By Ted Katauskas

In the Town of Friday Harbor—a historic community (pop. 2,500) on the eastern shore of San Juan Island that has served as the bucolic backdrop for Hallmark Channel movies— everything revolves around the ebb and flow of water. The pace of daily life in the state’s only municipality not accessible by road is dictated by the summer schedule of the Washington State Ferries system, which conveys passengers and vehicles from Anacortes, the closest mainland city, on four vessels that arrive every two to three hours, from dawn until 1 a.m.

One of the largest, the M/V Yakima, which calls on Friday Harbor twice a day, carries 2,000 passengers and 144 cars and trucks; when operating at full capacity, the full fleet brings 11,361 people to Friday Harbor’s sidewalks, and 1,015 vehicles to its streets, every 24 hours. In the tourism high season, the influx stresses the quaint town’s infrastructure, and the patience of locals, to the breaking point, with bumper-to- bumper traffic snaking from the ferry landing halfway up the length of Spring Street (downtown’s mile-long primary arterial) after the ferries dock, from May through September.

After a bustling 2017, summertime congestion had become bad enough that Town Administrator Duncan Wilson proposed a—by Friday Harbor standards—radical solution: replacing the stop signs at one of Spring Street’s most notorious bottlenecks with a traffic circle.

“We put in a roundabout, and you would’ve thought there’d be rioting in the streets,” says Wilson, who was recruited to Friday Harbor from North Bend in 2011 by the town’s long- standing administrator, King Fitch, who held the position for 25 years and was revered by many locals (when Fitch announced his retirement that year, the town newspaper headlined its story “King’s Reign Nears Its End”). “This job is like walking a razor blade, because any time you suggest something new, whenever you make a decision, you always have to keep in mind the history of this place and its reluctance to change. It’s about maintaining the long-held culture here so when you improve things, you have to just tweak them ever so much.”

As an example, the no-frills traffic circle Wilson designed with the town engineer—inspired by an innovative roundabout he saw in Ireland on vacation—was built by adding torch-down plastic strips over existing pavement (allowing grocery-laden semis from the ferry to roll over it), requiring no street demolition or construction and little more than a few gallons of reflective paint and signage. Still, for months the project was the talk of the town. At the roundabout’s dedication in May 2018, county officials presented Wilson with a gag gift, an inflatable seat-cushion ring referencing its local nickname—Duncan’s Doughnut. Despite all the hoopla and grousing, ferry traffic flowed smoothly around it, easing congestion, so much so that last May the town added another roundabout a few blocks up the street.

“We’ve done an awful lot of infrastructure: we’ve redeveloped sidewalks, water systems, sewer systems, streets, and underground utilities—the meat-and-potatoes stuff—because my predecessor left me with some money in the bank and we went for grants,” says Wilson, who plans to retire in January after a decade at his current job and a government career spanning 40 years in five cities. Still, he adds, “No matter what I think my legacy may be, it’s going to get overshadowed by the fact that the roundabout I suggested was called ‘Duncan’s Doughnut.’”

The municipal history and culture of Friday Harbor, named for a Hudson’s Bay Company sheepherder, has a recurring theme: fiscal restraint coupled with long-term sustainability. Three years after the town’s incorporation in 1909, when the local economy revolved around a lumber mill and a salmon cannery—as well as a bustling wharf adjacent to a University of Washington marine biology field station—a well that served as the hamlet’s primary source of drinking water became contaminated, resulting in an outbreak of typhoid. Declaring that “the future of Friday Harbor depends on good water and sewage systems,” the town council, with voter approval, adopted an ambitious plan to secure a reliable supply of water, building a dam at Trout Lake on the west side of the island and a 5.5-mile-long wood-stave pipeline that was operational within a year—a system that (after multiple upgrades) still serves as the town’s primary water supply.

No matter what I think my legacy may be, it’s going to get overshadowed by the fact that the roundabout I suggested was ‘Duncan’s doughnut.’
– Duncan Wilson, Town Administrator

Some 30 years ago, long after the lumber mill and cannery closed, local leaders made a calculated bet that tourism would better sustain the economy. They funded a visitors bureau that over the decades has proved to be remarkably effective, with Friday Harbor regularly appearing on national and international lists of “Best Places” to live and visit.

