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As an affordable housing complex in Portland鈥檚 Sunnyside neighborhood nears its regulatory expiration, the city has agreed to facilitate a company鈥檚 purchase of the property to ensure units remain affordable.

The Portland City Council on Wednesday authorized acquisition financing up to $6 million to help Washington-based Vital Housing buy Belmont Dairy Apartments and Lofts, at 3340 S.E. Morrison St. After the current owner 鈥� 33rd & Morrison LLC, according to city records 鈥� placed the property on the market earlier this year, the Portland Housing Bureau offered acquisition financing to a prospective, preservation-oriented buyer.

The property held a dairy before it was redeveloped in 1996, said Danell Norby, housing investment and portfolio preservation manager at the Portland Housing Bureau. The building has 85 apartments above five commercial spaces, including one occupied by Asian grocery store H Mart. Building amenities include an enclosed courtyard, two resident lounges, a community room with a kitchen, parking, and on-site property management.

Currently, 65 units are restricted to 60 percent of the area median income (AMI) or less; however, the regulatory agreement is set to expire in December 2026. A market-rate conversion would increase rents by $450-$860 per month, according to the Portland Housing Bureau.

The Belmont Dairy Apartments is one of many affordable housing properties with 30-year regulatory agreements approaching expiration, according to the bureau. The total number of units at such risk through 2034 is 1,130, it reported.

鈥淚f we really want to address affordable housing, making sure we don鈥檛 lose those properties at the back end of the portfolio is critically important; otherwise, we鈥檙e back at square one,鈥� said Corey Baldwin, vice president of acquisitions at Vital Housing.

With the acquisition, 67 units (47 one-bedroom units, 19 two-bedroom units, and one studio) will be restricted to 60 percent of AMI or less.

The financing consists of a $6 million loan at 0 percent interest for 60 years via Construction Excise Tax funds from the Portland Housing Bureau. The loan also leverages more than $18 million in private financing.

The Portland Housing Bureau will regulate and monitor the project for up to 99 years. The bureau will charge a fee over that span to cover compliance monitoring costs.

Following acquisition of the property, Vital Housing plans to install a 100-kilowatt solar array on the roof; some of the funding would come from the federal Inflation Reduction Act of 2022. The firm also plans to remove the gas boiler system and install ductless heat pumps and water tanks.