City To Buy Land Under ARCHES

 By Sarah Owens and Michael Livingston

615 Commercial Street NE

Monday night, the City Council acting as the Urban Renewal Agency is, at long last**, expected to authorize the purchase of the property (land only, not the building) at 615 Commercial Street NE, and a 30-year lease-back to the seller, the Mid-Willamette Valley Community Action Agency.  See staff report here.  The building's lower level is occupied by MWVCAA's ARCHES Project.  The City Manager's 10/28/20 Update incorrectly states that the City has purchased the building already, but the City will not be purchasing the building, only the real estate under it, and the City has not yet authorized that purchase, but likely will on Monday night.    

City Manager's 10/28/20 Update

The agreed purchase price is $2,225,000.  **See "The Golden ARCHES Project", Part 1, Part 2, and Part 3, "State to Sink More Hless Assist $$ in MWVCAA Bldg", "MWVCAA Bldg Sucks Up More Gov't $$",  "Urban Renewal to the Rescue" (28 November 2018), "MWVCAA Pays Mortgage Debt with Hless Assist $$" (21 February 2019) and "State Seeks Accountability from Hless Svces Providers" (24 February 2019).

As discussed in an earlier post, the purchase is part of the City's effort to establish a much-needed  navigation center/low-barrier shelter and will allow the The ARCHES Project day shelter to expand from 27 to 41 hours/week and be open on Saturdays.  Current hours are M-W, F: 9–3 and Th: 9–noon.  Expanded hours will be M-W, F-Sat: 9–4, Th: 9–3.  It won't be the 24/7 nav center/low barrier shelter that some had hoped for, pre-pandemic, but it's a step in the right direction.  See "News from the Continuum" (17 October 2020). 

Ward 1 Councilor Kaser will not be voting on the purchase, having resigned earlier this week. Woodworth, W.  "Salem City Council member Cara Kaser resigns. What we know."  (2 November 2020, Statesman Journal.)  (stating that Kaser served on the Police Facility Committee, the Water/Wastewater Task Force, and "focused on the city's response to homelessness" during her four years on Council).  On October 23, 2020, Kaser entered into a stipulated final order with the Oregon Government Ethics Commission in which she agreed she'd violated ORS 244.120(2) by failing to disclose that she lived across the street from a proposed low-income housing development that was before Council on an application for the City's HOME funds.  She also failed to disclose that she was married to the neighborhood association officer who testified against the development.  See November 6, 2020 Meeting Materials at page 123, and "'Progressive' Council Snuffs Affordable Hsg Project"  (20 June 2020).  Kaser's term would have expired in two months.  She told the Statesman Journal she resigned because she and her husband had moved to Silverton.  Council is expected to accept Kaser's resignation Monday night, and appoint Councilor-elect Virginia Stapleton to serve as guest councilor (can't vote) in her absence.  

Also Monday night, Council will be asked to "consolidate" extend its unsheltered emergency declarations and extend them for a year to October 26, 2021 [correcting a misreading of the staff report that the resolution would also consolidate the COVID emergency declarations].  Staff report here.  The resolution consolidating the emergency declarations would also "allow the City Manager to suspend land use regulations, including land use permit requirements, for warming centers and emergency shelters on land not zoned single-family residential, and continue the vehicle camping pilot program."  If passed, the City Manager plans to suspend land use regulations to allow the property at 1787 State Street to be used as a shelter for women and children. 

1787 State Street

On the CRU mobile crisis unit front, Councilor Nordyke will ask Council Monday night to "direct staff to present Council with a proposal to implement a mobile response unit for the city including funding options. The proposal shall describe how a mobile response unit will fit in with other services and identify potential community partners to share costs."  To understand why this motion is cart-before-horse, see "Council Conducts 'Disjointed' Session on 'Non-Criminal' Policing" (22 October 2020).  See 11/7/20 update below.