Aside from a fledgling tech and research sector (anchored by UW’s Friday Harbor Laboratories and Luxel Corporation, which manufactures optical filters used in NASA space telescopes), Friday Harbor’s economy remains almost exclusively aligned with tourism. High-priced retirement and vacation homes spread across San Juan Island’s 55 square miles, with the square-mile Town of Friday Harbor hosting almost all of the island’s tourism infrastructure, restaurants, inns, markets, and boutiques—and the expenses that come with it.

Fiscally conservative—when Wilson began serving as town administrator in 2012, he inherited a $15 million capital reserve fund—the town, with one of the lowest property tax rates in the state and no utility tax, derives the vast majority of its $2.5 million annual general fund revenue from the windfall it receives from sales tax. And that’s driven by tourism and construction, as well as online purchases of goods unavailable on the island; per capita, Friday Harbor is one of Amazon.com’s most lucrative markets. But a ferry-driven population that swells tenfold on busy summer weekends comes with its share of challenges.

“I often call us the busiest 2,500-population city in the country. Take the sewer plant, for instance,” says Wilson. “The plant is actually serving 950 customers, but we have to build it and maintain it to handle the maximum capacity, which might be 25,000 people on a really big summer weekend day. Right now, we’re facing a $15 million upgrade of our sewer plant. And $15 million is darn near the end of the world for a small town.”

Heeding its culture of sustainability, the town already has made significant investments in good-for-the-planet (and the local economy) upgrades to its municipal infrastructure. After converting all of the town’s streetlights to energy-efficient LED (with the help of a state grant) five years ago, in May Friday Harbor powered up a 100kW solar array (at a cost of $579,280, 90 percent funded by state and private grants) on city-owned acreage outside the sewage treatment plant that will produce 12 percent of the electricity consumed by the plant, saving the town $11,000 annually. With another grant, the town also upgraded the plant’s pumps to energy-efficient variable-speed pumps.

Then there’s biowaste, which is transported (via ferry, then highway) to the Town of La Conner, which operates a biomass plant that converts Friday Harbor’s effluent into compost that’s used to fertilize tulips across the Skagit Valley. And garbage: instead of sending its individual collection trucks across the Salish Sea via ferry, the town has partnered with San Juan County to build a transfer station on the island where collected trash is ferried off the island in large containers, reducing the town’s carbon footprint while reaping a significant cost savings. And Friday Harbor has just supplemented one of the state’s most successful municipal recycling programs with a pilot program, funded by the SC Johnson company, to add so-called “stretchy” plastic film, including bubble and shrink-wrap used in Amazon packaging, to the town’s stream of recyclables.

Inspired by such wins, Friday Harbor has adjusted its can-do spirit to focus on tackling the town’s single greatest hurdle to achieving long-term economic viability: a dearth of affordable housing for its resident population.

“If we don’t provide affordable housing for our citizens and our essential workers, we’re not going to be very sustainable,” says Farhad Ghatan, Friday Harbor’s mayor. “This is the number one issue here. Right now, there are many good-paying jobs being offered here that cannot be filled because of the lack of housing. We hired a new community development director who searched for months to find a house for his family. He lived for a time on a 22-foot boat down at the port. This is a guy who makes over $100,000 a year, and it was hard to find a place to live for under a million dollars. It’s brutal.”

When Ghatan moved to Friday Harbor from Seattle in 1991, it wasn’t difficult to find reasonably priced fixer-uppers; a contractor who specialized in historic restoration, he later purchased a three-story Victorian with a wraparound porch that was built in the 1880s by San Juan Island County’s first judge.

After meticulously restoring the home, Ghatan opened it in 2015 as the Friday Harbor Grand, a boutique inn referencing the 1910 Steinway B grand piano that is the centerpiece of the inn’s parlor, where the mayor, a classically trained pianist, hosts evening concerts for guests and anyone from town who wanders by.

