SOUTH PORTLAND — More affordable housing is being planned in the city’s west end with the help of a city-backed loan.

A variety store owner is hoping to build a mixed-use building that would include some affordable housing on Westbrook Street, between the Redbank and Brickhill neighborhoods, by borrowing municipal funds.

The City Council on Monday unanimously authorized lending Quang Nguyen $86,000 from the city’s Revolving Loan Fund Program to purchase a vacant 0.25-acre lot at 600 Westbrook St.

Also Monday, councilors had the first reading of a housing ordinance that would require some developers to make allowances for affordable housing.

Nguyen, of Portland, owns the convenience store Le Variety next door at 586 Westbrook St., and has an agreement to buy the land. Nguyen said he has owned the variety store for about 1 1/2 years. He wants to combine the 0.66 parcel he already owns with the quarter-acre lot he is acquiring for the development.

The land was listed for sale for $120,000. A 2016 city assessment of the property valued it at $86,900.

Nguyen is providing $10,000 in equity. Interest payments will be nearly $570 per month for five years, amortized over 20 years, with a balloon payment after five years.

He is working with Avesta Housing on the project that includes commercial space on the first floor, where he said, he would like to move his store. The upper floors will be used for affordable housing.

According to city documents, “The type and size of the building, and its specific uses, are speculative at this point.”

Joshua J. Reny, assistant city manager and economic development director, said Nguyen and the loan application have been vetted and he was found to be a good candidate for the loan.

Councilor Brad Fox said the deal made him proud. “This is not just one person getting a loan to rebuild a store,” Fox said. “This is part of the west end community planning process. … Everyone involved in this really got together. We all decided to focus on this one block because it is really the center of this huge neighborhood.”

Fox called Nguyen a great neighbor, saying, “He has been doing everything he can to help us out and get this project off this ground.”

Councilor Maxine Beecher said it was a “huge piece for moving the west end forward,” while Councilor Linda Cohen said she was happy to see growth in that area.

Councilor Claude Morgan said he supported the plan, but he concerned the city might be slipping into the role of a bank and wants to see a council workshop on the use of city money for loans.

Mayor Patti Smith also expressed concerns about city loans and said a workshop “on the policy of revolving loans and how we incentivize growth within our community” is a good idea.

Affordability requirement

The inclusionary zoning ordinance that councilors considered for the first time is modeled after an ordinance already on the books in Portland.

It would require any new housing project of 20 or more units to set aside 10 percent as affordable, or pay $100,000 per unit to a city fund set aside for affordable housing. The new amendment would be retroactive to Feb. 27, when councilors previously discussed the matter during a workshop.

The zoning ordinance also introduces incentives for developers, including a 12-foot height bonus for buildings in mixed-use or commercial zones.

Several residents spoke out against the height bonus, however, and councilors unanimously removed the incentive before sending the ordinance back to a workshop.

City Manager Scott Morelli said a workshop date has not been set for the matter, but the first open slot isn’t until the end of July. The council could, however, reschedule workshops if it wants to expedite the discussion.

 Melanie Sochan can be reached at 781-3661 ext.106 or msochan@theforecaster.net. Follow her on Twitter@melaniesochan.