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Changing the Use of a Building Triggers a Hidden Cost

A Salem project got dinged because the structure in question was originally built for worship rather than as a living space.

By Nigel Jaquiss

Oregon Journalism Project

It’s not just projects in Astoria, of course, that are running into challenges in front of the Bureau of Labor & Industries.

In Salem, nonprofit developer DevNW wanted to replace a shuttered church with 18 units of affordable housing. DevNW kept the church’s exterior walls and built the new units inside.

BOLI rejected DevNW’s request for a prevailing wage exemption, ruling in 2022 that the project “did not meet the definition of ‘residential construction’ because the project includes the renovation of a church building, which is neither an apartment building or a single family home.”

In recounting this Kafkaesque denial to lawmakers in 2023, DevNW executive director Emily Reiman said the decision hit the project’s finances.

“BOLI’s denial of this exemption added $870,000 to the project cost,” Reiman said. (That’s nearly $50,000 per unit, a 13% increase.)

The project, since completed, got dinged because the structure in question was originally built for worship rather than as a living space.

The Salem Housing Authority could have warned Reiman what she faced. In 2021, that organization sought a prevailing wage determination from BOLI for the redevelopment of Yaquina Hall, built in 1948 as a dormitory for nurses at Oregon State Hospital.

During the intervening years, the building was converted to offices. The housing authority proposed to convert it into 52 affordable apartments—18 of them reserved for people with serious mental illness.

BOLI’s determination issued May 5, 2021: “While the project will be privately owned and will predominately provide affordable housing, the project does not meet the definition of ‘residential construction,’ because Yaquina Hall is an office building rather than an apartment building.”

“I was shocked,” says the Salem Housing Authority’s Jessica Blakely. “After that decision none of the housing authorities want to touch surplus public properties.”

That issue will also add costs to the conversion of empty office space to affordable housing around the state—based on BOLI’s rulings, any such project will have to pay prevailing wage.

The Latest

Ridgeway Health Moves to Old City Hall, Plans Expansion

bySky Chappell
August 20, 2024

Ridgeway Health, a privately owned medical center that’s focused on patient care, recently completed their move to the old city hall building located at 1140 12th Avenue. 

Formerly located at 1025 Main Street, Ridgeway Health offers basic healthcare needs. Being smaller in nature, the center allows for more time to be spent on their patients and for the patients to have a say in their health care decisions. 

“[We] try to offer care based on who they are and what they want,” Chad Tyler, the Certified Physician Assistant, said. “We’re not trying to check boxes and meet quotas.”

The city-owned building Ridgeway Health moved to opens the door for the expansion of services. The envisioned expansion includes a potential wellness center, which would allow for more auxiliary services. 

“I think the benefit from working with the city is having their backing,” Tyler said. “Which is beneficial when we are trying to expand services.” 

The move of locations was discussed during a City Hall meeting. According to a New Era archive, the council also approved authority to enter into lease negotiations with Ridgeway Health, which hoped to rent the old city hall building, June 25. The Ridgeway building will allow for multiple lessees. 

“What we would really like to do with that space is not only approve the potential lease with Ridgeway Health, but then open that up to be a wellness center,” former city manager Kelcey Young said. “We have other agencies that have expressed interest in being in that building as well, and we think it would be a big benefit to Sweet Home.”

The council expressed gratitude for the opportunities to increase support services to the community. The current sitting Assistant City Manager, Cecily Pretty, said, “The hope is to create a wellness anchor for Sweet Home. It’s been really exciting that we’ve had some medical facilities move in, but we definitely want to grow that.”

“Obviously, when you have a building with multiple lessees, you want them to complement each other,” Pretty explained. “So it would be great if we could get some sort of daycare or preschool thing going.”

As the transition continues, both Ridgeway Health and the City of Sweet Home look forward to the benefits this partnership will bring, enhancing the overall well-being of Sweet Home residents.

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