The residents and staff of Nickelsville got some unwelcome—but not entirely unexpected—news this week.

In an email sent Wednesday morning, Sharon Lee, the executive director of the Low Income Housing Institute (LIHI) informed Nickelsville staff and leadership that they will be severing their relationship with the organization. This could end up defunding the organization, as well as costing Nickelsville staff their jobs, and it means that Nickelsville will almost certainly be evicted from its three tiny house villages in Georgetown, Northlake, and Othello.

"It has become apparent that there are fundamental differences in our organizations’ approaches and aspirations," Lee wrote. "While we are proud of the good work we’ve accomplished together in providing shelter and community to hundreds of people and families experiencing homelessness, it has become clear that these differences are not reconcilable."

The differences between the two organizations have become increasingly apparent in recent months, as Nickelsville and LIHI, which contracts with the City's Human Services Department (HSD) to operate the tiny house villages, failed to come to a compromise on operating procedures at Nickelsville villages.

Nickelsville was established as a self-governing community for people experiencing homelessness, emerging during the administration of former Mayor Greg Nickels, who ordered regular sweeps of homeless encampments in the early 2000s. According to Peggy Hotes, an advocate for the homeless and a co-founder of Nickelsville, people would return to their camps at night to find their homes dismantled and all of their possessions taken away by the city.

"Nickels was ordering sweeps of encampments no one was complaining about," Hotes says. "He was making people's lives miserable for no reason."

Residents of these encampments, along with advocates like Hotes, began to organize, and what eventually emerged was a rotating tiny house village dubbed Nickelsville after the old mayor. The first site was set up in 2008 on a vacant piece of land owned by the City on West Marginal Way. Nickels, however, did not grant his approval: The day the camp opened, notifications appeared saying that it would be soon be swept and dismantled. In protests that took place that week, camp residents and activists, including Hotes, were arrested.

Over the years, Nickelsville has moved from public to private land and back again. Today, the organization maintains three tiny house villages in partnership with the LIHI. According to the Seattle Times, the three sites combined receive over a million dollars each year from the city. With LIHI severing that relationship, Nickelsville will cease to receive it.

The root of the conflict between Nickelvilles and LIHI is, in part, what the purpose of Nickelsville really is.

"Nickelsville views it as permanent housing," LIHI’s Sharon Lee told me in a phone interview. “The problem is that when you have people staying there long-term, other people can't move in."

But Hotes, a former elementary school teacher who spent years sleeping at homeless encampments to show people that it wasn't dangerous or scary, told me in a phone interview that the reason Nickelsville considers the housing permanent is that there's no other choice. Despite LIHI mandating that all Nickelsville residents meet with case managers tasked with helping them into permanent housing, there just isn’t enough affordable housing in Seattle, Hotes said. Waiting lists for affordable housing can be years-long. In the meantime, people have nowhere else to go.

Hotes also said Nickelsville staff feel like LIHI doesn’t include them when making decisions. Instead, she said, LIHI works directly with the HSD and cuts the staff and residents of Nickelsville out of the process. As an example, she cited a two-story shower tower LIHI built at the tiny house village in Georgetown. “Some of our people are homeless because of mobility issues,” Hotes said. “They can’t get upstairs. If they had consulted us, we’d have told them to build it in a trailer.”

On another occasion, she says, “we were moving from Ballard to North Lake, and every house in Ballard had a solar panel. They voted as a camp, when we move, we want to continue to be an eco-village. And LIHI said no. They said, ‘We don't want it.’ It’s disrespecting the residents not to give them a voice.”

A spokesperson for the HSD said the agency supports LIHI's decision to sever its relationship with Nickelsville, and Lee says that it’s Nickelville’s management, including Scott Morrow, a longtime Nickelsville leader, that’s the problem. "They hide information from us," Lee told me. "If an incident happens, they don't want us to know. They are basically saying it's none of our business, which doesn't make sense. We have a lot of responsibility and if someone gets in a fight or is doing drugs or gets barred from some reason, they don't want LIHI to know and they don't want case managers to know." (This isn’t the first time Morrow has been accused of poor management, including by residents. In 2016, residents at an encampment on Dearborn voted to oust Morrow and were soon evicted from their camp. The year before, a camp in the ID voted “no confidence” in Morrow as well. Morrow declined to comment on the record.)

Lee also says that Nicklesville enforces their rules arbitrarily, which results in some people being barred for petty offenses while others are allowed to stay. As an example, she says that one man was permanently barred for double-parking while a man who instigated a fight was not just permitted to stay but given a position in leadership. "That's what we're concerned with," Lee said, "punitive, unfair, and arbitrary treatment of residents."

After getting the news on Wednesday, Nickelsville asked LIHI to participate in mediation, but at this point, it's unclear the relationship can be salvaged at all. Still, Hotes is optimistic that Nickelsville will survive. They’ve had difficult times before—they’ve been targeted by the city and the police. They’ve been kicked out of neighborhoods. They’ve swelled and shrunk with the population. And they’ve always, somehow, survived.

"HSD is really the ones to blame," Hotes says. "They are putting pressure on LIHI to get people into permanent housing but there's just not enough affordable housing. I wished they understood that most people are homeless because they don’t have a home and that won't change until there is more housing available. It’s just that simple."