Island County commissioners aren’t happy with a Seattle nonprofit for its lack of progress in turning a Freeland motel into a mixed-use housing development.

Commissioner Melanie Bacon, who’s known for calm restraint, admitted at a meeting and in an interview that she is “genuinely, honestly angry” with the Low Income Housing Institute, or LIHI, for failing to offer much-needed housing for low-income people a year after receiving a county grant. She’s also concerned that the organization doesn’t seem to be following its obligation to offer both short-term shelter and permanent supportive housing.

“It’s been a year and we don’t have one person in that place,” she said. “If they were as enthusiastic as we are, then we would have had people in there months ago.”

Yet Sharon Lee, the executive director of LIHI, said in an interview that the organization is moving forward with the project and plans to honor its contract for both types of housing. She said LIHI will soon start open short-term shelter accommodations — now that a stairs project is complete — and will begin the process of applying for a change of use permit to operate permanent supportive housing, which are essentially apartments with help.

Lee argued the organization is not to blame for the delay. She said LIHI’s efforts have been stymied by persistent “NIMBYism” from people who simply don’t want to see the project succeed.

In a June 27 letter to Bacon, Lee even blamed the county planning department for setting up barriers to the project by providing contradictory information for a permit to build new stairs. Yet a timeline that the planning department provided to the commissioners shows that LIHI attempted to build stairs without a permit, which resulted in a stop-work order, and that the delay was a result of LIHI taking months to provide complete information.

LIHI received the permit to build new stairs on the front and back of the building on June 31.

It’s undeniable, however, that LIHI has faced other impediments in trying to build housing for Whidbey residents in need. In 2019, the Oak Harbor planning staff, the hearing examiner and the city council approved a project that would have provided workforce housing to veterans and others downtown. But a merchants association sued and a superior court judge invalidated the permit. LIHI appealed and lost.

Then the organization received a $1.5 million grant from the state Department of Commerce to convert the Harbor Inn in Freeland to a housing project. The group asked Island County for a matching grant, which raised a stir in the community with people concerned about increased crime, overtaxing of the septic system and zoning issues. The commissioners ended up awarding the grant in a 2-1 vote, with Commissioner Jill Johnson in opposition.

A group called Freeland Concerned Citizens filed a lawsuit against LIHI, the county and the owner of the motel in an attempt to prevent the organization from getting the county money and buying the property. The group dismissed its own lawsuit after a judge denied a preliminary injunction request. LIHI wasn’t able to recoup $90,000 spent in legal fees — which it said would have gone into the project — but won a $10,000 award from Freeland Concerned Citizens’ attorney for violating a civil court rule by claiming that LIHI was accountable for a man’s death.

Lee said the Freeland Water and Sewer District sent a letter in March that threatened to cut off the water unless individual meters are installed for each unit. LIHI’s attorney sent a stern letter to the district that explained that the district’s stance is “grieviously mistaken and legally baseless” since it mistakenly assumed the facility is being run as multi-family residential housing.

“While LIHI eventually plans to convert the Harbor Inn into low-income permanent housing, it has not yet done so,” the letter states.

Lee said the water was not cut off but acknowledged that individual meters will have to be installed for the 10 units that will someday become permanent housing units.

Island County commissioners discussed their concerns about the lack of progress with the project at a recent workshop meeting with the planning, health and human services departments.

The staff members explained that LIHI can operate an overnight-type shelter under the current “transient housing” use. Transitioning units to supportive housing, however, will be an onerous process with many requirements, including the evaluation of the septic tank.

Planning Director Mary Engle said the staff members weren’t able to answer many questions because LIHI hasn’t agreed to a pre-application meeting or submitted permits for the permanent housing part of the project.

“One of the reoccurring problems we’re having with this is that we still don’t know what they’re doing,” she said. “It’s all speculation.”