“What attracted me was the community and the way people treated each other,” says Ghatan, who was elected in 2017 and is running for a second term. “I lived in the same house in Seattle for seven years, and I didn’t know a single neighbor. Here, before I even closed on my first house, I knew all my neighbors.”

Five years after moving to the island, Ghatan was invited to take an open position on the town’s planning commission. (After subsequently serving six years as the commission’s chair, he was elected to the town council in 2013, and four years later became mayor.) During his tenure with planning, in 2002 the town commissioned a study to assess the real estate market and housing needs of town residents, and the conclusion was less than uplifting.

“While the Town of Friday Harbor is the center of commerce on San Juan Island, the wealth generated thereby generally does not accrue to the residents of the town,” the report concluded, noting that incomes of town residents (who primarily worked in the service industry) trailed incomes of county residents (typically vacation homeowners and retirees) by more than 30 percent. “This creates a seemingly insurmountable barrier for young people, those of lesser means and wage earners when it comes to achieving home ownership or even finding affordable rentals.”

The study recommended three potential approaches to addressing this inequity, including requiring local businesses to pay a livable wage (noting that the town lacked regulatory authority enforce such a measure), relaxing zoning restrictions to allow for the construction of up to 200 units of infill housing, and providing subsidized housing for low-income residents. Led by the town council and the San Juan County Housing Advisory Commission, on which Ghatan also serves, the island has focused on these last two objectives, with a heavy lift provided by a pair of local nonprofits.

Aided by rural development grants from the USDA’s Mutual Self-Help Housing program, Homes for Islanders developed plats and purchased lots in existing Friday Harbor residential neighborhoods, then provided technical assistance for low-income islanders who agreed to work 35 hours per week for 14 months to build a three-bedroom single-family home, for around $300,000, less than half the market value of a similar home.

“This is not for everyone; it’s a 14-month endurance project,” says Executive Director Bill Gendron, who notes that dozens of nonprofits have replicated this model to create 50,000 units of affordable housing across the state and around the country. “Typically, people are renting, so when they move in we are making rentals available, which is kind of cool because it opens up the rental market. Still, more homes are needed.”

But they won’t likely be built by Homes for Islanders. In August, after completing the last 10 of 129 homes it has constructed since 1998, the nonprofit will suspend operations for at least two years due to a lack of available land.

For now, that leaves the San Juan Community Home Trust. Using funding from federal, state, county, and private sources, the Home Trust has built 41 affordably priced homes (from $113,000 for a two-bedroom to $212,000 for a three-to- four-bedroom) in three neighborhoods for locals with low to moderate incomes (earning from 50 to 115 percent of the area median income). Like Homes for Islanders, the Home Trust requires applicants to contribute sweat equity (a modest 50 hours) to each build, but unlike Homes for Islanders homeowners, who are free to sell their homes at market value, Home Trust homeowners must abide by a deed restriction that uses a resale formula to ensure that each home is sold at a below-market price to another income-eligible local to ensure that its inventory is “forever affordable.” In addition to a fourth neighborhood of eight units, the Home Trust plans to build additional affordably priced homes in the future, thanks to a five-acre donated parcel annexed into the town in 2009.

“There’s a big gap,” says the nonprofit’s board president, Sarah Crosby, who estimates that the island needs to add another 300 affordable units to meet existing demand. “Like any intractable problem, it’s due to a complex set of issues, and you need to think about all of the contributing factors and address them in a comprehensive way.”

To that end, Friday Harbor’s council recently relaxed zoning ordinances to allow residents to add accessory dwelling units to existing homes, and it is studying an increase in building height to allow for the construction of three-story apartment complexes. As well, the Housing Advisory Commission in 2018 levied a 1 percent excise tax on real estate transactions to create the San Juan Home Fund, an affordable housing grant that is expected to generate $15.2 million over 12 years.

“We have seen over 150 units of new housing in the town of Friday Harbor in the last two years,” says Ghatan. “That is huge in a town of 2,500.”

