Southeast Portland's Lents district, a place of hard-luck tales and hard-fought neighborhood battles, is immersed in a new controversy that pits a nonprofit's plan to build low-rent housing against the neighborhood's dream of a new commercial "town center" project.

The Rose Community Development Corp. is moving forward with plans to build a 24-unit apartment building for low-income individuals and families at Southeast 91st Avenue and Reedway Street, one block north of Foster Road.

The housing-only plan is all that remains of a much more ambitious neighborhood proposal to create a new commercial center on several blocks facing Foster Road. In the mixed-use plans, the apartments would have been built on upper levels of a commercial building.

Plans for a mixed-use project faltered in April, when prospective developers gave up trying to come up with a development plan for the property after hitting a brick wall of financial and market problems.

The push for the subsidized apartments continues largely due to the availability of federal tax credits for low-income housing, which will generate about $2.6 million toward housing construction at the town center and on three smaller sites.

Rose is working to meet a tax credit deadline for completing construction by the end of next year, said Nick Sauvie, the nonprofit's executive director. "I think the timeline question is severe," he said.

The devolution of the mixed-use project into a smaller housing-only project has not gone down well among neighborhood leaders. Some are critical both of Rose, for continuing to pursue the housing plan, and of the Portland Development Commission, for its support of the project.

Some say they are wouldn't mind if Rose lost the coveted tax credits. Others search for a compromise, such as finding a new site for the housing project, that city and Rose officials think is unattainable.

"We're saying, 'Let's build it, but let's build it in the right place,' " said Louis Martinez, vice chairman of the Lents urban renewal advisory committee.

Opposing votes on development Earlier this month, an urban renewal citizen advisory committee voted 16-3 against Rose's proposal for the housing, saying the idea needed more public review and more consideration of alternatives.

But the next day, the Portland Development Commission's board of directors backed the housing-only project in a 4-1 vote that rejected the advisory committee's recommendation.

Commission member John Russell opposed the action. "I can't see voting against such an overwhelming community vote," he said. Other commissioners said they wanted to prevent the loss of the housing tax credit.

In a community where criticism of the city is almost an article of faith, some viewed the commission's vote as a betrayal. Glenn Taylor, a member of the urban renewal advisory committee from the Powellhurst-Gilbert neighborhood association, complained that the neighborhood's wishes were ignored.

"You guys just look astonished when people say we are fed up with government," he told Baruti Artharee, Portland Development Commission deputy director, at a neighborhood meeting last week.

The Portland Development Commission has invested heavily in the Lents Town Center scheme, purchasing property and then contracting with the Clackamas-based Morrison Companies to come up with a development plan. But economic jitters spurred by the Sept. 11 terrorist attacks, financing problems and a cut in urban renewal funding all contributed to Morrison's inability to come up with a mixed-use development plan, said Steve Baarstad, Morrison vice president.

The appearance of Lents, which he described as "tired and worn out," didn't help.

"People who weren't familiar with the area initially were excited," he said. "They would go out on a site visit and take a look at it and just shake their heads.

"A lot of people didn't have the vision."

Baarsted said economic uncertainty after Sept. 11 made matters worse, as did the Portland Development Commission's financial problems following an Oregon Supreme Court ruling in December that reduced urban renewal funding.

Catalyst for businesses? But he said the development commission's investments have begun to improve the neighborhood. He predicted that a housing-only project would be a catalyst for further improvements and commercial development.

Some neighborhood leaders and activists disagree. They see the housing project as the end of their dream of a commercial center in a neighborhood that was ripped apart decades ago by Interstate 205. The housing will occupy about 20,000 square feet, leaving about 77,000 square feet for commercial development.

"I think you know that this is going to derail any chance of that becoming a commercial center for Lents," resident Beverly Tobias said at last week's meeting. "I think eventually it will all be developed as residential, and we are not going to have any commercial at all."

But some residents criticize neighborhood leaders, saying they need to develop more positive, cooperative approaches to issues.

"I think we need training in basic things out here," said resident Molly Cooley, who criticized the neighborhood's leadership at the Portland Development Commission's board meeting. "Like speaking and not interrupting, how to run a meeting and how to listen well."

Neighborhood leaders also should understand that some of their goals for a commercial district might not be realistic, Cooley said. "They just have wishes and don't have any real understanding of what makes them come true."

Neighborhood opponents of the housing-only project have suggested moving it to a nearby property owned by the Portland Development Commission. But Rose and city officials say that there are legal constraints against moving the project to another site, and the deadline for completing the project makes that change impossible.

The federal tax credits are disbursed by the Oregon Department of Housing and Community Services in a highly competitive process. Bob Repine, director of the state department, has informed the city that a change in the project's location would violate Internal Revenue Service rules.

Sauvie said that even if the state would somehow authorize the change, his agency would not have enough time to plan and build a project at a different location.

Paul Ellison, president of Rose's board, said the conflict is unfortunate for all involved.

"In the long term, the housing will provide a benefit," he said. "In the short term, it will take a while to rebuild some bridges." You can reach Gordon Oliver at 503-221-8171 or by e-mail at gordonoliver@news. oregonian.com.