Selling houses makes agency less "scattered"

A small house near the freeway in the Green Lake neighborhood was intended to become a rental property, but the new owner liked it so much he fixed it up and moved in with his family.

A tiny house on a deep and skinny lot in Greenwood is about to be torn down by a developer who plans to build three duplexes.

A no-frills house in Crown Hill was bought by the people who live directly behind it to pre-empt anyone from putting up a megahouse there and blocking their view.

All three houses were sold by the Seattle Housing Authority (SHA), which had rented them exclusively to the city's poorest residents.

While the transformation of Seattle's public-housing projects into mixed-income neighborhoods has been highly visible, a similar change is happening on a much smaller scale — one property at a time.

Following a trend of housing agencies across the country, SHA has been selling off scores of its so-called "scattered site" properties — small, single-family houses, duplexes and triplexes, mostly in the North End and West Seattle — and moving their residents into apartment buildings that are easier and cheaper for the agency to manage. The agency is holding on to houses that will accommodate families with many children or tenants with special needs.

SHA started buying single-family houses in predominantly white neighborhoods in 1978 to reduce the concentration of poverty and expand opportunities for poor people. Those goals are now being addressed in other ways, such as through the redevelopment of NewHolly, Rainier Vista and High Point from public-housing projects to mixed-income neighborhoods.

Since 2005, SHA has sold about 100 scattered-site properties, with 40 more still to market. While they may lack curb appeal, most have good bones. They've been bought up largely by investors who've flipped them, turned them into market-rate rentals or torn them down and replaced them with megahomes or town houses.

A few have been bought by buyers who moved in themselves — an outcome Luis Gervassi never saw coming three years ago when he bought the little Green Lake fixer for $313,000.

Remodel added space

Its living area was a mere 750 square feet, but the house had a framed attic, an unfinished basement and great potential. Gervassi figured he'd do a minor remodel and then rent it out as an investment property.

"It turned out we ended up liking the place, so we finished a bigger remodel," he said.

He poured about $100,000 into it, tripling its living area with two new bedrooms, two new bathrooms and French doors leading to a new deck above the garage.

He sold his house on Beacon Hill and moved his family into the Green Lake home in September 2006.

"I wish I would have pursued more of these properties," said Gervassi, a scientist who dabbles in real-estate investment on the side. "It was definitely a great deal for me and anyone who bought those houses."

The Green Lake house was typical of the SHA properties — sturdy and clean but with cheap, outdated finishes.

Gennie McMurtry, a Windermere agent, marketed the properties as fixers, which are especially desirable to flippers, developers and first-time buyers who prefer to do their own remodeling.

SHA laid out the history of repairs and maintenance for each house, and McMurtry said the detailed disclosures also made the properties attractive to buyers.

They tended to sell quickly.

"They may not have always looked that attractive from the outside, and the inside may have had an institutional look, but the stuff behind the walls — the plumbing, the electrical — was usually in good shape," McMurtry said.

So far, SHA has raised more than $35 million in proceeds from the sales, reinvesting much of it in 12- to 24-unit apartment houses with two- and three-bedroom flats and an elevator. Like most of the properties they sold, the replacement units are in the North End and West Seattle.

Economic advantages

The sales were driven by economics, said Ann-Marie Lindboe, SHA director of housing finance and asset management.

It costs the agency far more to replace the roofs of 12 single-family homes than it does to replace one roof on a 12-unit apartment building. Yet the federal government gives the housing authority the same money to maintain a house as it does for a single apartment unit.

The same economics drove the Housing Authority of Snohomish County to sell all 43 of its single-family houses between 2000 and 2002. The houses were scattered across 500 square miles and thus expensive to manage and maintain, said Bob Davis, executive director.

The agency replaced the houses with 43 units in a 300-unit complex it owns near Mill Creek. The agency rents other apartments in the complex at market rate, so the low-income tenants have neighbors who are not, which Davis said is central to the overhaul of public housing.

The King County Housing Authority's inventory of single-family houses is limited to eight in Bellevue that are temporary residences for families transitioning out of homelessness, spokeswoman Rhonda Rosenberg said.

Out of necessity, SHA plans to retain about 160 of its largest single-family houses because it can't find apartments with enough bedrooms to house large families, Lindboe said.

"No one is going without housing because of this program," she said.

"Totally blessed"

Last September, SHA moved tenant Dolores Wilson from a three-bedroom house it plans to sell in Lake City to a nearby house it plans to keep.

"At first when I got the letter saying we had to move, I was very concerned because there are not a lot of houses for the disabled in the North End," said Wilson, whose youngest son has intractable epilepsy and doctors say needs to live in a house close to Children's Hospital & Regional Medical Center.

"We were totally blessed that they had this unit for us," she said. "It has a wheelchair ramp, a nice deck, a big backyard, a double-car garage and two full baths. What more could I ask for?"

But SHA tenant Christine Wright had to move from the Ballard triplex she loved to a place near Fremont that she says is so cramped her oldest daughter ended up moving out.

"Nothing fits in my bedroom except my queen-size bed, and that barely fits," Wright said. "I used to have a lovely oak bedroom set, and now I have a mattress on a doggone frame."

Many of the SHA tenants who had to move because of the sales "would have preferred to stay where they were at," Lindboe said. "But we have tried to give people many options."

Stuart Eskenazi: 206-464-2293 or seskenazi@seattletimes.com