Two developers discussed the possibility of constructing 36 workforce apartments on a property to the west of Adventist Health Tillamook with the county’s housing commission at a meeting on July 18.
Steven Wade said that he is working with the county and his partner, Clayton Taylor, to realize a project on site but that it will take considerable work to combine different financing elements and realize the project successfully.
Wade and Taylor are targeting the property immediately to the west of Adventist Health Tillamook’s campus on Third Street, with a vision of turning the three-acre parcel into housing for workers at Adventist or other area businesses. The apartments would be spread across two, three-story buildings, with both one- and two-bedroom units, as well as a leasing office located in a separate building.
The first hurdle for the project is the site’s status as a brownfields property, meaning that it has hazardous material concerns from a past use. Wade said that for the project to move forward, the county would need to remediate those issues and remove a house that is on the property as part of its brownfields program.
A more considerable obstacle comes as Wade and Taylor consider funding for the project, which they estimate will cost around $8 million.
Wade said that offering the units at rent levels affordable to individuals earning the area’s median income would not generate large enough returns to attract private investors as equity partners, leaving the project to rely on institutional investors.
To secure institutional financing, developers will need to either put down 40% of the project’s cost up front, which is a nonstarter, or demonstrate the project’s viability to banks by preleasing the site. Preleasing involves developers finding local businesses that agree to lease a certain number of apartments in a project for a set period, removing the risk of low occupancy.
Wade said that he and Taylor plan to approach Adventist Health, the Tillamook County Creamery Association, county government and other local businesses about preleasing, and encouraged commission members to have other interested business owners reach out.
Another critical element in making the project financially viable will be receiving funding support from government programs. According to Wade, the project will need to secure at least $1 million in grants, or forgivable or low-interest loans to make the economics pencil out. Wade mentioned Tillamook County’s multifamily housing grant program as a possible source of support, as well as the county’s property tax abatement program for workforce housing.
Wade said that he was optimistic about the project’s prospects and that he had already had conversations with the property’s owner, who had signaled a willingness to sell the property for housing development.
Wade explained that he hoped that the Tillamook project would help his team get their foot in the door in the county and make future projects easier to achieve by building successful relationships with financiers and contractors.
The Tillamook project is not the first that Wade and Taylor have attempted in the county, as they are also involved in the Maker Manzanita proposal, which envisions a two-phase project that would add 68 total units of workforce housing to that city. However, according to Wade, that project has recently hit a snag as promised state funding for infrastructure improvements fell through, leaving developers on the hook for almost $3 million in infrastructure spending to facilitate the development.
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