths, and a population increase of 345.

A 2002 county planning document on the housing crisis said demand is causing high land prices that “squeeze out” working families.

“Local working families must compete with the life savings of retirees and the second-home purchases of seasonal residents from throughout the western U.S… There is little the county can do to keep these purchasers from bidding up local land prices,” reads the document, which also partly attributes high prices to state-required low rural density.

Income sources have been changing, as well; the county has a $29,000 annual wage – but the annual per capita income is nearly double that, at $57,000. Economic analysis in 2008 shows that since 1969, roughly 20 percent of the county’s per capita income has shifted from wage “earned income” to income from dividends, interest and rents, indicating an increased population of the independently wealthy.

The 2002 planning document adds, “The salaries of teachers, fire and police staff, construction workers, retail and service workers, and county employees do not meet the house payment on the few homes available for sale each year. Since our islands are ferry-dependent, our workers cannot simply commute from more affordable areas of the state (nor do we want them to).

According to the office of financial management, in 2008 there were 11,514 housing units in the county. Almost 29 percent (3,339) were occupied only seasonally or recreationally, while only 2.5 percent of homes in the state are seasonally occupied. Over 2,000 units were rentals, leaving a remaining 53 percent of all homes (6,156) occupied year-round by their owners. Almost 26 percent of housing in the state is multi-family, encouraging affordability, compared to only 7.5 percent of the county’s housing.

Income bracket definitions in today’s dollars, for a family of four:

Low income: up to $54,300.

Very low income: up to $33,950.

Moderate income up to $64,505.

Middle income: up to $81,480.

Low upper income: up to $101,850.

Upper 150%: over $101,850.

County’s median income: $67,900.

The projections therefore expect 1,158 new households earning the 2025 equivalent of today’s salary of under $54,300; 475 new households earning less than $64,505; 504 new households earning less than $81,480; 387 new households earning less than $101,850; and 445 new households earning over that amount. That means at least 1,633 of the expected new households will make under $65,000.

John Campbell, secretary for affordable housing program Homes for Islanders, said growth management legislation is partly to blame for high demand and low supply.

“If you restrict growth in rural areas and draw a tight ring around urban areas, (if you restrict supply), the inevitable consequence is that price goes up,” he said.

Scarcity in Eastsound

Campbell said the 50 percent of the island’s population growth that the county has allocated to Eastsound will by necessity be mostly low-to-moderate income households.

“None of those people are going to have the ability to buy five acres in the rural area and buy themselves a house,” he said, so densely zoned areas will be their only option. But Campbell argues that the Eastsound UGA does not have sufficient land suitable for affordable development.

“Based on GMA growth projections, Eastsound needs a residential development capacity of something like 640 units; [a 2007 land supply analysis showed] there were 657 units; so far, so good,” he said; but meeting the exact projected demand is in reality insufficient.

“If you need 400 units, and [have] 400 vacant lots, the price of those lots is going to get very very steep before you get to the end… if you want to have a market, you’ve got to have a few more people offering lots for sale than want to buy.”

According to Campbell, the problem goes even deeper: lots designated in 2007 for residential housing have been taken off the market for other purposes. For example, he said Homes for Islanders recently tried to purchase a 3.5-acre lot near Smuggler’s Villa, but it was instead sold to the Smuggler’s Villa condo homeowners – removing from the UGA 28 potentially affordable home sites.

Based on instances like that one, said Campbell, “[I took the 2007 analysis] map and crossed out all the numbers on it that I felt were impossible or improbable for affordable housing; as a consequence, about one-third of the development capacity in Eastsound is realistically available for affordable housing.”

This is partly because affordable housing developers often need to rely on economy of scale in order to build homes.

“The vast majority of the residential development capacity identified in Eastsound is expensive, scattered single family lots totally unsuitable for affordable housing development,” he said. “There is almost as much work involved in developing a single family house as an eight-unit subdivision.”

“It needs to be between one and five acres with access to utilities and streets,” added affordable housing architect Fred Klein. “There’s precious little of that available in Eastsound.”

Interestingly, an analysis made by Campbell of building permit records from 2000 to 2009 indicates that only 128 of the 778 (16 percent) Orcas island permits issued were within the Eastsound UGA – a far cry from the 50 percent target.

San Juan County’s affordable housing history

Campbell filed an appeal against the county’s housing plan in 2009, arguing, “A county with the second highest per capita income in the state and wherein the average annual wage ranked 35th out of 39 counties, whose housing needs are as described… that has the lowest tax rate in the state and can find $2-3 million/year for conservation purposes but nothing for its blue collar workers is not trying.”

He stated the county was found ‘not compliant’ on affordable housing by the growth board in 1999. In 2000, the county established on paper an unfunded Housing Trust Fund and was found in compliance. In 2002 a .5 percent real estate excise tax (REET) to fund affordable housing was permitted by the state legislature; but county citizens voted down the tax. Campbell said the tax did not have the support of that year’s county commissioners.

