# Housing Policy and Shelter Solutions: Bellingham's $27 Million Action Plan On a Monday afternoon in early May, the Bellingham City Council's Community and Economic Development Committee gathered to review two significant agenda items that would shape the city's approach to affordable housing and homelessness in the coming year. Chair Jace Cotton called the meeting to order at 3:55 PM, with committee members Dan Hammill and Skip Williams joining both in person and online, while other council members participated as observers. The meeting, though procedurally routine, revealed the complex financial and logistical challenges facing a mid-sized Pacific Northwest city grappling with rising housing costs, persistent homelessness, and the ongoing need to balance federal requirements with local priorities. ## The $27 Million Housing Action Plan The committee's first order of business was reviewing the city's 2025 HUD Consolidated Action Plan—a comprehensive blueprint for how Bellingham would spend $27 million in federal and local funds on housing and social services over the coming year. Samuel Utz, the Housing and Services Program Manager, walked the committee through what he described as the third year of the current five-year consolidated plan. The numbers told a story of both ambition and constraint. While the total budget appeared substantial, only about $12 million represented annual recurring funds. The remainder consisted of rollover funding from previous years and uncommitted resources finally finding their way into projects. Most significantly, local funding sources—the voter-approved housing levy and affordable housing sales tax—comprised 80% of the total budget, with federal funds making up the remainder. "The predominance of these are our city funds," Utz explained, noting that this local control provided flexibility but also meant the city's housing efforts were increasingly dependent on local economic conditions. Indeed, affordable housing sales tax revenue was projected to decline from the previous year's $3.9-4 million to approximately $3.5 million, according to finance department forecasts. ### Two Major Housing Projects Take Center Stage The action plan's most significant commitment involved funding two new affordable housing developments that would add 131 units to the city's housing stock. Mercy Housing Northwest received approval for $5 million toward a 68-unit senior housing project in the Old Town neighborhood, while the Bellingham Housing Authority secured $6.149 million for a 63-unit development on Unity Street—the former location of the housing authority's offices. Both projects represented ambitious undertakings in an increasingly challenging financial environment. The Old Town project carried an estimated total cost of $33.97 million, while the Unity Street development was pegged at $28.83 million. Both would require additional funding through the competitive Low Income Housing Tax Credit program, where recent market conditions had created significant gaps. Tara Sundin, Community and Economic Development Manager, delivered sobering news about the financing landscape. "The bummer is that costs have risen to such a point that the amount of money that we are committing per unit is more than double what we were just a few years ago," she told the committee. The value of tax credits had dropped to about 83 cents on the dollar, creating $5-6 million funding gaps on average for projects. ### Rental Assistance Under Pressure Beyond capital projects, the action plan allocated over $6 million for rental assistance and supportive services—programs that committee members noted were facing unprecedented demand. The city received 34 applications totaling about $4 million in requests, but only had $2.5 million available through competitive processes. Council member Michael Lilliquist pressed for details about a $1.2 million line item for "prevention and diversion programs." Utz explained that this represented funding from a special 2021 allocation of federal HOME Investment Partnership Program funds distributed through the American Rescue Plan Act, designed to be spent over seven years on services that help people avoid or quickly exit homelessness. The complexity of the funding streams reflected the patchwork nature of America's housing assistance system. Federal Community Development Block Grant funds, HOME program dollars, local housing levy money, affordable housing sales tax revenue, justice sales tax funds, and general fund allocations all flowed into different program categories with specific federal and local requirements governing their use. ### Pipeline Challenges and Future Concerns Council member Dan Hammill raised pointed questions about the long-term sustainability of the city's housing development pipeline. "What I'm trying to figure out is when we started to create these funds, the idea was like build the pipeline, fill the pipeline and then just keep the projects moving forward," he said. "In times where sales taxes are down, what are the impacts when it comes to those local funds that we so desperately need?" Sundin's response revealed both progress and limitations. While the city had successfully developed a project pipeline after years of apparent stagnation, the pace was unsustainable. "You're seeing us do 2 in 1 year. That's very unusual," she explained. "You're probably not going to probably see a project after Old Town. We