DevNW is hoping to turn Evergreen Church into 14 units of affordable housing but faces another hurdle after Salem City Council denied it funding. (Amanda Loman/Salem Reporter)

A developer seeking to build 14 units of affordable housing faced a set back after the Salem City Council denied it federal funds that would have helped with construction costs.

Nonprofit housing developer DevNW is hoping to turn Evergreen Church at 905 Cottage St. N.E. into an apartment complex that will include single-room occupancy, one bedroom and two-bedroom units. The nonprofit also wanted to turn the parsonage on the church parcel into its commercial office.

But nearly all the city councilors opposed that idea, saying that DevNW’s plan to include an office in the central Salem development would adversely affect the neighborhood.

The Grant Neighborhood Association sent a three-page letter to council that said putting a commercial office at the church property would chip away at the neighborhood’s character and recommended the council deny it funding.  

“There are certainly many worthy projects deserving of this funding that will not require a speculative rezoning and redevelopment of vibrant, historic properties contrary to the recommendation of the neighborhood association,” the letter signed by land use chair Paul Tigan states.

The council’s move comes at a time when Salem and the rest of the state face mounting problems over housing. Homelessness has been of high concern for Salem residents, with 41% saying it was their top issue last year. In the same survey, less than a third of respondents said they felt Salem did a good job ensuring residents have access to affordable housing.

Despite Oregon’s widespread housing shortage, the amount of housing built in the state during the last decade reached a record low.

Michael Andersen, a senior researcher with the Seattle-based sustainability think tank Sightline Institute, said delays like the church project are exactly why it costs a lot of money to develop housing of any kind, especially affordable housing.

“Every single time we add delay and have to go through a whole process again to find a new site or find a new HUD allowance, it drives up the cost and that means you get fewer units per dollar and fewer units get housed,” he said.

City council voted on June 22 to approve the Salem-Keizer Consolidated Plan, a document that outlines how the city will spend federal money earmarked for affordable housing and other community development projects, leaving out $393,539 set aside for DevNW’s church project. Councilor Matt Ausec was the sole nay vote and councilor Jackie Leung didn’t vote because she is participating in homeownership classes with the nonprofit.

The federal HOME funds used for the plan are specifically earmarked for private nonprofits called Community Housing Development Organizations that are dedicated to addressing housing needs. DevNW is one of two such organizations in Salem.

During the council meeting, DevNW CEO Emily Reiman said her group is trying to site its office in the parsonage. She said that doing so would make the project more viable because DevNW would pay rent into the affordable housing project instead of at their current office downtown.

Reiman told councilors over Zoom that siting an office at the location of an affordable housing project is often seen as a positive because there are eyes on site.

Mayor Chuck Bennett asked Reiman if she had been informed of the council’s long-term policy on bringing commercial space into an historic neighborhood.

“Do you understand how profoundly concerned [the Grant Neighborhood Association] are about the changing character of that neighborhood?” Bennett said during the meeting.

Reiman told councilors the nonprofit doesn’t plan to change the exterior of the building but would use the interior to host classes of 10 to 15 people on financial literacy and homeownership.

Councilor Cara Kaser said changing the zoning would require a comprehensive change of the Grant Neighborhood Plan, adopted in 1983.

Kaser, who owns a home across the street from the proposed project, said she was “very concerned that DevNW is not really willing to compromise because you need the office.”

Reiman said DevNW searched for a property that would meet affordable housing requirements for more than a year and hadn’t found any other viable alternatives.

“It’s very difficult to find property that meets the requirements for affordable housing development, in a location near transportation and services, and in a size-range that matches available funding sources,” she said in an email.

The project also went through an environmental review, which has its own restrictions, like a project can’t be near train tracks.

Andersen with Sightline said there are a lot of leverage points for people to be able to say they support affordable housing, just not that specific project they object to.

“The idea that a neighborhood’s character is a value to be prioritized over someone else’s right to live indoors or someone else’s ability to live in the best place for their family is not what I believe personally and it’s not what most people would believe if put to that question,” he said.

Ausec, who voted against denying the project funding, said time and time again the council has been shown the emergent need for affordable housing and has made waivers for other projects in the past.

“We make so many concessions for private developers and I’m disappointed we’re not doing that for a community developer,” Ausec said.

Reiman said that she was surprised that the council denied the project funding because her group’s office would have meant less foot traffic than the church. She also said that the offices’ services would have been available to residents.  

Despite the set-back, DevNW is moving forward with the project. The churches zoning status needs to be changed before it can be turned into housing. The project’s land use application will go before the Salem Planning Commission on July 21.

“This is a moment for the city to walk its talk about affordable housing, and I hope they will. We’ve taken our office out of the project plan and off the table as an objection, so I hope we see strong support for the project moving forward, with everyone unified behind the common goal of creating quality affordable housing in Salem,” she said in an email.

When asked if the project can pencil without the commercial office, Reiman said, “We’re actively exploring that right now, but it definitely creates a budget gap. We will likely need to add additional housing units, in the parsonage and also in the main building (which is great for creating more affordable housing). We may also need additional grant funding for the project.”

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