HADLEY — A nearly $20 million redevelopment of a former Route 9 hotel into a mix of 51 one-bedroom and studio apartments for low- and moderate-income residents will get an infusion of $100,000 from the Hadley Affordable Housing Trust Fund.

At the request of Valley Community Development Corp., which is handling the proposed renovation of the three-story Econo Lodge hotel at 329 Russell St., members of the trust voted 5-1 Tuesday to be a small funding source for the renovation.

The vote came in response to an appeal from Laura Baker, the CDC’s real estate development director, who said the local contribution will strengthen the nonprofit’s application for state funding.

“It’s really a reflection that the town is in it with the state,” Baker said.

The trust’s contribution, which must be affirmed by the Select Board at its Dec. 18 meeting, comes in advance of Valley CDC’s final application for state funding in February. Work on the improvements to the three-story hotel, built in 2003 in front of Mountain Farms Mall, are to begin in January 2026, and tenants would move in by the end of 2026.

Currently, the hotel is being leased to the nonprofit Craig’s Doors Inc. to house some homeless individuals.

The money from the trust, though, comes with a requirement that Valley CDC attempt to have 30% of the apartments provided as “local preference,” meaning reserving those homes for people who live or work in Hadley, or have children in the town’s schools. The trust also wants to have all the apartments remain affordable in perpetuity.

In addition, the trust scaled back Baker’s initial $250,000 request after members were concerned that it was too large an ask from the $510,734 available. The account has been created from donations by two housing developers who opted to make a donation instead of constructing affordable homes.

The trust is made up of the five members of the Planning Board and Select Board Chairwoman Molly Keegan.

Keegan spoke in favor of the town contribution.

“When you’re in a competitive application process, the people doling out the funds really want to know there is local buy-in,” Keegan said.

Planning Board member Mark Dunn said the contribution could help ensure the town remains in “safe harbor,” or above the 10% threshold of affordable housing mandated by the state. Currently, Hadley has 11.9% of its housing stock counted toward the subsidized housing inventory.

“I think this is a great payback,” Dunn said, initially supporting the $250,000 request. “If we can contribute $5,000 per unit, and the state sees that as good effort, getting 50 units to help keep us in safe harbor, where we get to choose where projects go, I think this is a good investment.”

Planning Board Chairman James Maksimoski said he worried about being asked for too much and that Hadley might not be able to incentivize other developers to incorporate affordable housing into their developments. He said there are developments on the horizon that might offer affordable units with this kind of town financial support.

“I just don’t think giving this project any money is in the best interest of Hadley,” Maksimoski said. But he agreed to support the smaller amount, so long as the hotel’s apartments are permanently affordable.

Planning Board Clerk William Dwyer, too, noted a finite amount of money is in the trust, and there is no identified stream of income to feed the trust.

“My big concern is that it’s a big ask of what’s available, without a replenishment source,” Dwyer said, noting that the Community Preservation Act account also has $308,000 for affordable housing that can be appropriated through Town Meeting.

Baker, though, said the trust’s incentive ability is limited — that it already costs $500,000 to develop one unit and that amount of money won’t encourage new affordable housing development. For Valley, though, the contribution would be meaningful.

“Having the town commit any money is a big difference, rather than the exact dollar amount,” Baker said.

In the end, only Planning Board member Joseph Zgrodnik voted against the appropriation. Zgrodnik said Hadley is already doing its part to provide affordable housing, pointing to the state’s Housing Appeals Committee overturning the Hadey Zoning Board of Appeals denial of a permit for the Econo Lodge project last year, and the state’s takeover of the Knights Inn to house other low-income families.

“The state seems to feel that it’s their obligation to thrust more upon us,” Zgrodnik said.

Zgrodnik said he is also worried that voters at a Town Meeting don’t get a say. But Keegan said the trust is meant to act on opportunities as it’s able to support developers quickly. She also observed that all members of the trust are elected by residents.

The Econo Lodge development will include 12 one-bedrooms and 39 studios, all with kitchens, Bakler said. Of the units, 33 would be reserved for people making 30% or less of the area median income, with a single person making $23,000 or less and for two people making $26,300 or less; and 17 would be reserved for people making 60% or less of the area median income, with a single person making $46,020 or less and for two people making $52,560 or less. With one staff member apartment, the maximum capacity on site would be 63.

Baker said a lot of people working along Route 9 would be eligible, and she expects that Valley CDC could get more than 1,000 applications for the apartments.

“We feel like it meets the needs of Hadley residents, especially low-income and elderly households, homeless households, and persons with disabilities,” Baker said.

The use of trust money also won support from resident Shardool Parmar, whose family runs three hotels along Route 9 and employs 40 to 50 workers.

Parmar said the hotels have run into issues with staffing and often depend on people who have to commute from Hampden County. This, at times, has meant the hotels can’t stay open or have limited occupancy, meaning Hadley loses out on hotel room taxes.

“If we don’t have people to man the front desks, clean the rooms or do the laundry, that’s going to impact Hadley’s ability to collect those taxes,” Parmar said.

Similarly, Hadley loses out on meal taxes from restaurants that may scale back their hours without reliable help, Parmar said in arguing the trust fund gift would benefit the town’s tax base.

Scott Merzbach can be reached at smerzbach@gazettenet.com.