City of Port Townsend to sell Cherry Street site

Building towed over Strait will be demolished

PORT TOWNSEND — A property in which Port Townsend officials invested hundreds of thousands of dollars, hoping to create affordable housing, will go up for sale.

The Port Townsend City Council voted unanimously Monday to sell a property on the 100 block of Cherry Street.

After several years and hundreds of thousands of dollars, council members in recent weeks have ordered the demolition of the building that sits on the property and instructed city staff to work with a real estate agent to put the property on the market.

City staff will work with local real estate agent Terry HcHugh to prepare the property for market with hopes of listing the site in February, said Emma Bolin, Planning and Community Development director.

Offers will ultimately be selected by council members. Bolin said staff hope to bring offers to the council by May.

Proceeds from the sale would be used either to support the city’s new Evans Vista affordable housing project or pay back the $834,000 in bonds issued by the city in 2018.

The council has not yet decided what kind of restrictions to place on the sale, if any, City Manager John Mauro said Thursday, but he added that things like density may be considered in the eventual sale.

“Staff has recommended there be as few restrictions as possible and council has discussed maximizing density,” Mauro said. “There’s a little bit of a trade-off with density and maximizing profits to put toward affordable housing.”

The troubled project began in 2017 when the city loaned affordable housing group Homeward Bound, now known as Olympic Housing Trust, $250,000 to purchase the two-story apartment building from an owner in Canada and ship it from Victoria.

But the project soon ran into cost overruns and in 2020 Homeward Bound informed the city that rehabilitating the building would cost up to $1.8 million. The city then began talks with Bayside Housing and Services to take over the project, but the COVID-19 pandemic increased the costs of materials, leading the organization to decide against taking over the development.

A foundation was eventually installed, but little other progress was made as the building sat empty and became the target of vandalism.

As of August 2022, the city had spent $524,000 on the project, leaving $310,000 remaining bond dollars. The city pays $68,896 in annual debt service, with the final payment due in 2040.

In September, the city issued a request for proposal for demolition of the apartment building and accepted a bid from KD&S Environmental of Montesano for $44,875. Demolition of the structure is set to begin as soon as Monday.

Several public comments submitted to the city in writing asked the city to continue pursuing affordable housing at the site, but Mauro said at Monday’s meeting the city had tried that.

“There are at least two providers we tried to work with and they couldn’t make it pencil,” Mauro said at the meeting. “That’s why we’re not there now. We’ve tried twice in that direction and it didn’t work.”

An appraisal of the property in 2020 estimated the value of the site at roughly $240,000 with no property restrictions.

The city has called the Cherry Street project an “error” but said it is still committed to affordable housing.

“As the City moves forward, cost analysis as part of due diligence is a critical matter in projects such as Evans Vista,” the city’s website said. “Ensuring financial feasibility is a key criteria of the Evans Vista planning effort and is fundamental for project success.”

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Reporter Peter Segall can be reached at peter.segall@peninsuladailynews.com.

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