LEBANON — City officials are studying the feasibility of building a small, affordable housing development for public employees on a parcel of city-owned land near Interstate 89.

On Wednesday, the City Council will hold a public hearing to consider a proposal to discontinue the end portion of Barrows Street, which divides two city-owned lots. Barrows Street in a dead-end residential lane off Hanover Street near the south end of the pedestrian bridge over I-89.

City officials intend to merge these lots into a single parcel that could contain a “pocket neighborhood,” a cluster of small, affordable homes with a shared open space.

The city hopes to build up to five small homes on the property, though the number will depend on the final design of the homes. The city is contracting architects to create multiple housing designs that are predetermined to meet municipal requirements and fit the character of other homes in the neighborhood.

“We first need to identify a (design) or two to see how they will fit on the lot with the setbacks (and) accomplish the goals of a cottage cluster (development),” Deputy City Manager David Brooks said in an interview. “We can’t work that out until we select the units that we are going to work with.”

Under the proposal, the city would finance the construction of the homes. Upon completion, the homes would be sold to municipal or school employees, or employees of local nonprofits such as the Lebanon Housing Authority.

The prospective home buyers would be selected through a lottery system, which is still being planned.

The city is funding the initial design and permitting costs for the Barrows Street project using a $440,000 grant from InvestNH, a state-funded program intended to incentivize the development of affordable workforce housing. The home sales would recoup the remaining costs, including construction.

The city’s goal is to keep the sale prices of these homes “well below market rate,” such as a 3-bedroom unit in the range of $300,000, Mayor Tim McNamara said in an interview in February.

According to NH Realtors, the median sales price of a single-family in Lebanon was about $500,000 at the start of 2024.

The city, which also is considering clustered housing projects on a city parcel at 3 Seminary Hill Road and on 1.9 acres of city land on Hanover Street Extension, hopes to demonstrate to private developers that building affordable single-family homes can be economically feasible if provided with the right resources and support, McNamara.

Pre-approving the home designs are intended to eliminate time and costs that developers incur during the permitting phase.

The lots on Barrows Street total 1.5 acres, of which half an acre is suitable for development, Brooks said.

A large portion of the property is covered by wetlands, Brooks said. The development could impact a small wetlands area of less than 1,000 square feet, which would require a permit from the state Department of Environmental Services.

Some neighbors question the wisdom of building several housing units on the end of Barrows Street, given the limited amount of land.

“It doesn’t make sense to me. There has to be a better place than this to do this little development,” said Robert Murphy, who lives next to the city property.

Traffic noise from the interstate is also bothersome in the neighborhood, Murphy said.

“It’s not bad in the summertime because the sound is deadened by the leaves in the trees,” Murphy said. “But once those leaves drop (in the fall) you can hear the interstate for miles — and that’s all you will hear when you live here.”

Rebecca Kidder, whose home on Winter Street abuts the city property, said she is upset about the prospect of suddenly having less privacy in her backyard.

“When I bought this property one of the biggest appeals was that we’d never have neighbors behind us because of the wetlands, “now 30 years later, I’m going to have a development in my backyard.”

The city plans to hold public meetings with neighbors to allow them to see the proposed site plan once it is developed, Brooks said.

“We hope to have a meeting or presentation with the neighborhood so that they can begin to visualize what we’re wanting to achieve,” Brooks said.

The project’s timetable depends largely on when the architectural designs are ready, though the city hopes to submit a site plan to the city Planning Board for review in the fall and to possibly start construction at Barrows Street next spring, Brooks said.

After the Barrows Street project is complete, the city plans to develop the Seminary Hill Road property, followed by Hanover Street Extension.

The City Council will meet on Wednesday, May 1 at 7 p.m. in City Hall.

Patrick Adrian may be reached at padrian@vnews.com or 603-727-3216.