TO: Mayor and City Council
FROM: Councilor Linda Nishioka, Ward 1
SUBJECT:
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Revised Motion - Motion from Councilor Linda Nishioka regarding support for the United Way - Cottages United phase 2 affordable housing project, located on Market Street, NE near Swegle Elementary School.
Ward(s): Ward 6
Councilor(s): Councilor Hoy
Neighborhood(s): ELNA
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MOTION:
I move to direct the Bond Oversight Steering Committee to consider recommending the City use $500,000 in affordable housing bond funds to support the next phases of the United Way of the Mid-Willamette Valley’s Cottages United affordable housing project located on Market Street, NE near Swegle Elementary.
DISCUSSION:
Councilor Nishioka has revised this motion to refer this proposal to the Bond Oversight Steering Committee for consideration and recommendation.
In May 2021, a significant step was taken toward providing affordable housing for low-income seniors when the Salem City Council voted to sell city-owned property to the nonprofit United Way for a planned tiny home project. This initiative aims to offer affordable rent to seniors in need. Phase 1 of the Cottage Clusters project reached a milestone with a ribbon-cutting ceremony on May 30, 2024.
These Cottage Clusters are an exemplary model of affordable housing development. I hope the City Council will support Phase 2, using $500,000 of the $10,000,000 from the Safety and Livability Bond designated for affordable housing. The project will deliver:
• Safe, affordable, and sustainable housing provides tenants with financial security.
• Priority is given to low income seniors, women, and veterans.
• Rent is $500 monthly, approximately 30% of the average Social Security benefit.
• Tenants pay rent and electricity, while United Way covers other utilities.
• The construction is cost-effective and meets building and energy codes.
• Stable housing improves health and well-being.
• Providing low-income housing for seniors can reduce public costs in other areas.
• It prevents at-risk seniors from falling into homelessness.
• Society has an ethical and moral responsibility to care for its aging population.
Rhonda Wolf from United Way stated, "Our goal is to provide a safe and affordable place to call home for as long as they can live independently."
Staff Note:
United Way has estimated the development cost for phase 2 at approximately $1,000,000. This motion seeks to support the development of phase 2 by using $500,000 of City affordable housing bond funds for the project. Use of these bond funds are limited by Oregon law. The funds may only be used for capital costs for projects under public ownership. Therefore, to utilize bond funds for the project, the City must re-acquire and own the land, then lease it back to the United Way for them to build and operate the development. To maintain bond covenants, the City must obtain roughly equal value for the investment of bond funds. This may require that the City will need to maintain ownership of the land and the improvements until the City repays this portion of its bond issuance in 2026.
Upon Council adoption of this motion, staff will prepare a purchase and sale agreement to acquire the land from United Way utilizing the bond funds, and a lease back to United Way to allow them to develop the project. The lease will require United Way to maintain the cottages as affordable for the period of the lease. Once the details of the purchase and sale agreement and leaseback have been agreed to in principle, staff will present the plan to the Bond Oversight Steering Committee for review.
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