New London — The New London Homeless Hospitality Center last month added another multifamily home to its growing inventory of city properties aimed at housing the city’s lowest-income residents.

The strong likelihood the property will enjoy tax-exempt status has caught the attention of city officials.

The nonprofit homeless hospitality center, which city records show now owns five multifamily homes, purchased the 195 Williams St. home for $185,000 with plans for four apartments and a total investment of about $400,000, according to Cathy Zall, the center’s executive director.

The center, with headquarters at 730 State Pier Road, plans to apply for tax-exempt status, as it has for all of its other properties.

Mayor Michael Passero said the city would take a closer look at the expansion of the center’s practice of purchasing homes, taking them off the tax rolls and renting them out as a tax-paying landlord might.

Passero said affordable housing is an important issue in the city but so is supporting city services.

“We have to have a balance,” Passero said. “I think it bears a closer look to find if the tax-exempt purpose fits within the spirit of the law.”

Tax-exempt status, according to the city tax assessor’s office, was granted to other homeless center holdings because the properties are owned by a nonprofit and used for transitional housing for homeless clients or, in one case, at 51 Mountain Ave., for homeless veterans.

The purchases will allow the city’s lowest-income residents to find decent, affordable rental units — an increasingly difficult prospect, Zall said.

There are people on disability living on less than $700 per month along with other people working part-time who similarly find themselves at the homeless shelter, she said.

The center’s goal is to offer homes with rent in the $300 to $400 per month range — well below other market-rate apartments.

“There’s very little on the market. As we have the opportunity to buy these buildings, it helps us find a place for someone who could be trapped in the shelter for a very, very long time,” Zall said.

To purchase the 195 Williams St. home, the center was awarded $300,000 through the federal Low-Income Housing Tax Credit program of the Connecticut Housing Finance Authority.

The program is designed to stimulate investment in affordable housing, and the tax credits typically are sold to corporations or investors to raise equity for a project.

In this case, the credits were purchased by Eversource, Zall said.

Zall said the center used a similar method to purchase and renovate a four-family home at 73 Broad St. in 2013.

The homeless center also  owns homes at 19 Steward St. and 70 Mountain Ave.

Zall said state funds were not used in all cases.

The 19 Steward St. home was given to the center by the First Congregational Church of Old Lyme. The center took out a loan to purchase the 70 Mountain Ave. home for $74,000 in 2014.

Passero said he applauds the goals of the homeless hospitality center but said there are other affordable housing units available in the city with owners who pay taxes.

“The city is still obligated to provide emergency medical services, police and fire services, trash pick-up and other city services,” he said.

The renovations to the home on Williams Street, opposite Williams Park, will include lead abatement, a new heating system, painting and siding replacement.

Work crews were on site Tuesday with scaffolding covering the front of the home.

The majority of the lead abatement costs, about $40,000, was covered by the city’s Lead Hazard Reduction Program.

“That building has had very little investment for a very long time,” Zall said. “When it’s done, it will be very nice.”

Zall said the homeless shelter is an important safety net but not a solution for the problem of homelessness.

“We really recognize the response to homelessness isn’t shelter. It’s housing,” Zall said. “Our mission is to end homelessness and the way to do that is increase number of people who are housed. This is just one little piece of it.”

 g.smith@theday.com