Tiny-House Funding Debate Reveals Fractures Over Future of Homelessness System

Low Income Housing Institute director Sharon Lee
Low-Income Housing Institute director Sharon Lee at an event promoting a proposed tiny-house village in South Lake Union last year.

By Erica C. Barnett

Last week, the Seattle Times published a story about state Rep. Frank Chopp’s (D-43) decision to allocate $2 million in state funding to the Low-Income Housing Institute to build tiny house villages. Both Chopp and LIHI’s director, Sharon Lee, took issue with the piece, which suggested that Chopp (who co-founded LIHI 31 years ago, but has no financial interest in the nonprofit) had improperly used his power to take the money away from three other projects that the King County Regional Homelessness Authority had chosen through a competitive bidding process.

The story of the $2 million is both more complicated and simpler than the Times’ coverage suggested. More complicated, because the state allocated the funds for tiny house villages almost a year ago; the money was never spent because of decisions made by Mayor Jenny Durkan, whose administration gave a series of excuses for not releasing the funds before her term ended last year. And simpler, because the money is ultimately controlled by the state, which can do what they want with it—including funding LIHI directly without going through any bidding process.

Chopp says he first agreed to find $2 million to fund tiny house villages after City Councilmember Andrew Lewis, a longtime advocate for tiny house villages, asked Chopp to help fund his “It Takes A Village” strategy—a plan to build 12 tiny house villages across the city. The 2021 state capital budget, adopted last April, dedicated the $2 million explicitly to “tiny homes (Seattle).” Last June, the council adopted—and Durkan signed—the Seattle Rescue Plan, which, among other things, allocated another $400,000 in operations funds to supplement the $2 million from the state (on top of $2.8 million from the 2021 budget that had gone unspent) to build new tiny house villages. The Durkan Administration, however, never spent the money.

“They never had the money. It was not theirs to begin with.”—State Rep. Frank Chopp (D-43)

At the time, Durkan’s staff gave several reasons for declining to take action on the funding, including the fact that the city hadn’t allocated long-term funding to keep the villages for years in the future (as council members pointed out at the time, the city only budgets in one-year increments); a lack of staffing as the city’s Homelessness Strategy and Investment division emptied out in the runup to the KCRHA taking over; and a desire to let the KCRHA’s new director, Marc Dones, implement their own shelter strategy.

Dones has made no secret of their desire to overhaul the region’s shelter system. On several occasions, Dones expressed skepticism about the tiny-house village model, suggesting that group houses or a more direct route from the street to permanent housing might be a better option. This created a sense of urgency for tiny-house proponents to get the new villages up and running by the end of 2021, before the authority took over, as well as a mistrust between LIHI and the new authority that persists to this day.

Advocates for tiny house villages were still asking the city to spend the $2 million as late as September, but gained no traction. “We were all frustrated that that money sat there for a whole year, and we kept asking the mayor’s’ office and [the Human Services Department, why aren’t you putting out a [request for proposals?]” LIHI director Sharon Lee recalled.

According to Chopp, as 2021 wound down, he called Lewis and the interim director of the city’s Office of Intergovernmental Relations, Robin Koskey, and said “‘Time’s up. A year ago, you promised it was all ready to go, and you promised the money would be spent by the first quarter of this year,'” which ended on March 31. At that point, Chopp said, he decided to take action by writing a local community project request—a way of earmarking capital funds for specific projects—to fund the three LIHI villages. Chopp said he told Nigel Herbig, the KCRHA’s intergovernmental relations director, “Nigel, you don’t have the money” in the third week of January.

The Times reported that Chopp withdrew money that the KCRHA had in hand, a contention Chopp called “ridiculous. They never had the money,” he said. “It was not theirs to begin with.”

A KCRHA spokeswoman, Anne Martens, did not respond to detailed questions about Chopp’s conversation with Herbig, subsequent conversations between Chopp and the KCRHA, or why the authority moved forward to seek bids for the $2 million even after being told the money was going to LIHI. “[A]s you know, the RFP as awarded does fund tiny house villages,” Martens said in an email—a reference to a 25-unit project the Chief Seattle Club proposed in partnership with LIHI and a separate expansion of Catholic Community Services’ existing Pallet Shelter on 15th Ave. W.

Despite Chopp’s action to earmark the $2 million for LIHI, the agency still applied for funding through the KCRHA’s process; as we reported, the authority rejected both of their applications to build and operate their own tiny house villages, saying that their proposal to build a village on City Light-owned property in South Lake Union, which Lewis supported, would require people to live in “inhumane living conditions.”

Martens said she would have to look into our question about what specific conditions were “inhumane” when we asked about this last Tuesday, and had not followed up by press time. In a previous conversation, Martens said the awards prioritized “equity” and “lived experience.” The authority, Martens said, used “competitive bidding in order to be more equitable… and that is reflective of our commitment to centering lived experience.”

