Don't build a small building with lots of asphalt. Library should be responsible for providing adequate parking so there is no negative impact on nearby businesses. Every development needs some on-street parking. Use good architecture for housing. Get some on-street parking.
Retail provides expansion option.
Use land for open landscaped space, open to Fanno Creek. Put the library on the same side of the street as most of the schools. Step-back Bertha Court wall. Comment - Often people deal with the library as an amenity in the community at the same time they use other amenities. Housing makes sense and I commend you for this idea.