But because the island was perceived as a refuge from the pandemic—due to its isolation and community-wide adherence to social distancing measures—urbanites from Seattle and other cities, untethered from offices as teleworking became the norm, have snatched up what few existing homes remained in an already tight housing market, depleting inventory and driving island home prices ever higher: in 2019, the $602,000 median home here already was more than 50 percent above the $397,900 statewide median; according to MLS data in July 2021, the median home price on the island had soared to $852,000.

So what is the ultimate solution for Friday Harbor?

“There’s no single answer; it’s looking at all options,” says Windermere real estate broker Gary Franklin, who once proposed anchoring a mothballed World War II troop ship off Friday Harbor to serve as workforce housing. “For a while people were saying affordable housing, we need more of that, but I’m a proponent of available housing. If there’s more housing supply, the prices will come down and become affordable.”

We have seen over 150 units of new housing in the Town of Friday Harbor in the last two years. That is huge in a town of 2,500.
– Farhad Ghatan, Friday Harbor Mayor

Verne Howard, owner of Friday Harbor Marketplace and King’s Market (grocery stores that have been in business for four decades) and a co-owner of San Juan Island Brewing Company (opened in 2017), says he can’t afford to wait for that to happen, nor can he afford to pay wages high enough for his 180 employees to purchase market-rate real estate. His solution: buy apartments and lease them to those on his payroll as employee housing, a fringe benefit that ensures loyalty and longevity— some have been working for Howard for more than 30 years.

“Housing is a big deal,” says Howard. “It’s worse now that we’ve become a very attractive place for people to live.      I’ve been doing this for 55 years, and I’ve learned that it’s all about your employees: you take care of your employees.”

Victoria Compton, executive director of the Economic Development Council of San Juan County, firmly believes Friday Harbor will never be able to build its way out of its affordable housing conundrum. For her, the most relevant statistic isn’t the median sales price of Friday Harbor’s homes, but the average earnings per local job ($38,593, 51 percent of the state average) and the fact that the figure has remained static for more than 50 years, ranking San Juan County 38th of the state’s 39 counties.

“At some point you have to say, ‘OK, there’s a lot of people here who are doing worse than they were 30 years ago and are leaning on social safety nets,’” Compton says. “People can’t afford to put their kids into childcare because they’re not making enough money. People used to be able to afford a house, or certainly could afford an apartment, but now a lot of those have been turned into vacation homes. As a result, we’ve got people living in cars now, and we didn’t used to have that as a problem.”

To address the wage stagnation, the San Juan County EDC has launched a pilot project, free to locals, offering online training in high-paying professions, work that can be done from home or elsewhere on the island. Recently, a cohort of students received certification in computer-aided design, while another soon will begin coursework in cybersecurity, industries where the entry- level wage is more than double that of an island service worker.

“Once you start looking at wages, you’ve fixed everything,” Compton says. “You don’t have to have the affordable housing conversation. You don’t have to have any other conversation. And what’s the best way to do that in a rural community with an untrained workforce? You do that by having a long view.”

Fortunately for Friday Harbor, long-range planning is something the town does best. And like everything in Friday Harbor, the moral of this story circles back to water.

Farhad Ghatan thinks of Greg Bell, the keynote speaker who wowed him at AWC’s annual conference in June, and the parable that is central to his book, Water the Bamboo.

“It’s the most amazing parable in governance,” he says. “A bamboo farmer plants his bamboo seed and starts watering it on day one. And at the end of year one, he’s still watering, and the end of year three, he’s still watering. He hasn’t seen anything, and at year five the sprout emerges from the ground. And in 60 days, it grows 90 feet and is harvestable. That’s the parallel to the work we do in government: you have to be patient. You have to keep doing what you feel is right and just keep at it.”

That explains why in 2016, despite its present-day challenges, the town council voted to allocate a sizable sum from each year’s budget to a capital fund for a replacement dam at Trout Lake, work that won’t begin until 2035.

“We’re not short-term here in our thinking,” says Ghatan. “The first iteration of our water system got built a hundred years ago, and it has been looked after since then. The irony is that on many other parts of this island, wells are going dry or being inundated with salt. Yet this little one-square-mile town has the necessary water infrastructure to provide service for the next 100 years.”