City Council will also be asked to allocate $1.2M from the General Fund "to allow for the additional expenses related to the unsheltered in Salem."  It looks like these funds can be reimbursed from CARES Act funding.  See details in the staff report here.

11/7/20 update:  City Manager 11/4 update states, "Following City Council’s October 26 discussion of a mobile crisis intervention program, staff will work with the United Way on the United Way’s invitation to area organizations to explore what funding partnerships would be available in Salem."  

11/9/20 update:  correction that only the City's unsheltered emergency declarations were extended, not the COVID emergency declaration, which is set to expire January 12, 2021. 

11/13/20 updated paragraph on former Councilor Kaser to reflect the stipulated agreement with the OGEC.

The Golden ARCHES Project - Part 3

Revised: January 2019

 

By Sarah Owens and Michael Livingston

When the Mid Willamette Valley Community Action Agency (MWVCAA) initially applied to the Oregon Housing Department (OHCS) for Emergency Housing Assistance (EHA) and State Homeless Assistance Program (SHAP) funds for the 2015-2017 biennium, they had to include a "work plan", and show how they "provided a meaningful opportunity for participation in the work plan by the local or regional continuum of care, local service providers, advocates, clients, businesses, churches, citizens, governments and other interested stakeholders."  See OAR 813-046-050, OAR 813-240-041.

Funny, then that we can find no one outside MWVCAA who knew about, much less participated in formulating MWVCAAs work plans.  For certain, the community wasn't asked about the decision to close the ARCHES day shelter in June, or reallocate such a large proportion of MWVCAA's housing and homeless assistance funds to the purchase of a building.  But that, apparently, is just fine with OHCS.

Below are MWVCAA's EHA budgets in March 2017, before they decided to buy a building and in June 2017 after they decided to buy.  As you can see, by the time of the closing in late June, the total EHA-NEW allocation had increased by about $30K.  You can also see that the building purchase required substantial sacrifices in all other program areas.          

Back in October 2016, when the Housing Stability Council (HSC) approved OHCS's proposal to allow the new EHA and SHAP funding to be used for acquisition, OHCS told the Council that OHCS would report back on how things went.  In in preparing for that report, on August 28, OCHS staff emailed Jimmy Jones, asking him to "Please read the following description for accuracy and let me know if I've stated anything incorrectly...Renovations to enhance service provisions are underway and should be completed by November 2017."  OHCS also wanted to know "the days/hours of shelter operation and the anticipated number of persons assisted daily and annually, if possible."

ARCHES is <2,500 feet west of OHCS

Jones didn't tell OHCS that renovations were not under way, or that the shelter was not in operation, both of which were true.   

ARCHES is less than 2,500 feet from OHCS;  less than a ten-minute walk.

The August 30 report to the Housing Stability Council falsely stated that MWVCAA had submitted an acquisition application, and falsely stated that the ARCHES day shelter had "doubled its daily capacity by 100%" [sic].  It gave the false impression the day shelter was in operation and omitted any mention of the gross irregularities that occurred in the purchase transaction.

The only hint that OHCS's approval process needed improvement were two cryptic "Next Steps" inserted, without discussion or explanation, at the very end of the report.

Aug 30 Report to HSC from Ass't Dir. Claire Seguin and Homeless Programs Analyst Vicki Massey

We attended the Council's September 8 meeting to observe how the August 30 report was presented and received.  We requested an administrative review decision on the purchase.  On September 21, the Director of OHCS informed us that she "could confirm MWVCAA did have OHCS approval prior to acquiring" the Commercial Street property.  We accepted that statement at face value -- until we got the response to our public records request, showing that it was not true.  We asked for a meeting, and were told one would be scheduled.  No one ever contacted us to schedule a meeting.  

So, that is the story of the Golden ARCHES Project.  Our notes on the public records received in this matter pasted below, in chronological order.  Anyone who'd like to have an electronic copy of the records themselves, just drop us a line.  We'll be glad to share.   

