Read part two of this two-part series here.

A local apartment complex, which is partially under an affordable housing program, may be overcharging tenants.

On July 20, staff from the Washington State Housing Finance Commission, which oversees the housing program at Friday Harbor Village, confirmed that some tenants could be paying more than the program’s rent regulations. A review by staff should be completed during the week of July 24. Watch the Journal for updates.

David Mills, a member of the limited liability corporation which owns the property off Carter Avenue, affirmed that he is working with WSHFC staff to resolve the issue. Mills spearheaded the audit, during the week of July 17, after the Journal questioned him about tenants’ alleged excess rent.

Until the review is completed, the details of the possible excess fees are unclear, said Mills. On Wednesday, July 18, he confirmed one tenant was charged $50 more than the rent regulations, for about four months. He said another tenant, living in a different sized unit, could have been overcharged, but didn’t provide details.

According to the program’s guidelines, rent in a three-bedroom apartment cannot exceed $1,055. On July 18, Mills said one overcharged tenant was paying $1,100 for a unit of that size, since April.

“We are correcting it with the tenant,” said Mills at the time.

If the audit reveals tenants have been overcharged, said Mills, their rent will be reduced and fees reimbursed. The WSHFC requires proof of the reimbursements.

Before the WSHFC review, the Journal spoke to two tenants, who asked to remain anonymous. Each tenant said they paid $1,100 a month for their three-bedroom apartments, but did not provide documentation. Mills and the housing authority declined to release information on the overcharged tenants, so it is unclear whether the Journal previously interviewed them. Currently, no tenants have been notified that they were overcharged.

Tax credit

In 2015, a foreclosure on the property broke the agreement to offer affordable housing, according to the WSHFC Director Val Pate.

This started a three-year grace period to give tenants enough time to find additional housing, before market-rate prices begin at the end of this January. Those living at the complex before the foreclosure could maintain their reduced rates until the beginning of 2018, but new tenants were charged market rate.

The possibly overcharged tenants, identified in the WSHFC review, lived in the complex prior to the foreclosure. The tenants who spoke to the Journal said the same, but could not provide documentation.

Margaret Graham, the WSHFC communications manager, explained there is no obligation to display program rates at the complex. However, she said, property owners annually report tenants’ income compliance with the WSHFC, which Mills has done.

According to Graham, Friday Harbor Village was accepted into the Low Income Housing Tax Credit program in 1994. In this federal program, developers receive tax credits in exchange for offering affordable housing. Usually, developers sell the credits to investors, giving builders the cash they need for construction.

By now, all the tax credits have been used by the building’s previous owner or investors, said Graham. The current owner was not part of this exchange, she added.

Under the agreement, tenants at Friday Harbor Village had to earn 60 percent of the median county annual income to be qualified to rent 22 of the units. They needed to earn 30 percent of the median income to be qualified to rent three of the units. Rent rates are then determined by their income and unit size.

Rent increases

According to another anonymous tenant, who lived at Friday Harbor Village prior to the foreclosure, rent for this person was raised $150 in the last year.

One raise occurred under the first owner after the foreclosure; the other was raised under the second, current owner.

The increase is about $50 lower than the highest rent allowed under the program for the tenant’s apartment. However, the large increase in a short amount of time can be hard on renters, said San Juan Island Family Resource Center Director Jennifer Armstrong. Armstrong has heard about the increases at Friday Harbor Village from those served by the social service organization.

“Rent has been raised significantly there, and it’s getting really tough for tenants to stay,” she said.

Armstrong suspects many tenants moved out because of the rent increases. Although tenants could have maintained paying the program’s reduced rents until 2018, Mills said 14 of the 26 units are no longer in the program.

The tenant’s increased rent includes a fee for utilities, which was implemented within the last year. The cost of utilities is included in the maximum rent rates under the affordable housing program.

Mills said the complex has undergone roughly $100,000 worth of improvements since Friday Harbor Village LLC purchased the property in May of 2016.

Mills added that rent after the program expiration has not been set though there are currently about 10 people on the waiting list for apartments.

To determine whether your Friday Harbor Village unit is still part of the program to receive reduced rent, contact the WSHFC at 206-464-7139. To search for local affordable housing, visit housingsearchnw.org.

To discuss housing issues with the Journal, email hday@sanjuanjournal.com. Check the Journal for updates.

Staff photo/Hayley Day Friday Harbor Village includes 22 units, 16, of which, still receive reduced rent, according to a housing authority.