Byers said of the failed 2005 housing REET proposal, “It’s unfortunate. I have long been a proponent of wishing we could do as well by affordable housing as we do by land conservation. I firmly believe we need to protect natural areas and maintain ecosystems here, and the more we do that, the more we put pressure on the pricing of land that’s left for human habitation, which makes it more difficult for affordable housing.”

The Growth Management Act passed in 1995 requires the county’s comprehensive plan to identify sufficient land for low-income housing and provide for the existing and projected needs of all economic segments of the community. The act also encourages affordable housing incentive programs.

A June 2009 San Juan County Comprehensive Plan Housing Needs Assessment projected a population increase of 6,413 people by 2025, with an expected need for 1,095 housing units for those earning less than $100,000 annually.

“If the proportions of the different income groups remain the same over the planning horizon,” states the HNA, 85 percent of the potential new households or approximately 2,523 new households will require housing that is cheaper than that which is currently available.”

The housing element of the county comprehensive plan states, “It is clear… that if the county is to continue to provide a place to live and work for a wide variety of people, and to move forward toward a balanced, year-round economy in accordance with the Vision Statement and goals of the Land Use Element, the County must act to make provisions for the development of housing affordable to the very-low to moderate-, middle- and low-upper income groups… More recent data suggests that the percentage of upper income households in the county has increased since 2000.”

According to the document, between 2000 and 2025, it is anticipated that the county will add a total of 2969 new households: 1,158 earning low to very low income; 475 earning moderate income; 504 earning middle income, 387 earning low upper income and 445 earning “upper 150%” income. It says that even households considered low-upper income “may be cost-burdened by the price of housing” in the county.

A separate 2009 county document called the 2008-2025 San Juan County Community Development and Planning Housing Housing Needs Assessment further clarifies the issue.

Tabulated data in the document indicates an increase in Orcas Island’s population from 5,073 in 2008 to 7,091 in the year 2025, and estimates the need for 567 housing units within the Eastsound UGA.

The document states, “It is misleading to presume that the proportions of the different income groups will remain constant… If housing that is affordable to the very low, low, moderate, middle and lower upper income sectors is not developed over the planning horizon then it is reasonable to assume that both total numbers and relative percentages of very low income to middle income earners will decline dramatically relative to the upper income groups.”

Current and projected demographics indicate: the number of children (0-19) will shrink from 18.56% of the population to 14.6%; the 60+ population will swell from 28.5% to 49%; the number of 20-and 30-somethings will hold steady at 14.7%; and numbers of 40’s-and-50’s drops from 38.2% to 21.7%.

The results of the 2010 federal census may not be available until sometime in 2012, in order to discover whether the economic demographics are indeed shifting toward upper-income households. But the growth management hearings board has stated that San Juan County is not responsible for housing its commuting workforce – so if workers leave the county due to a lack of affordable housing, the problem of providing affordable housing for them will become the responsibility of other counties.

Current funding for affordable housing

The county currently has a total of 182 permanently affordable homes.

“In 2009 and 2010 OPAL delivered 32 new homes,” said Byers. “Homes for Islanders delivered six and started eight homes. That’s more new affordable housing delivered on the island than any year in our history, and it was all filled; I think that’s a pretty good indicator of demand.” Problem is, most of that construction was funded by the state’s previously well-funded State Housing Trust Fund.

“It has been cut drastically as part of cuts in state government,” said Byers. Without that backing, “OPAL is not going to continue to build at the scale that it’s been.”

The county has a fund called the San Juan County Housing Bank overseen by a Housing Bank commission appointed by county council members. The fund currently includes a state-supplied revolving home down payment assistance fund of around $500,000, $437,000 of which is loaned out at present; and “2060” and “2163” funds generated by recording fees that supply emergency rental assistance and senior rent subsidies. Since the 2006 introduction of the recording fees, $320,000 in county-generated funds has been allocated to non-profit organizations, roughly enough to purchase one median-priced single-family home. Federal housing subsidies are available only to those of the low and very-low income, and alone are insufficient to make in-county housing affordable to those income groups.

Possible solutions:

A Housing Authority

“There are a number of different options available,” said Maycock. “It’s just a question of how the community wishes to proceed. The obvious one is, San Juan County is the only other county other then Garfield that doesn’t have a Housing Authority.” A housing authority is a public corporation that is not part of local government, but must be created by a resolution by a city or county. An authority can channel funds from various sources into affordable housing programs designed to fit its community. The directors of the Island and Skagit county housing authorities have each presented to the San Juan County council in favor of a SJC housing authority in the past.

“Housing Solutions” group

A $40,000 Community Development block grant funded prior to the cuts is currently facilitating a housing solutions work group composed of 20-25 county residents, who have been meeting for the past year to examine the future of affordable housing in the islands. The county’s affordable housing representative Angela Lausch is coordinating the group, which hopes to stimulate a community conversation.

“We’ve put together a presentation that pulls out some of the trends we’ve seen over the past 20-30 years to give a context to some of the changes that we’ve seen in our community,” said Byers, who is chair of the group. Community members interested in being involved may contact Lausch at 378-4474; Byers at 376-3191; or Patty Miller, the communications representative at 376-6840.