The Golden ARCHES Project - Part 2

Revised: January 2019

 

By Sarah Owens and Michael Livingston

Last October 2016, when OHCS changed its rules to allow CAAs to use their EHA and SHAP funds for acquisition, eight expressed interest.  Four, however did not bother to apply.  According to OHCS's August 30 memo, a major factor preventing their applying was "the short timeline to implement"  -- they only had until June 30 to "complete the purchase and have ready for client use a shelter or transitional housing facility."   

As discussed in Part 1, the short timeline somehow wasn't a problem for MWVCAA, who also didn't bother applying.  Lucky for them, OHCS cleared their funds to be used for acquisition anyway.  Let's say that was a mistake.

But, as we will show in Part 2, the mistake was eventually discovered.  Unfortunately, rather than admit the mistake, OHCS and MWVCAA colluded to paper it over, so no one need know. 

"Need some items for my file"

The first suggestion of record that OHCS knew they'd screwed up is an August 1 email to CRP Director Jimmy Jones. 

I have to write something up on the acquisition accomplished with the EHA-NEW funds.  Please tell me 1) what date MWVCAA completed their move and opened to the public in the new location, 2) what other funding was used to make the building purchase, and 3) what is your capacity for the day shelter.

Now, obviously, OHCS should have known the answers to these questions before they released the half million dollars of EHA and SHAP funds, because they go to the basic requirements of the funding.

And, just as obviously, Jones knew OHCS's questions went to the basic requirements of the funding, and knew what the answers needed to be in order to avoid the whole phony Golden ARCHES deal blowing up in everyone's face.  Jones replied.

We completed the move on June 30th and opened immediately. We used [O]HCS dollars for our down payment, and completed a contract sale for the building with the owners. The payments are coming out of our normal operating budget (CSBG). The capacity for the day center will be 65 at any one time. Right now we've got enough money to substantially upgrade the day center area. The drawings are being finalized, and we're about to start a renovation that will allow us to run a real, one-stop shop, bring in medical and dental and other agencies to work with our population.

Trouble was, the answer to Question 1 needed to be that the day shelter was opened by June 30.  However, the day shelter would not open for more than a year. 

What could they do?  It was too late.  The money was spent.  They did what anybody would do.  They tried to cover it up.  They lied.

OHCS, Jones, and MWVCAA all pretended that the office building or "day center" being "open to the public" was the same as its being a place where people experiencing homelessness could take shelter -- it wasn't, and it wouldn't be for over a year.  It was a cruel, shameless, lie.

The answer to Question 2 needed to be consistent with the purchase's being completed by June 30.  But, a "contract sale", sometimes called an "installment contract" is a seller-financed agreement to purchase a property over time.  It is the antithesis of a completed purchase.  Furthermore, OHCS's question shows OHCS had no idea how much MWVCAA had agreed to pay for the building, or what proportion of the facility was devoted to use as a "day shelter."  As OHCS didn't know what other funding was used to purchase the building, it had no way to gauge the project's feasibility, when or if it was likely to be completed, or whether it was an appropriate of use of almost $.5M of EHA/SHAP funds.  Furthermore, Jones's answer omitted any mention of the two, quarter-million dollar balloon payments, which could not be possibly be paid out of MWVCAA's "normal operating budget", and which OHCS should have questioned.   

The answer to Question 3 needed to demonstrate that the Commercial Street facility had, since June 30, been continuously operating as a day shelter at a  capacity that was substantially increased from its capacity on Madison Street.  MWVCAA's hedging answer as to what the capacity "will be" begged the question what the current capacity was, namely zero.  It would be more than a year before the day shelter could open.

Jones's assertions about having "enough money" "right now" for renovations, about  "drawings...being finalized", and about renovations  being "about to start" were lies.

