Philomath may soon get its first affordable housing complex — a proposed 33-unit apartment building at the corner of Main Street and North 20th Street — if financing and negotiations with a Wisconsin-based developer succeed.
The Philomath City Council agreed Monday night to pursue a partnership with Commonwealth Development Corp. for the $12.8 million project, which would mark a major step toward the city’s affordable housing goals.
“The council put developing this property into affordable housing on our strategic plan priorities for the year, which went into effect July 1,” Mayor Christopher McMorran said. “It’s now Aug. 11, and we already have a developer here with a conceptual project for this lot, so it’s been less than a month and a half.”
Commonwealth’s plan calls for a four-story, mid-rise building with 26 one-bedroom and seven two-bedroom apartments, plus surface parking on the back half of the property.
The complex would include on-site property management, a maintenance worker, community room, fitness room and business center.
“Even though it’s an affordable housing project, we really still develop and make it look and feel as if it’s a market rate project,” said Danny DiFrancesco, Commonwealth’s vice president of development. “You wouldn’t know the difference between affordable or market rate.”
Proposed rents would range from $663 to $1,260 for one-bedroom units and $796 to $1,512 for two-bedroom units, based on Area Median Income levels set annually by the U.S. Department of Housing and Urban Development.
Before Monday’s council meeting, DiFrancesco took city officials on a tour of Commonwealth’s 53rd Flats complex in west Corvallis — a 100-unit project completed about 18 months ago.
Commonwealth has developed more than 125 affordable housing projects nationwide, with five completed projects in Oregon and a sixth in pre-development.
“We are a long-term owner,” DiFrancesco said. “We don’t develop and then sell in a few years. We really are developing to be a long-term partner and be within the community for a long time.”
The rent structure drew skepticism from City Councilor Teresa Nielson, who noted that roughly two-thirds of the apartments would carry the highest-tier rents.
“That doesn’t seem like low-income housing to me,” Nielson said. “If I tell constituents that two-thirds of the rents are going to run between $1,200 to $1,500 a month, they’re going to say, ‘Teresa, is that really low-income housing?'”
DiFrancesco explained that smaller projects face tighter operating margins because fewer units are available to spread costs around.
“It’s a numbers game from the standpoint of needing to have more 60s (60% AMI units) to be able to cover those expenses,” he said.
McMorran acknowledged Nielson’s concerns but offered perspective: “Right now, it’s an empty field, so there’s no one able to be housed there.”
The project’s estimated $12.8 million cost breaks down to $7.9 million for construction, $3.3 million for financing and fees, and $1.5 million for design.
Commonwealth has applied for Local Innovation Fast Track (LIFT) funds and tax credits through Oregon Housing and Community Services. Under the proposal, Commonwealth would purchase the city-owned property for $1.
“To really make these deals go, having some type of city contribution goes a long way,” DiFrancesco said, noting that construction costs continue rising.
He also suggested the city consider reducing system development charges, which can be “a big hit” to affordable housing projects.
“I have seen certain municipalities potentially waive or give like 50% reductions,” he said in the context of negotiations that could potentially reduce costs to be able to provide more lower-income level apartments in the complex.
The timeline shows construction potentially beginning in June 2026, with completion estimated for August 2027.
The city purchased the half-acre site in March 2023 for $337,500 after the previous owner’s death led to discussions with family members in California.
“This wasn’t a property we were looking for, but there are enough good potential uses that the council gave direction to pursue it,” City Manager Chris Workman said at the time. “It’s got good potential, it’s a great location, and it’s got the added bonus that now the City Council has a little bit of control over what goes in there.”
City Attorney Ashleigh Dougill said the transaction would likely involve a development agreement setting terms for the project, with many details to be negotiated in future executive sessions.