The Winchester Woods development is under construction in Portland’s East Deering neighborhood. Staff photo by Rachel Ohm.

Portland’s largest nonprofit affordable housing provider said Tuesday it is no longer planning to purchase a development in East Deering to use as housing for asylum seekers.

The announcement comes a day after the Portland City Council took up a funding request for the project. It was brought up at the last minute at the request of the city’s newest councilor, but was deferred until early next year.

Avesta Housing had been planning to purchase a 48-unit housing development, Winchester Woods, under construction off Sherwood and Dalton streets and turn it into housing for asylum seekers.

Just as Avesta was emailing city officials Tuesday to say it was stepping away from the project, the developer said he was preparing to give the nonprofit another extension to finalize the purchasing contract.

“The Winchester Woods plan required a multitude of partners, resources and circumstances to align in order to be possible,” said Sara Olson, vice president of advancement for Avesta Housing, in a statement. “Unfortunately, this did not come to fruition and Avesta has determined that the Winchester Woods acquisition cannot move forward.”

The nonprofit applied for $5 million in American Rescue Plan Act funding through the city, and planned to also secure funds from Cumberland County and a loan from MaineHousing to cover a total cost of about $15.6 million, according to the ARPA application. Avesta also requested $500,000 from South Portland, but city councilors there rejected the request in November.

Asked if Monday’s council decision affected Avesta’s decision and if there were any other things the nonprofit needed to move the project forward, Olson said in an email that “there were many pieces of this project that needed to come together.”

“The city’s approval was one of them,” she said. “When we weighed the risks without the city’s vote, we decided it would not be fiscally responsible to move forward.”

Mayor Kate Snyder said the proposal didn’t make it on Monday’s agenda because there were too many outstanding questions following a Nov. 16 workshop on the project.

“We’re not holding this back for any reason other than we’re waiting for information in order to be able to give you a thorough review of what’s being asked,” Snyder told the council Monday.

Snyder did not respond to a phone or email message late Tuesday asking about Avesta’s decision.

In a memo to Snyder and the council Monday, Interim Housing and Economic Development Director Mary Davis said staff wanted to be able to recommend the project, but “cannot in good conscience do so at this time given an absence of documentation.”

Davis said staff needed an appraisal of the property before they could make a recommendation to the council and also raised concerns about whether Avesta had secured funds from other sources, the lack of a guarantee that asylum seekers in Portland would get preference for the housing, and other issues.

Olson said Avesta was aware of the appraisal request, which she said was unusual, and had told the city it would be delivered at the end of the month. “We have responded to all of the city’s requests and inquiries,” she said.

The memo listed conditions the council could incorporate if they wanted to approve the project, including the appraisal, written confirmation that the project would house asylum seekers, that the state would pay the rent for two years and inclusion of rent affordability provisions.

Councilor Regina Phillips, who took office earlier this month, took the unusual step of calling for the item to be brought up Monday. Fellow councilors voted 7-2 to suspend council rules and consider the item with Snyder and Councilor Mark Dion voting against it.

Several councilors then said they wanted to move forward, but could not support taking a vote Monday. A vote to waive a second read failed 8-1 with only Phillips in support.

Councilor April Fournier said she was concerned by Davis’ memo. “If I’m looking at what was provided to us by city staff, that there’s a seven-point condition to approving this, that doesn’t feel good to me and it doesn’t check the boxes of this housing is safe, it’s equitable or that it’s permanent,” she said.

“We need to have public comment,” said Councilor Pious Ali. “We need to engage people.”

Winchester Woods was originally proposed as mostly market-rate apartments with one-quarter of the units set aside for “workforce housing” for families and individuals earning at or below 80% of the area median income, as stipulated by the city’s inclusionary zoning requirements.

Developer Kevin O’Rourke said he was approached by Avesta in June, after construction had already started, about purchasing the development.

O’Rourke said he has a purchase and sale agreement in place with Avesta and they have worked through several extensions while Avesta worked to finalize funding. The latest extension is set to expire Wednesday, and O’Rourke said he was willing to grant another one.

He said Tuesday afternoon he hadn’t yet heard about Avesta’s plans to walk away from the project, but if that were to happen, he would revert to his original plan to rent the 48 apartments himself.

“It’s walking distance to Baxter Boulevard, easy access to I-295 and a five-minute Uber to the Old Port,” O’Rourke said. “It will be very desirable housing.”