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

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

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