On June 23, Jones indicated that he would be relying on grants to pay for renovations.  September management reports indicate Jones was still waiting to hear whether they'd secured $125K in grants "for the day center", and that an architect had only just been secured to complete the needed drawings.  So, the drawings could not have been "being finalized" on August 1.  In consideration of Jones's "optimism", we gave his answer a "Mostly False", even though none of what he said was true in fact.

       

About a week after that first set of questions, OCHS was back.  "We worked through the building purchase so fast in June that I'm lacking some required documents for my file."

Someone at OHCS must have finally figured out that MWVCAA hadn't so much as submitted an application.  So, why not admit the mistake?

Instead, OHCS acted as though they just happened to have a few, very pointed questions that just happened to cover what should have been provided with the acquisition application -- the one that MWVCAA didn't submit.  Jones's response was prompt.  "I'm working this, will try to have it all to you no later than mid-week of next week."

The next day, August 11, we published "MWVCAA Purchase Appears to Side-step State Approval Process", prompting this email to the Homeless Services Section manager from the staffer who worked on all the acquisition projects:

"There's one thing we can argue about the blog article: this project fits under the Community Capacity Building definition, which reads in part: Eligible expenses include programs, activities and projects that expand homeless prevention and or intervention program capacity."

"There's one thing we can argue"?  Not, "Oh, s%$t.  We're busted.  They know MWVCAA never submitted an application.  What do we do now?"?   

Later that day, still August 11, the staffer sent Jones an acquisition application form with the directive, "Please provide as many documents as possible by Monday."  (Emphasis added.)

Monday, Jones's responses started trickling in to OHCS.  Some of the information was new, much of it had been conveyed in previous emails.  Then came the closing documents, the accounting policies, the list of MWVCAA's real estate holdings.  Tuesday, Jones made a special request.

Would it be possible to pull the installment note I sent yesterday out of the file?  The reason I am asking is that there are two $250,000 balloon payments in there, that we are going to have to cover at some point.  I'd rather that piece not be public knowledge if I can avoid it.    

"That we are going to have to cover at some point"?  Could it be any clearer that MWVCAA had no plan for making those balloon payments?  And, what's more, they didn't care, and, apparently, neither did OHCS, because they didn't ask about them.

On August 16, OHCS told Jones they needed a signed document promising to use the property as a day shelter/center for 20 years (of course, MWVCAA was already in breach of that covenant, but, never mind), and a five-year operational budget.  On August 23, Jones provided the requested document, and told OHCS, "Yes, we do have reserves and resources that could be used for operating and repairs as the need arises."  No further assurances were offered or asked for.  

At some point in late August, Jones provided OHCS an undated "business plan" for the project.  But, whereas a business plan generally projects 3-5 years ahead and outlines the path and organization intends to take to reach its goals, including revenue projections, the document Jones submitted reads like bad advertising copy that fails to distinguish between aspiration and reality.  It doesn't even call itself a plan.  Here's a brief summary:

The Executive Summary: the old building was run down and we needed to move.  The new building is in a better location and will allow us to expand.  Organizational Statements:  vision, mission, name, business form.  Services: we're one day going to provide a whole bunch of services.  Company History: CAAs were created as part of the War on Poverty.  Market Analysis: (5 pages) there are a lot of homeless in Salem.  Management Summary:  there are 7 really amazing managers working on this project.   Funding: ARCHES gets lots of $$ from OHCS, HUD/CoC, FEMA, HUD/HOME, CSBG, SSVF, OHA, and DHS, among others.  

Financial Analysis (at left in its entirety) we have plenty of money for renovations and staff, but we're asking for more, just in case.  Evaluation Tools: we have great assessment tools and are going to collect all kinds of cool data that will help us eliminate chronic homelessness in Salem.  Growth and Grant Opportunities: "Our goal is to open the Day Center with full services in November 2017, with the hope of attracting most of the co-location partners quickly [within 2 years] after that."

