Joseph Ditzler
The Bulletin

Property between Parrell Road and U.S. Highway 97 in southeast Bend is scheduled for the next phase in affordable housing financed by the city.

Fourteen homes are planned in Southern Pines, a subdivision at Parrell Road and Southeast Calvin Way where 10 homes are already built. It’s just north of Shady Pines, a 10-home affordable housing project completed in 2013.

Jim Long, Bend city affordable housing manager, said builders may move dirt in Southern Pines by summer’s end and have homes ready to occupy by spring 2015.

The project, funded partly by an affordable housing fee paid to the city and partly by a state grant, aims to help residents whose earnings are at or below the area median income — $64,000 for a family of four — buy homes of their own. The result is a home that would list for approximately $270,000 but — with its costs underwritten — sells for less than $200,000, Long said.

“It’s very hard for most entities to do that,” he said. “But we’ve got some creative financing on this one, got some pretty good contractors working on it, and the overall developer of it is Building Partners for Affordable Housing.”

Building Partners for Affordable Housing, the nonprofit arm of the Central Oregon Builders Association, purchased the property, with city financing, out of foreclosure in 2011 for $232,000, Long said. The purchase money originated with the city’s affordable housing fee, one-fifth of 1 percent of the estimated value listed on city building permits, and with a grant from the state Home Ownership Assistance Program.

The partnership bids the construction work, and the city loans each contractor the money to build on each lot, at no interest and with payments deferred. The builder pays no interest on the construction loan, saving $10,000 to $15,000 in costs that come off the home price, Long said.

Homebuyers must qualify for a mortgage. The buyer also assumes title to the lot but pays nothing on the zero-interest, deferred-payment loan originally held by the partnership. By deferring payments on the lot purchase, the city further reduces the overall home price by another $55,000 to $65,000.

A lien on the home ensures the city is paid its share whenever the home is sold again, Long said.

Building Partners for Affordable Housing acts as the middleman in the transaction, applying in stages for enough public funds to build two or three homes at a time, said Tim Knopp, COBA executive vice president.

He said builders make little profit but see the program as an investment. Entry-level homebuyers build equity that one day helps them afford more expensive homes.

“I think the builders that participate with us believe in the mission,” he said. “Once they do it, they get very connected to the people they are building the houses for. … They recognize the life-changing trajectory it can have for a family with a lower income.”

Eight to 10 building contractors take part in the program, Knopp said. He and Long said the city, through the building program, also kept some builders in work during the recession.

“At one point, I think it was 2008 or 2009, COBA figured the city of Bend was the largest construction lender in the city,” Long said. “We were making hay while the opportunity was there.”

— Reporter: 541-617-7815,