|| October 7, 2009
|| Nancy Buonanno Grennan, County Administrator
Continued work requires County to step in with
repayment plan for $3.6 million in additional Kitsap Consolidated Housing
(Port Orchard, WA) – In a
continuing effort to stabilize the Kitsap County Consolidated Housing
Authority’s financial condition, Kitsap County
has been asked to honor a prior commitment to back the Authority’s debt.
Accordingly, the County will assume direct responsibility for $3.6
million of Housing Authority debt under a plan that will be up for approval
before the Board of County Commissioners at the Board’s next regular meeting
scheduled for October 12, 2009.
The Authority’s Board approved the
financing plan on Tuesday, October 6, 2009.
Key terms, similar to
a separate plan approved by the County in May 2009, include securing deeds
of trust for housing authority properties and ensuring County control over
sales of the properties.
entered into a contingent loan agreement in 2006 to loan the Consolidated
Housing Authority up to $3 million in the event the Authority could not pay
a $5.244 million loan earmarked for low and affordable housing projects.
Since the Housing Authority is unable to repay or restructure its
debts due this year, the County has been asked to perform on its legal
obligation to loan the Authority $3 million of this debt.
An additional $622,975 will enable the Authority to pay off the loan
securing its Silverdale Office Building,
located on Bayshore Drive.
That property, and four other properties, is pledged to
County under this plan,
with proceeds from the sale of the properties used to repay the County.
A similar arrangement
approved in May 2009 has already generated over $10 million in projected net
proceeds from sales of assets scheduled to close by October 10, 2009.
This arrangement gives Kitsap County
direct control over several key assets and will allow the County at least
four years to sell the assets, with proceeds dedicated to repay the County’s
loan. During that time the
County will be required to make interest-only payments on the loan.
Conditions of the
financing arrangement in which the County will assume $3,622,975 of debt
The County will assume $3 million of the debt incurred by the Authority to
fund low and affordable housing projects within the County.
This $3 million of the total obligation represents the amount
obligated for this purpose in 2006; the balance of the obligation remains
with the Authority.
The Authority incurred the additional $622,975 loan in its acquisition of
located at 9307 Bayshore Drive
in Silverdale. This property is
now being actively marketed, and proceeds will be paid to the County to
cover a significant portion of the total obligation under this repayment
The County will have the right to direct and manage the sale of specific
properties pledged as security from the Authority to the County.
This repayment plan is
the last major piece of Housing Authority debt guaranteed by the County
outside of the Norm
Center located in downtown Bremerton. The Norm Dicks Government Center
bonds are secured by rents from the County, the City of Bremerton, Bremerton Housing Authority, and
the Kitsap County Consolidated Housing Authority.
Payments on the bonds are current and the County has not been alerted
to financial difficulties with that
Major terms of the repayment plan