Operational Budget:  $14K/yr for supplies and equipment and $169K/yr for the building, not including the cost of hazard insurance or the $.5M in balloon payments due in 2018 and 2019.  Income from Rents:  (at right) $132K/yr.

Jones's projection that income from rents will eventually exceed the monthly mortgage payment by several hundred dollars was pure fantasy.  Unless the City/County and local health care providers decide to put a sobering station on the first floor and pay MWVCAA substantial rent, but, when that might happen, and how long it would last, was anyone's guess.

"I can confirm that MWVCAA did have OHCS approval prior to acquiring the site"

In Part 3, the cost to the community, and the OHCS cover up.

The Golden ARCHES Project - Part 1

Revised: January 2019

 

By Sarah Owens and Michael Livingston

The Oregon Housing Department (OHCS) says, when the Oregon Legislature gave it an additional $10M in Emergency Housing Assistance (EHA) and State Homeless Assistance Program (SHAP) funds back in 2016, it gave them "the opportunity to look creatively" at ways to respond to the housing crisis and the lack of shelter for homeless Oregonians.

Translated:  this was some serious money that could make a difference.  

So, staff and local Community Action Agencies (CAAs) ('cause that's who gets all the homeless assistance $$ coming out of OHCS) developed a proposal to allow these new funds to buy real estate -- something that previously had not been allowed at all --  specifically SHELTER facilities or transitional HOUSING units.  The proposal was discussed and approved by the Housing Stability Council on October 7, 2016 and details were  finalized and shared later that month.

Being able to use EHA and SHAP funds for acquisition was a very big deal, see, because of the amounts involved, and the potential for inexperienced social service providers to make costly mistakes.  The need for caution and oversight was well understood. 

Longstanding OHCS rules require CAAs to stick to their EHA and SHAP "work plans" and budgets, or seek approval to amend them.  The new acquisition process didn't change any of that.

What it did do, however, was require preliminary approval of the acquisition project -- separate and apart from work plan amendments and budget change requests.  Makes sense, doesn't it? To  get a project approved before requesting funding for it?   

So, to purchase a shelter facility or housing units using these new EHA and SHAP funds, CAAs had to submit an application, complete with "an extensive Business Plan"  that included, among other things, demonstrated ability to maintain and manage the property, a five-year operational budget with projected revenue, the availability of agency reserves for replacement and operations, and a projected timeline showing that the property would be purchased and clients/tenants in place by June 30, 2017.

Which is exactly what three CAAs much smaller than MWVCAA (Klamath Lake Community Action Services, Oregon Coast Community Action, and United Community Action Network) managed to do -- all by or before March 1, 2017.  But not, as it turns out, MWVCAA.

There's plenty of excuses and blame to go around, but they don't matter.  The agency screwed up.  Jon Reeves was asleep at the wheel.  The Board wasn't paying attention.  Everything was left up to one, newbie manager with zero management experience, Jimmy Jones, who would later admit the purchase was "executed clumsily and with a great deal of optimism, when a healthy dose of skepticism would have better served us."

So, the end of the biennium came and went, with no business plan from MWVCAA.  Their project should have lost out, shouldn't it?  But obviously, it didn't, or we wouldn't be talking about it.  So, for reasons we cannot fathom, in flagrant violation of OHCS's expectations, OHCS staff cleared about $.5M in EHA and SHAP funds for MWVCAA to use to acquire the old office building on Commercial Street, knowing nothing more about the project  than what had been been shared in a few casual emails.  The closing took place on June 28, 2017.

Amazed such a thing could happen?  Don't believe it?  Write to us, and we'll send you the documents we received in response to our public records request.  It's all there, in banal email after banal email.

"I know that you’re anxious to get that money spent, so are we.”

