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Innovative Housing Inc. has closed on its purchase of the historic Erickson and Fritz buildings in Old Town Chinatown, and moved a step closer to its $15.5 million renovation.

The nonprofit affordable housing developer bought the two adjacent buildings (which front Northwest Second and Third avenues, between Couch and Burnside streets) from Bill Naito Co. for $2.2 million. Innovative Housing plans to turn the combined 51,381-square-foot space into workforce housing.

Both buildings have colorful stories beyond their decorative brick facades and elaborate cornices. The Erickson opened in the 1880s as Erickson’s Saloon – a roughneck haunt named for patron August Erickson. The Fritz was named for Fred Fritz, who operated a saloon and cabaret theater during the same time period.

Innovative Housing will preserve the exteriors while converting the interiors into 62 workforce apartment units. Ten units will be market-rate, but most will be for individuals earning 50 to 60 percent of the area’s median family income.

A full seismic upgrade will be required; however, instead of reinforcing the exterior frame, Innovative Housing will create an interior courtyard with concrete shear walls that run from the foundation to the roofline, Executive Director Sarah Stevenson said. The approach preserves the historic appearance, which is critical to project financing.

Innovative Housing is raising equity for the project through the sale of federal historic tax credits and a federal low-income tax credit. The Portland Housing Bureau also awarded the developer an approximately $6.3 million cash grant, which is tied to a commitment to provide affordable housing for 60 years.

Stevenson said she hopes to close soon on a construction financing package with Wells Fargo so that work can start in June. Silco Commercial Construction Inc. is the general contractor. LRS Architects is handling design for the Erickson building; ORANGEWALLstudios is handling it for the Fritz.

Robert Black, senior vice president for NAI Norris, Beggs & Simpson, brokered the purchase for Innovative Housing. He said the project will follow in the footsteps of the Modern Rich Apartments – a nearby historic building Innovative Housing converted to workforce housing in 2012 – and add to the vitality of Old Town Chinatown.

“(The Modern Rich Apartments) was the model they were trying to leverage off of,” Black said. “That’s nicely populated with good retail on the bottom, and it has these great rehabbed historic units up top. It was a successful project, like this one will be. It’s not the norm of what everyone else is doing.”