Asked why she applied for KCRHA funding if she knew Chopp had already earmarked the $2 million for LIHI, Lee said she “assumed that KCRHA had chosen to backfill (add) the $2 million from other sources,” such as leftover rapid rehousing funds from the Durkan Administration’s unsuccessful effort to cycle unsheltered quickly through hotels into permanent, often market-rate, apartments.  “Why would the RHA take this information and then proceed to award the funds if they were told that the funds were not available?” Lee said. “Why wouldn’t they make another plan or find additional funding?”

“We’re using every single dollar that we can right now to address the crisis of homelessness and housing and the shadow pandemic—all of those dollars are accounted for. We cannot continue to layer on additional funding.”—City Councilmember Teresa Mosqueda

KCRHA has not said how they plan to pay for the projects that won funding through its bidding process. One possibility, Martens said, is to go to the city of Seattle, which provides about 70 percent of the authority’s funding, for the money. “We are talking to the City about this whole snafu to figure out what the next steps are,” she said.

Barring a dramatic turnaround in its budget forecast, the city seems unlikely to provide the authority with additional money this year. “We’re using every single dollar that we can right now to address the crisis of homelessness and housing and the shadow pandemic—all of those dollars are accounted for,” city council budget chair Teresa Mosqueda said. “Marc and the RHA are receiving 68 percent of their funding from the city of Seattle. We cannot continue to layer on additional funding.”

Mosqueda called Chopp’s action to allocate the $2 million to LIHI “appropriate,” adding, “We have to be good partners with the state legislature when they trying to help with the most pressing issue in our city. You either use funding or you lose funding, and I’m glad that the  funding is being deployed so that people can continue to get access to tiny house villages, regardless of whether through RHA or directly from the state legislature.”

Although it’s tempting to chalk the dispute over the state funding to animosity between a single homeless service provider and the homelessness authority, tension has been bubbling up over Dones’ tendency to dismiss current models for addressing homelessness, including existing outreach strategies and shelter models, as moribund. Social service providers have expressed frustration about Dones’ plan to spend millions hiring “peer navigators”—people with “lived experience” of the human services system—to provide intensive case management to people living unsheltered downtown, noting that existing outreach and service providers already hire people with lived experience, they just don’t brand themselves that way.

Providers have also said they wish the authority had addressed inequitable wages for outreach workers before creating a parallel, and arguably competing, system whose workers will make substantially more money than those working for nonprofits that receive their funding through the RHA.

Rejecting LIHI’s tiny-house model may be part of the same tendency to reinvent the wheel. Last week, the Sand Point Community Methodist Church advertised a forum featuring Dones, deputy mayor Tiffany Washington (who is in charge of the city’s homelessness strategy) and Lee, from LIHI. Dones and Washington were no-shows. (According to a spokesman for the mayor’s office, Washington “had a COVID exposure” and the organizers weren’t able to connect her remotely.) Martens sat in for Dones. The debate over funding for tiny houses did not come up. 

9 thoughts on “Tiny-House Funding Debate Reveals Fractures Over Future of Homelessness System”

  1. I agree with the description of the KCRHA as trying to ‘reinvent the wheel’ when we have competent service providers already many with ‘lived experience’ that the KCRHA seems unaware of. Seattle has transitional shelter models too including tiny house villages that work as well.

  2. Anyone know the “prepare 3 envelopes” joke about the new bureaucrat. I hope the new King County Homeless Director knows it as trying to undercut Frank Chopp – who is doing exactly what he should – is very appropriate.

  3. Tiny house villages are expensive magnets for predators–look at the experience with the one on Aurora & @ 88th/Licton Springs, for example. Lee showed her true colors when KOMO’s Choe tried to get answers about why LIHI’s existing rules were not being followed. Dones looks like he will identify a whole new set of cronies to whom he will pay our money. None of them are already successful and none has a plan for what to do about people declining offered help. Meanwhile, the rest of us pay and pay and pay some more, and realize no results. Meanwhile Lee and people like her pay themselves hundreds of thousands of our dollars to not solve the problem. They are in the business of perpetuating their own incomes, nothing more. Time for accountability: let’s make the providers all open their books to the public and account for every penny of our money so we can identify which might be most likely to give us some value for it, and then cut off the rest.

    1. Given the number of actual housing units LIHI has successfully developed and managed, Sharon Lee could easily earn orders of magnitude more if she took her considerable skills to the private sector.

      I also suspect based on the ignorance of the rest of your post that you are blissfully unaware that LIHI gets audited all the time the finance staff of the governmental entities that fund them – all of whom have forgotten more than you’ll ever know about the rules and restrictions (and there are whole a lot of them) that accompany public financing of low-income housing projects.

      1. Yes, I do. What’s your point? I want to see the books be publicly available for all of us to see exactly how our money is being spent.

      2. I think Jay is actually referring to an IRS Form 990, which is basically the nonprofit organization version of a 1040 return. These can be found pretty easily on GuideStar and are required to be made available by nonprofits.

        As to the specific information about government contracts and the nonprofit agency outcomes and projects they fund, sp88ky can waste public employee staff time and tax dollars easily enough by filing a public records request for them if they are honestly curious enough to spend the time and effort doing so. It won’t be nearly as incriminating as they think it will, though.

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