A project by the Island Housing Trust to build eight affordable homes at 250 State Road in West Tisbury has rankled some elected officials who question why the cost of construction — which is partially subsidized by the town — is so high — and why the contractor hired to build the project is also a member of the trust’s board of directors.

The questions surrounding the $3.1 million project surfaced at the annual town meeting last month and at a selectmen’s meeting last week. They echo other questions that have surfaced recently about the housing trust and its sister organization, the Island Affordable Housing Fund.

Because the trust is a nonprofit organization, it is not bound by state public bidding laws, even though it takes in and uses public money. The Massachusetts Open Meeting Law, public records law and state ethics law also do not apply.

The 250 State Road project dates to 2007, when the Martha’s Vineyard Land Bank and Island Housing Trust jointly purchased 22.5 acres along State Road. The land bank retained part of the property as open conservation land, while the trust hired South Mountain Company to design and build a pocket neighborhood of eight single-family houses in a 3.5-acre building envelope. One of the houses will be built by Habitat for Humanity of Martha’s Vineyard.

The co-owner of South Mountain, John Abrams, is a member of the board of directors for both the trust and its sister nonprofit, the housing fund.

At 250 State Road the houses have been designed with high-performance building standards and include Cape Light Compact-funded solar electric systems that will allow the homes to approach zero net energy. It is one of the most energy efficient new housing projects in the country, but also much more expensive than a traditional development. Once building is completed, the trust plans to work with the town and the Dukes County Regional Housing Authority to locate income-qualified households and conduct a lottery selection. The eight houses are scheduled to be sold while the trust will retain ownership of the land in a ground lease. Resale restrictions will be placed on the homes to ensure that they remain affordable.

At the West Tisbury annual town meeting last year, voters approved $400,000 in Community Preservation Act funds for the project; another $170,000 in CPA funding was approved at the annual town meeting last month. At that meeting, there were questions from voters about the high cost of construction and why there had been no public bidding process.

Similar questions surfaced at the April 22 meeting of the selectmen. Board member Jeffrey (Skipper) Manter questioned what kind of control the town has over the design and cost of the project now that CPA money is involved. “They are using public money now,” Mr. Manter said. “Can the town say, as part of the [approved] article, we can require you to go out to bid?”

The cost of the project is estimated at about $400 per square foot.

“The numbers on this project are quite high . . . unusually high,” selectman Richard Knabel said.

“They are small [units] too, only around 1,200 square feet,” agreed Mr. Manter.

Planning board member Virginia Jones said since CPA funds were first approved two years ago, the cost of the project has gone up. She agreed money could be saved if the project went through a public bidding process.

“In the future I hope these projects are shovel-ready, to borrow a popular phrase of late,” she said. “I also think these projects should be subject to competitive bidding . . . there are many contractors on this Island who can do these projects for less money.”

Mrs. Jones cited another frequent complaint, that the contracts for the affordable housing projects seem to go to a select few contractors, including board members of the Island Housing Trust and Island Affordable Housing Fund. South Mountain is the contractor for 250 State Road.

“It has sort of become a niche market for certain contractors to do most of these projects,” Mrs. Jones said. “That’s not throwing stones, that’s just the way it is.”

Tax records for the Island Housing Trust obtained by the Gazette show that South Mountain Company was the highest paid contractor for the trust in 2006. That year the trust paid South Mountain $574,665 for design services. Tax records for the Island Affordable Fund from the same year show that South Mountain Company was paid $163,358.

The trust and fund are sometimes difficult to distinguish. Indeed, auditors have taken note of the fact that the two organizations share board members and grant contracts to board members. Patrick Manning, executive director of the fund, is also a board member for the trust.

This week Philippe Jordi, executive director of the trust, acknowledged the questions and responded. He said construction costs for 250 State Road are misleading, because the cost of the green technology will largely be paid for through state grants and a contribution from the Cape Light Compact. If the trust built homes minus the renewable energy amenities, it would cost the town the same amount of money, he said.

Mr. Jordi said the trust builds environmentally friendly projects, not just because they are better for the planet, but because they save money over the long run.

“We are looking to provide affordable housing not just for now, but for generations to come. And that means doing modest size, energy efficient homes with green technologies and durable materials,” he said.

He cited the trust’s green building practices, drafted in February of 2008, which state in part: “ . . . while initial affordability is a primary concern, [the trust is] also committed to using the best green building practices to decrease maintenance and energy costs to ensure ongoing affordability.”

Mr. Jordi said the trust is not required to go through a public bidding process; he said that does not change because CPA funds are used. But he said the trust does, in fact, solicit bids from Island contractors, and publishes requests for qualification in local papers to alert contractors when a job may be available.

He said the trust sets a profit margin ceiling of 10 per cent for all projects, which may be a deterrent to some contractors. But he also said the trust has made changes recently in an attempt to clarify their process for selecting contractors. In April, the trust drafted a new set of guidelines, largely because of the more frequent use of CPA funds in various affordable housing projects. “Frankly, we were hearing concerns from various people in the public and in the industry, and we felt the previous process was insufficient. We decided it was time to clarify how we choose contractors . . . especially if CPA funds were involved,” he said.

He said he plans to bring the new policy around to Island selectmen in the weeks ahead.

Mr. Jordi said he is confident that board members of the trust, including Mr. Abrams, have no conflict when their firm is awarded contracts or paid for services. He said a legal counsel reviewed the question of conflict, but he also conceded the attorney who performed the review is also a member of the trust’s board who often provides legal services on a pro-bono basis.

Mr. Jordi said board members routinely recuse themselves.

“Whenever there is a decision or a vote that has anything to do with a board member’s professional occupation, that person does not participate. Even town representatives, who technically don’t have to recuse themselves, will step aside,” he said.

And he said he welcomes criticism.

“To be honest, we receive criticism on all levels. Some people think we are doing too much; others think we are doing too little. Some want a project more dense, others want it less dense. Some say we need to cut costs, others say we need higher performance construction,” he said, adding:

“We’ve learned that’s all part of the process.”