The size of the proposed Nishioka Building, projected to bring 150 units to the corner of State and Commercial streets. The project could receive urban renewal money worth nearly $750,000. (Troy Brynelson/Salem Reporter)

In a move to usher more housing and homeless services into the city of Salem, $1.5 million in downtown urban renewal dollars could go to a pair of upcoming projects.

Koz Development's micro-apartments and Union Gospel Mission of Salem's upgraded men's facility, both proposed downtown, could each nab grants worth $749,000, staff tell Salem Reporter.

Grants that size — over $300,000 — require approval from Salem's Urban Renewal Agency, which is comprised of the Salem City Council. Similar grants have been awarded in recent years to the Park Front office building and a 40-unit apartment.

Staff are considering putting their weight behind these projects because they both help the city meet long-term goals, according to Urban Development Director Kristin Retherford.

Retherford said staff plan to take a report to the agency on June 24, recommending approval for Koz Development's grant. Union Gospel Mission's is still being worked on, she said.

The micro-apartments add more housing in a hungry market, add to the city’s tax rolls and infuse other downtown businesses with customers, she said.

“Housing is a big (reason),” Retherford said. “That is a top priority within the Downtown Urban Renewal Area.”

The so-called Nishioka Building would bring 150 units to the corner of State and Commercial streets downtown. Rents have not been finalized, but project filings list the majority of its units as offering 270 square feet at $850 per month.

That rate would be cheaper than the average cost of a studio, according to SMI Commercial Real Estate. That same firm says apartment vacancy rates in the region stand at 1.8 percent, and monthly rents rose over the last three years from $780 on average to $983.

Snohomish, Wash.-based Koz Development declined to comment for this article.

READ: Downtown micro apartments seek tax break from Salem City Council to tamp rent.

The lot has been an empty, gravel square for more than a decade after a 2006 fire tore through McMahan's Furniture & Appliances.

Erecting an apartment complex there would not only add housing supply, but bring in more property tax revenue and provide a steady stream of customers to Salem's downtown businesses.

"Housing within the downtown core supports business vitality and business success, because you have a 24-7 customer base," she said.

Giving three-quarters-of-a-million dollars to Union Gospel Mission is less straightforward but it could meet some other needs.

Retherford said nonprofits are precluded from receiving downtown urban renewal grants, but she said the Urban Renewal Agency can still award the grant if they choose.

"It is the (agency's) prerogative to approve a grant under such circumstances, and they could certainly do so based on other compelling reasons," Retherford said.

The mission's projected 55,000-square-foot facility could break ground next year. Once completed, it could add more laundry services, showers, bathroom access and storage for homeless people. Such services were recommended last August by the Downtown Homeless Solutions Task Force.

According to Dan Clem, the mission's executive director, the city grant would help the mission's fundraising efforts. Currently it has about $9.5 million out of its $15 million goal.

"I think everybody wants to help," Clem said. The mission's proposed shelter, however, recently garnered a neighbor's appeal who said the project has grown behind what was originally planned.

READ: Business appeals Union Gospel Mission’s shelter once more.

City staff see another advantage to helping the mission move: When it does, the city’s Urban Renewal Agency will take over its current location at Commercial and Center streets.

Combined with four parcels the agency officially bought in late March, the agency would have substantial real estate to start finding partners to build something new, such as another hotel, a grocery store or mixed-use office space.

“When they relocate that provides a beautiful redevelopment opportunity at a gateway point into downtown,” Retherford said.

Have a tip? Contact reporter Troy Brynelson at 503-575-9930, troy@salemreporter.com or @TroyWB.