Over 220 apartments in Salem will remain available to low-income renters under a public-private partnership to preserve the region’s largest affordable housing complex.
Tenants at the privately owned Orchard Park Apartments, located at 4100 Kacey Circle N.E., were seeing rent increases of as much as $400 per month once the complex’s initial 30-year affordability term expired at the end of 2021, said Jessica Blakely, assistant housing administrator at the Salem Housing Authority.
Aberdeen Capital, a Woodinville, Washington-based socially conscious real estate investment company, last week purchased the apartments for $51 million through a partnership with the Salem Housing Authority and Oregon Housing and Community Services, which contributed $23 million.
The company also intends to renovate 21 units damaged in a fire in 2021, something the previous owners were unable to do.
“If we didn’t step in, 224 units would have left affordability and gone to market rate,” said Ben Englund, a co-founder of Aberdeen.
Apartments like Orchard Park which rent below market rates are typically given tax breaks or other incentives for a specified period of time, during which the property owner agrees to limit rents based on state affordability guidelines.
When that period expires, often after 30 years, building owners can return the units to market rate. But before doing so, owners must notify the state or local government and give them an opportunity to purchase the property at market rate.
Blakely said keeping Orchard Park affordable was a top priority for the Salem Housing Authority. The loss of such a large complex would have undone years of work to build new affordable housing projects in Salem.
“All along our focus has been on the residents of the community and trying to fight to keep the affordability there,” she said.
The property will remain tax-exempt under the purchase agreement. Aberdeen received $20 million from the state toward the purchase and another $3 million toward needed repairs from the fire damage.
Englund said those provisions will allow Aberdeen to keep rents affordable for people earning 60% of area median income — about $35,000 per year for one person, or $50,000 for a family of four.
Under state guidelines, the maximum rent allowed at that level in 2023 is $942 for a one-bedroom apartment and $1,131 for a two-bedroom in Marion County.
“This is why I ran for mayor. It’s days like today that make it all worth it. Today we got to help 224 families stay in their homes. I couldn’t be happier,” said Salem Mayor Chris Hoy in a news release.
Before the complex’s affordability provision expired, it was renting to households earning 60% or less of Salem’s median income.
Starting in January 2022, some tenants faced rent increases. Others moved out and units were rented at market rates to families who weren’t eligible for low-income housing.
Blakely said currently, the property is renting to households earning 80% of the Salem area’s median income or less, about $47,000 for a single person or $67,000 for a family of four. In the coming years, they plan to return it to just people earning 60% or less, but that will take time.
“Our intent is not to displace any households if possible for those that moved in during the gap,” she said.
The housing authority has a small ownership share in the building and will provide services to residents, including determining what work and renovations are needed in apartments. Following the building acquisition, the housing authority and Aberdeen are working to get state money to help cover the costs of needed renovations, Blakely said.
So long as the partnership is active, the property will be tax-exempt, lowering operating costs for Aberdeen and allowing them to keep rents lower.
Prospective tenants interested in leasing can contact Orchard Park at [email protected].
Contact reporter Rachel Alexander: [email protected] or 503-575-1241.
SUPPORT OUR WORK – We depend on subscribers for resources to report on Salem with care and depth, fairness and accuracy. Subscribe today to get our daily newsletters and more. Click I want to subscribe!
Rachel Alexander is Salem Reporter’s managing editor. She joined Salem Reporter when it was founded in 2018 and covers city news, education, nonprofits and a little bit of everything else. She’s been a journalist in Oregon and Washington for a decade. Outside of work, she’s a skater and board member with Salem’s Cherry City Roller Derby and can often be found with her nose buried in a book.