Pacific Crest Affordable Housing has been awarded state and federal tax credits that are critical to financing a $15 million apartment complex in northeast Bend reserved for very low-income renters.

Work will start next May on Canal Commons, Pacific Crest co-owner John Gilbert said in an email. The complex will be next to the future extension of Empire Boulevard, just across the irrigation canal from Pine Nursery Park.

The project will be two buildings, each with 24 apartments, a mix of one-bedroom, two-bedroom and three-bedroom units.

“We are thrilled with the progress Pacific Crest has made with getting this property ready for development and securing financing for it,” said Lynne McConnell, affordable housing manager for the city of Bend.

The city agreed to sell a 5-acre surplus property to Pacific Crest at its cost of $493,000 and awarded the developer $50,000 from its affordable housing fund, McConnell said.

The apartments will be reserved for families earning 30 percent to 53 percent of the area median income.

For a four-person household in Deschutes County, that translates to earning no more than $20,880 to $36,888 a year, according to U.S. Housing and Urban Development guidelines.

The city’s contribution is one of many sources of public funding that Pacific Crest will use to leverage private investment. Oregon Housing and Community Services announced this week that it awarded Canal Commons $1.15 million in federal low-income housing tax credits and $1.8 million in Oregon Affordable Housing Tax Credits, a $1 million grant from the federal HOME program, plus nearly $1 million from the federal Housing Trust Fund.

Canal Commons is one of 13 projects that will receive federal tax credits or HOME money, the state agency said. Another Central Oregon project on that list is Liberty Lodge, an eight-plex in Redmond by Housing Impact LLC, a partnership between nonprofit developer Housing Works and NeighborImpact.

Located north of Reindeer Meadows off Quartz Avenue, Liberty Lodge will serve disabled people, especially those with intellectual or developmental disabilities, Housing Works announced. Construction is expected to start early next year and take 10 months.

Canal Commons has been on the drawing board for three years. It was delayed in part by a state Land Use Board of Appeals case, brought by a neighboring developer, Larry Kine. He contested the city’s decision to rezone the property from standard residential to medium density.

“I’m not against affordable housing,” said Kine, who added that he sold the last house in the nearby Monticello subdivision this week. “My beef with that project was the city didn’t follow their own rules. If I tried to do the same thing they did, they would deny my application.”

Pacific Crest initially proposed Canal Commons as 65 units but then split it into two phases. The second phase calls for 44 apartments, which could bring the total to 92. Building the second phase would require another round of tax-credit financing.

Pacific Crest will be responsible for building Thornhill Lane to connect with the future extension of Empire Boulevard and Butler Market Road. The Empire extension runs along one leg of the triangular piece of property.

The city bought the land to accommodate the Empire extension, and when the sale to Pacific Crest is closed, the money will replenish the System Development Charges fund, McConnell said.

—Reporter: 541-617-7860, kmclaughlin@bendbulletin.com