The MWVCAA project was staffed by the same OHCS Homeless Services Section staff who had worked on the other acquisition projects, including the section manager.  But the MWVCAA project was more complicated (and costly) than the others, raised more questions, required more scrutiny, and the review process was apparently unclear, even to OHCS staff.  Checklists, review standards and deadlines were never developed, forms were confusing and in need of revision, and too few management signatures were required.  In other words, the process was just an unbelievable mess.  In the end, all that mattered was getting "that money spent" by June 30.

Let's be clear, there was every opportunity, between March 2, when MWVCAA first asked about using EHA funds as a down payment for a day shelter, and June 28, when the funds were cleared, to remind MWVCAA they hadn't submitted a business plan.  On March 24, OHCS reminded the CRP Director, "[Y]ou can't request funding for something that hasn't been approved.  For instance, if you want to fund a day shelter, you won't be eligible to be paid for your costs until that activity is authorized."  (Emphasis added.)  On May 24, the manager of the OHCS Homeless Services Section raised what should have been a red flag when she wrote to the CRP Director: 

Vicki and I have discussed your acquisition project proposal and my understanding is that you are now looking for another property to purchase by June 30th...I am concerned that there is not time to locate, secure additional funds, complete the purchase and have ready for client use a shelter or transitional housing facility within the next 5 weeks.

1255 Broadway

The "acquisition project proposal" that the manager was referring to was, initially, to use EHA funds to buy the building at 1255 Broadway (formerly the Center for Community Innovation).  But just when MWVCAA thought they had a "done deal" on the building, a tenant/shareholder with veto rights decided they didn't wish to share a building with a homeless shelter.  So, MWVCAA came up with a new proposal.  This new proposal was to buy the building as planned, but rather than move the ARCHES Project, they'd move their administrative offices from Center Street to the Broadway location, and put The ARCHES Project at Center Street.  

This new proposal, which OHCS rejected politely as "really difficult to defend as a legitimate use of the funds", reveals a couple of things.  One, it shows MWVCAA's determination to secure any kind of a deal by June 30.  Two, it shows the extent to which the ARCHES Project's day shelter was simply the means to an end.  It was immaterial to MWVCAA whether or not they could have their shelter ready for client use by June 30 (they knew they couldn't).  All they wanted was the building. 

By mid May, MWVCAA was stuck.  EHA funds couldn't be used to acquire office buildings, only homeless shelters.  No homeless shelter, no EHA, and no EHA, no office building.  They'd boxed themselves into a corner by allowing the Madison Street lease to end June 30 and having no Plan B.  So, even though they'd just told OHCS the day before that they couldn't buy "the old Coldwell Banker building" because they hadn't found a "partner to come along and provide us with another [$]300K to make that work for us", they were now telling OHCS, "We have signed a purchase agreement on the Coldwell Banker building...We anticipate moving our day center operations there on June 15."

Both statements were, of course, untrue (as late as June 22, the MWVCAA Board of Directors was told that they were still "working toward a contract"), but the lies kept the deal alive, as intended.

That was the last time before the real estate deal would close that OHCS inquired about MWVCAA's intent or ability to have their shelter ready for client use by June 30, even though it was a requirement of the EHA funding.  It apparently didn't occur to OHCS that one can't just open a day shelter in an office building, that there might be regulatory or permitting issues to overcome (there were), or that renovation construction costs and delays might pose a problem (they have).

At midday on Monday, June 26,  OCHS staff announced, "Done, done, done.  The funds will go out Wednesday and post overnight.  They'll be in MWVCAA's account Thursday."  OHCS had never seen the MWVCAA business plan (there wasn't one), and didn't even know the building's purchase price ($2.1M), or whether the purchase was financed (yes, by the seller).

"Need some items for my file"  

In Part 2, we'll discuss what happened after OHCS discovered they'd allowed MWVCAA to side-step the acquisition-approval process.

MWVCAA Purchase Side-steps State Approval Process

The Salem Weekly reported last week that the Mid-Willamette Community Action Agency paid $500,000 down on the $2.1M purchase of the old Coldwell-Banker office building at 615 Commercial Street NE.  Ever wonder where a non-profit gets that kind of money for an old office building?  Well, we did, and here's what we've been able to find out.