may have to sit out for a number of years." The reason was stark economics. Even with substantial city commitments and assuming successful tax credit awards, both current projects still faced multi-million dollar funding gaps. Staff planned to meet with developers later that week to strategize about the next few years, acknowledging that without federal intervention or dramatic improvements in the tax credit market, the development pace would slow significantly. ### Federal Requirements and Local Flexibility Throughout the discussion, the tension between federal requirements and local needs became apparent. The action plan had to comply with HUD's consolidated plan goals while also serving as the budgeting mechanism for local housing funds. Staff worked closely with the Community Development Advisory Board (CDAB) through multiple meetings and a public hearing process, though notably, no public comments were received during the formal comment period. The plan addressed five primary goals: reducing housing cost burdens for low- and moderate-income households; providing services to help vulnerable households remain stably housed; helping vulnerable households meet basic needs; increasing safety for vulnerable groups; and preventing housing discrimination while increasing protections for low-income renters. After limited discussion, Hammill moved to recommend approval of the resolution, with Williams providing a quick second. The motion carried unanimously, sending the action plan to the full council for evening consideration. ## North Haven: Consolidating Tiny House Villages The committee's second agenda item focused on a more immediate housing challenge: the city's ongoing effort to provide emergency shelter through tiny house villages. Tara Sundin provided an update on North Haven, a new village at 3300 Northwest Avenue that would consolidate and replace two existing shelter communities—Swift Haven and Unity Village. The project represented what Sundin described as a "fast track" initiative that began in summer 2023 when city staff worked with HomesNOW!, the nonprofit operator of existing tiny house villages, to identify a long-term location. The city purchased the Birchwood neighborhood property in April 2024 for $1.2 million, with the understanding that it would serve dual purposes: immediate emergency shelter and eventual permanent affordable housing development. ### Cross-Departmental Collaboration Sundin emphasized the collaborative nature of the project, involving staff from planning and community development, legal, public works, parks, and the mayor's office. "This is definitely in our wheelhouse as far as funding goes, but we are not in the construction realm," she explained. "This is one of those examples of when multiple departments are coming together to work together to implement a project." The infrastructure work proved substantial, with $450,000 invested in water, sewer, and utilities installation. Mobile units for kitchens, laundry, and restroom/shower facilities had been ordered and installed, though the project was still awaiting final electrical activation from Puget Sound Energy. ### Housing Quality and Building Standards The village development raised questions about building standards and long-term viability that Council member Lisa Anderson, participating as an observer, brought to the committee's attention. Anderson noted her previous experience on the planning commission when tiny home village codes were developed with intentionally short time limits because the structures weren't built to permanent housing standards. "The building codes for the tiny homes weren't that of housing. They were slightly amended because the idea is that they're temporary," Anderson observed. "If we're going to allow a tiny home village to be built and stay for something like ten years, has the building specs and codes changed in order for it to be a more longer term housing?" The question touched on a fundamental tension in the city's approach to emergency shelter. The original tiny home village code allowed only five-year permits (three years plus two one-year extensions) precisely because the structures were built to lower standards than permanent housing. Yet the practical realities of site development costs and ongoing need suggested longer-term operations might be necessary. Sundin acknowledged the complexity but defended the approach. "I'll say that I am not comfortable proposing a date for you," she told Anderson. "I never thought when I started working on addressing homelessness about ten years ago that this would become such an issue, and we've added years later, 4 or 500 shelter units and the need hasn't gone away." ### Unit Replacement and Quality Improvements A significant component of the North Haven project involved replacing existing 8x8-foot units from Swift Haven with new 8x12-foot structures. The smaller units, originally purchased by Whatcom County at the beginning of the pandemic, were deemed too small and had experienced moisture problems. HomesNOW! made the decision that all residents should have units of similar size and quality. The city supported this decision with $20,000 in funding—$10,000 for building materials and another $10,000 for energy efficiency upgrades including better roofing, insulation, and windows. The old units would be donated to United Way in Skagit County rather than stored, keeping them in service for emergency