The city of Keene could help Keene Housing apply for a $412,000 state grant to cover demolition costs for an affordable housing project on Washington Street.

In a unanimous vote, the City Council’s Finance, Organization and Personnel Committee on Thursday recommended City Manager Elizabeth Dragon be authorized to pursue and expend the grant. The motion now awaits full council approval at its July 18 meeting.

Monadnock Affordable Housing Corp., a Keene Housing affiliate, expects to break ground on 30 residential units this summer at the former Roosevelt School, with a second phase of construction adding 30 more units planned to begin in summer 2025.

Josh Meehan, Keene Housing’s executive director, has said he estimates the first 30 units will be fully occupied by fall 2026, with the second phase coming the following year. About three-quarters of the apartments are expected to be one-bedroom units, and the rest two-bedroom.

The first 30 apartments will be marketed toward people and households making between 30 and 60 percent of the area median income. For Cheshire County, the area median income is $89,100, according to the U.S. Department of Housing and Urban Development.

The grant, from InvestNH, would cover the destruction of a gymnasium built in the 1970s and interior demolition to pave the way for the new housing.

“So basically, we’re getting it down to the studs and building housing where once there were classes,” Meehan said before the FOP Committee.

For Monadnock Affordable Housing Corp. to receive the funding, Keene must be a signatory to the grant application and oversee certain aspects of the funding, according to a committee agenda packet for Thursday’s meeting.

New Hampshire created InvestNH in 2022 to assist in the construction of affordable multi-family housing projects in the state.

Meehan has estimated the project will cost about $22.5 million, primarily funded through various federal and state sources. Monadnock Affordable Housing Corp. hopes to begin phase one of construction in late July or early August, while it’s still working to secure funding for phase two.

The project recently received a $1 million boost in congressionally directed spending.

Dragon spoke in favor of the motion to pursue the demolition grant, noting it would be a “relatively easy lift.”

“This is a wonderful opportunity to help bring down the overall cost of this affordable housing project,” Dragon said.

Meehan said Keene Housing’s waiting list for affordable housing has 3,000 households on it, 1,500 of which are from Keene or an adjacent community.

N.H. Housing’s 2023 annual residential rental cost survey showed that a small fraction of two-bedroom apartments in Cheshire County are affordable to renters who earn the county’s median rental income level of $44,251. With that income level, an affordable two-bedroom unit would cost $1,106 per month. But only 2 percent of rental units in the county are at or below that level.

City Councilor Kris Roberts said it’s urgent that the city help to secure more affordable housing, noting that housing across the country is out of line with many Americans’ income levels.

“We’re just putting people at risk of being out on the street unless we can get more affordable housing,” he said.