The city's development arm is borrowing from a housingpreservation fund line of credit for the purchase while it comes upwith a long-term financing plan. The Fairfield Hotel (1117 S.W.Stark St.) was purchased for $1.475 million. The Fountain PlaceApartment building (929 S.W. Salmon) was purchased for $3.5million.

The agency has been working in cooperation with the HousingAuthority of Portland and other non-profit and for-profitdevelopers to preserve and build low-income housing. But just asfast as it's being done, owners of existing low-income housing,faced with decreasing rent subsidies from the federal governmentand escalating land values, are selling to high-end developers.

These particular purchases are trying not only to make up forpast losses, but also to offset the upcoming loss of low-rent roomsin the 133-unit St. Francis Hotel. The hotel is slated fordemolition next spring to make way for a new mixed-use project. Theproject, called Museum Place, will eventually provide 100 rooms oflow-income housing, but the new rooms are needed for the meantime,and to make up for previous losses, says the city.