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After seven years of mishaps and funding difficulties, an urban renewal-aided development in North Portland finally is near the start of construction.

The proposed Killingsworth Station mixed-use project has endured a change in developers and multiple designs. But if the Portland Development Commission board this morning approves a third amendment to its agreement with the project developer, Winkler Development Corp., then construction on the project would start by Nov. 1. | Update Aug. 27: The PDC today voted to increase the loan to Winkler Development.

The project site is a 32,000-square-foot vacant lot at the corner of North Interstate Avenue and North Killingsworth Street. The proposed four-story, mixed-use building would include 54 one-bedroom condominium units, three two-bedroom condominium units and more than 9,000 square feet of ground-floor retail space to be sold to businesses and not leased.

Of the 57 condominium units, 32 of them would be considered affordable, so only families making no more than 80 percent of the area’s median family income would qualify to live in them.

“By making the condos and retail space for sale it helps eliminate the gentrification that can come along with these types of projects,” said Jim Winkler, owner of Winkler Development Corp., which in 2006 was selected by the PDC board and a public advisory group as the project developer. By providing affordable homeownership opportunities in an urban renewal neighborhood, existing residents can stay and new ones can move in, he said.

The concept is a far cry from the original plan proposed in 2004, when the PDC was working with Portland-based KemperCo.

“KemperCo wanted to do a mixed-use, mixed-income project like this, but (it) wanted to rent out the living spaces and retail,” said John Jackley, director of communication and business equity at the PDC. “Then as construction costs started to rise over the next few boom years, the company couldn’t make the apartments pencil out.”

KemperCo proposed more than 60 apartments and more than 12,000 square feet of retail space.

Not everyone is happy about the new plan.

“Maybe this project would’ve helped curb gentrification if they built it back in 2004. But it’s too late now,” said Julie Metcalf-Kinney, a member of the Interstate Corridor Urban Renewal Advisory Committee and executive director of Low-Income Housing for Native American People of Oregon. “When the urban renewal area was created, all the general funds for community organizations were redirected to the PDC brick-and-mortar projects.

“So not only did they lose their homes and businesses, they lost their community organizations.”

But Winkler disagrees.

“We want the people that live and work here to dig deep roots into the neighborhood,” he said. “We couldn’t think of a better way than to have the people that live here have a stake in the ownership of the property,” Winkler said. “By making these for sale we slow down the rapid increases in cost of living that can take place when an area is revitalized.”

Winkler wanted to move the project forward in 2008 and even made the property shovel-ready to accommodate his timeline.

“Do you remember what happened in September of 2008?” Winkler asked, rhetorically. “A near financial collapse of the entire nation and most of the western world.”

The project was placed on hiatus as he searched for a willing lender. He also turned his attention to the PDC to see if it could help out.

The PDC offered to increase its original subsidy from $3 million to $5.1 million. But Winkler still couldn’t find a lender.

Now there is one. However, Wells Fargo, which would loan $4.6 million, has a stipulation that the $14 million project include gap financing in addition to the subsidy. In order to accommodate this request and move the project forward, the PDC board will vote today whether to increase the PDC’s $3 million construction loan to $5.86 million. That would increase the PDC’s total investment to nearly $11 million.

“For us to stimulate the economy during the recession we’ve learned we have to increase our presence and position on the projects we want to see completed,” Jackley said. “And this is one of those projects.”

Not only is the project a top priority for the PDC, but the Interstate Corridor Urban Renewal Advisory Committee also has it at the top of its gem list, which includes the most important projects that should be paid for with urban renewal dollars.

“This is a big-time project for the community as it’s the first project along the Interstate MAX light-rail (line) since the recession hit,” Jackley said. “It shows that confidence is picking up on both the public and the private side.”