shelter purposes. Council member Lilliquist, who had volunteered at construction events, noted that while the tiny homes were "substandard" in the sense that they lacked individual plumbing and kitchens, they were built with standard stick framing that should last 20 years if properly constructed and weather-sealed. ### Inspection and Safety Protocols Questions about building inspections revealed a comprehensive oversight system. During construction, city building officials and inspectors visited weekly to monitor work quality. Once operational, staff conducted quarterly site visits involving community development staff, the building official, fire marshal, and planners to ensure ongoing safety and maintenance standards. The city had also developed detailed specifications working with A1 Builders, creating CAD drawings that could be replicated for future units. This standardization aimed to improve quality control while maintaining the cost advantages that made tiny house villages financially viable as emergency shelter solutions. ### Adjacent Property and Fire Department Plans The meeting also revealed that the city had just closed on the adjacent North Coast Credit Union building, which would serve dual purposes. The Life Safety Division of the fire department would move into the building, freeing up space at City Hall while providing a good neighboring presence for the tiny house village. The shared parking arrangement would give village residents more space while accommodating both uses. This acquisition demonstrated the kind of strategic property planning that characterized the city's approach to the site. By purchasing the adjacent building, the city created more operational space for the village while finding a productive use for an existing structure and meeting other municipal needs. ## Budget Constraints and Service Decisions Throughout both presentations, the impact of budget constraints on service delivery became clear. General fund allocations for community development contractual services had decreased by over $350,000 from the previous year, partially offset by $340,000 in justice sales tax funding for behavioral health activities. The competitive application process for rental assistance and supportive services illustrated these pressures. With 34 applications requesting $4 million but only $2.5 million available, difficult decisions were inevitable. Staff recommended maintaining funding for most existing programs at previous year levels, with limited increases for highly recommended programs and reductions or eliminations for others. Some programs without existing city funding received no recommendation, including new shelter initiatives, housing programs, and various social services. The message was clear: in a constrained budget environment, maintaining existing services took priority over expansion. ## Looking Forward As the meeting concluded, both agenda items highlighted the complex balancing act facing Bellingham city government. The action plan represented significant financial commitments to housing development and services, yet staff acknowledged that the pace of development would likely slow due to cost increases and financing challenges. The tiny house village discussion showed pragmatic problem-solving in the face of immediate need, but also raised questions about the long-term viability of emergency shelter approaches and the appropriate balance between temporary and permanent solutions. Committee Chair Cotton noted that the surplus resolution for Swift Haven units would appear on the evening's consent agenda, providing a procedural end to one phase of the tiny house village evolution while North Haven prepared to begin operations. The meeting adjourned at 4:38 PM with both items moving forward to the full council for evening consideration—the action plan with a positive recommendation and the tiny house village update serving as information for ongoing municipal planning. The discussions had revealed both the scope of Bellingham's housing challenges and the city's determined, if sometimes uncertain, efforts to address them within the constraints of available resources and regulatory frameworks.

### Meeting Overview The Community and Economic Development Committee met on May 5, 2025, to review the city's 2025 federal housing funding plan and get an update on the North Haven tiny house village. The committee recommended approval of $27 million in housing investments and learned about progress on consolidating two existing shelter communities into one new location. ### Key Terms and Concepts **HUD Consolidated Action Plan:** The federal government's required annual plan showing how cities will spend Community Development Block Grant and HOME program funds, plus local housing dollars. **Community Development Block Grant (CDBG):** Federal funding for community development activities that benefit low and moderate-income residents. **HOME Investment Partnership Program:** Federal program providing funding for affordable housing development and rental assistance. **Housing Levy:** Local voter-approved tax dedicated to affordable housing, also called the "Home Fund." **Affordable Housing Sales Tax (AHST):** Local sales tax revenue dedicated to affordable housing projects and services. **Low Income Housing Tax Credits (LIHTC):** Federal tax credit program that provides financing for affordable rental housing development, available