In 2016, the Oregon general assembly passed Senate Bill 5701, which made a one-time appropriation of $10M from the General Fund to the Oregon Housing and Community Services department (OHCS) for "homelessness prevention and assistance services", and directed that the funds be allocated through two programs already in existence, the Emergency Housing Assistance (EHA) program ($8M), and the State Housing Assistance Program (SHAP) ($2M).  See the September 28, 2016 memo from the OHCS Homeless Section Manager, Marilyn Miller, to the Housing Stability Council (HSC).

Here's the problem.  With two exceptions, EHA program funds may only be used to pay for services (see ORS 458.650 or this fact sheet).  SHAP requirements are virtually identical. The two exceptions are for acquisition of shelter and transitional housing.  See OAR 813-046-0011, as amended to reflect the policy decision of the HSC last fall to expand the use of the EHA and SHAP one-time only funds to include the acquisition of shelter facilities and transitional housing units.

Now, because the use of "new" EHA and SHAP funds (as they are referred to for coding purposes) for acquisition was in the nature of an experiment, OHCS required the submission of an application, with a business plan, to be approved prior to the expenditure of any funds for acquisition, as detailed in this program update issued last October.

On March 2, 2017, Community Resources Program (CRP) Director Carmen Hilke sent OHCS an email, asking if EHA funds could be used as a down payment on a day shelter.  OHCS replied in the affirmative, and sent Hilke an acquisition application and other forms to fill out.  She left MWVCAA about that time.  She was succeeded by Jimmy Jones.  It was mid June before MWVCAA decided to purchase the property at 615 Commercial Street NE.

We know now that the application and forms were not submitted prior to the purchase, which was seller-financed at 6% with two, quarter million dollar balloon payments due in 2018 and 2019.

Leaving aside, for now, the fact that the purchase violated state requirements, there's a lot not to like about this situation from the taxpayer's standpoint.  Paramount would be using money intended primarily to house people to purchase a big, old office building that houses exactly no one.  This is precisely the sort of outcome that the Oregon legislature intended to avoid.  Half a million dollars might have allowed The Salvation Army to continue its transitional housing program another year, or the Homeless Rental Assistance Program to help get more chronically homeless people off the street.   

Then there's the question of whether MWVCAA has the capacity to maintain this project.  In November of 2016, ARCHES was paying $6,019/mo for about 6,900 SF at the Madison Street location.  Six months later, they're paying almost twice that, with two, quarter million dollar balloon payments due in the next two years.

Yes, they have two or three times the space, but what's the plan?  We doubt very much if their sub-lessees, Oregon Health Authority and Easter Seals, or anyone else who might be interested in co-locating, are going to be bringing in anything close to $10,000 in rent.  Maybe the City of Salem with its sobering center, but that's far from certain.  So what happens if MWVCAA can't support the debt service?  How long before the seller forecloses, MWVCAA again becomes a renter, and the community is left without a single housing unit to show for its nearly $.5M "investment"?

The MWVCAA board needs to be asking questions.  It appears they were, at one point, asking questions, but there was no follow through.  At least none that made it into the records of board deliberations leading up to the building purchase on June 28, 2017.  But, the board may recall that, back in March, when the idea of using homeless assistance funds to buy a building was first proposed, they had concerns (excerpt is from notes of a discussion with a consultant named Kay Sohl):

The board never receive the proposal it asked for.  Why not?  Sadly, the most likely explanation is that the decision to purchase was based on two, relatively minor considerations:  the 6-month extension on the Madison Street lease was set to expire on June 30, by which time state had to be spent or be returned to the state.  In other words, they had to move, and they had to spend the money.  Consideration for people experiencing homelessness was not paramount. 

We asked Jon Reeves and Marilyn Miller at OHCS specifically about this transaction, but they did not respond.