Copyright The Oregonian
The west hills of Coos Bay, where Greg Drobot plans to build homes affordable to middle-income workers, are tough terrain — and from a developer’s standpoint, a bit of a money pit. Among the costs chewing into his $17 million site work budget are the steep expense to lay new sewer lines and other utilities through 80 acres of former Oregon Coast timberlands to service 400 single-family homes that he plans to construct over the coming decade. His full development costs, he says, are still very much a moving target. So it came as some relief to Drobot when a state loan program, approved in the 2024 legislative session, went live in February. He’s among the first developers to seek assistance from the “Moderate Income Revolving Loan program,” which taps $75 million in state funds, funneled through cities and counties, to issue grants to developers, structured as zero-interest loans. Developers in turn agree to rent or sell the properties the funding supports to households earning a maximum of 120% of an area’s median income during the ten-year lifespan of the loan. Where Drobot is building, for instance, 120% of the area median income for a four-person household would be equal to $97,100 in 2025, according to the city. Instead of paying property taxes, grantees pay back the money as a fee to the local governments, which in turn pay back the state. If everyone pays their debts, money will revolve through the fund and enable the state to issue more loans over time. Housing-finance officials with Oregon Housing and Community Services have said they expect the $75 million the Legislature earmarked for the program to eventually produce between 2,000 and 3,000 new homes. Drobot’s development and two others in Tillamook County were hailed by Gov. Tina Kotek, who championed the fund in Salem, as some of the first, and are expected to initially bring 132 new affordable homes online, some by next summer. One of the Tillamook County projects will bring ten for-sale duplexes to the Nehalem area at a total cost of $5.6 million. Shane Boland, director of development with Owen Gabbert LLC, says his company hopes to raise about $300,000 from the revolving loan fund. The duplexes will be sold through what’s known as a community land trust, which lowers home prices because an entity such as a nonprofit owns the land and the homeowner owns the sticks and bricks on top. The developer of the other Tillamook County project did not respond to a request for comment. While Oregon Housing and Community Services administers the program by statute, local governments must act as “sponsors” in order to start issuing loans. Local governments like the City of Coos Bay are still trying to understand their compliance requirements. In a city with no housing department, said City Manager Nichole Rutherford, it may need to outsource some of that work to experienced groups such as CCD Business Development Corp., its local economic development nonprofit. “It’s a really fine dance between the state, the county and the city,” Rutherford said. Kotek thanked the City of Coos Bay and Tillamook County for stepping up first. “Hard-working families should have an easier path to finding a home they can afford,” she said in a statement. As in much of the state, coastal communities are grappling with shortages of affordable rentals and for-sale homes, local officials say, leading many job seekers who land employment at places like schools and hospitals to back out of offers once they survey the tight housing markets. “It helps fill that gap,” said Rutherford. Drobot and Rutherford say the Timber Cove development aims to open 30-50 homes by late summer 2026 with the help of an estimated $4 million from the revolving loan fund. When Drobot was previously developing stores and other commercial real estate around Coos Bay, business owners and tenants regularly told him they could lease more space and hire more workers if the city had more affordable housing. “It’s kind of a chicken and the egg,” he said. “You need the jobs but you also need a place for people to stay.” Business partners persuaded him to take a chance on the Timber Cove land, which has been planned for residential for about a decade but lain fallow because of the lacking infrastructure — a common problem for Oregon developers seeking to do their part in addressing the state’s housing crunch. The bare earth, for instance, needed a pump station to take wastewater to a new treatment plant. Drobot said he expects the homes to sell for $400,000 to $450,000, depending on whether they have three or four bedrooms. “When you see a brand-new home,” he said, “there’s much more in that sale price related to infrastructure than people realize.”