in 4% and 9% credit versions. **CDAB:** Community Development Advisory Board that reviews funding applications and makes recommendations to city council. **Rental Assistance and Supportive Services (RASS):** Portion of the housing budget dedicated to services like rental assistance, homelessness prevention, and support services. ### Key People at This Meeting | Name | Role / Affiliation | |---|---| | Jace Cotton | Committee Chair, City Council | | Daniel Hammill | Committee Member, City Council | | Edwin "Skip" Williams | Committee Member, City Council | | Samya Lutz | Housing & Services Program Manager | | Tara Sundin | Community & Economic Development Manager | | Kathleen Morton | Community Development Staff | ### Background Context Bellingham receives federal housing funds that must be allocated according to a five-year plan and annual action plans. The 2025 plan reflects ongoing challenges with rising construction costs—the city now commits more than double per housing unit compared to just a few years ago. Despite having $27 million available, much of this comes from prior-year carryover funds rather than new revenue. Affordable housing sales tax revenue has declined, forcing the city to be more strategic about which projects to support. The North Haven project represents the city's effort to consolidate existing tiny house villages into a more permanent location that can eventually serve future affordable housing development. This reflects the reality that these "temporary" shelters are becoming longer-term solutions due to ongoing housing shortages. ### What Happened — The Short Version The committee approved staff recommendations for spending $27 million in housing funds, with 61% going to housing production, 23% to rental assistance and services, and smaller portions for preservation, homeownership, and community facilities. Two major new housing projects received funding: a 68-unit senior project by Mercy Housing Northwest and a 63-unit project by Bellingham Housing Authority. The committee also learned that North Haven tiny house village is nearly ready to consolidate Swift Haven and Unity Village residents into one location by the end of May. ### What to Watch Next • City council will vote on the resolution at the evening meeting • North Haven village relocation scheduled for completion by end of May • City council will consider code changes to remove the five-year limit on tiny house villages • Tax credit funding decisions expected later this year for the two major housing projects ---

**Q:** What is the total amount of the 2025 Housing Action Plan budget? **A:** $27 million, with about $12 million in annual funds and $15 million in carryover from previous years. **Q:** What percentage of Action Plan funding goes to rental housing production? **A:** 61% of the total budget goes to rental housing production, the largest category. **Q:** Who is Samya Lutz? **A:** Housing & Services Program Manager who presented the Action Plan to the committee. **Q:** What are the two major new housing projects receiving funding? **A:** Mercy Housing Northwest's 68-unit senior project in Old Town and Bellingham Housing Authority's 63-unit project on Unity Street. **Q:** How much will the Mercy Housing project cost total? **A:** Approximately $34 million total project cost, with the city contributing $5 million. **Q:** What is CDAB? **A:** Community Development Advisory Board that reviews funding applications and makes recommendations to city staff and council. **Q:** How many applications did CDAB review for competitive services funding? **A:** 34 applications requesting over $4 million, with about $2.5 million available. **Q:** What is the current five-year limit for tiny house villages? **A:** Tiny house villages can currently operate for up to five years (three years plus two one-year extensions). **Q:** Where is North Haven tiny house village located? **A:** 3300 Northwest Avenue in the Birchwood neighborhood. **Q:** How many units will North Haven have when complete? **A:** 48 units initially, with potential for 5-6 more if needed. **Q:** What size are the new tiny house units being built? **A:** 8x12 feet, larger than the current 8x8 foot units at Swift Haven. **Q:** How much did utilities installation cost at North Haven? **A:** $450,000 for water, sewer, and electrical infrastructure. **Q:** Who operates Swift Haven and Unity Village? **A:** HomesNOW!, a nonprofit organization. **Q:** What happened to the Swift Haven units? **A:** They will be surplus and donated to United Way in Skagit Valley for continued use. **Q:** When is the committee's motion scheduled for full council vote? **A:** The evening meeting on May 5, 2025. **Q:** How has affordable housing sales tax revenue changed? **A:** It has declined from $3.9-4 million to about $3.5 million annually. **Q:** What is the Lake Whatcom Center project? **A:** A supportive housing project on lower Lincoln Street serving homeless individuals at 30% Area Median Income. **Q:** How much did the city provide HomesNOW! for materials and upgrades? **A:** $20,000 total ($10,000 for materials and $10,000 for energy efficiency upgrades). **Q:** What is the "prevention and diversion" program? **A:** A $1.2 million program funded through federal HOME-ARP dollars to prevent homelessness. **Q:** What committees vote was unanimous? **A:** The committee voted 3-0 to recommend approval of the Action Plan resolution. ---