Housing funds plentiful in Portland, but future funding is in question

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PORTLAND — Available city funding for affordable housing is approaching an all-time high.

But the good fortune may be fleeting as city officials look for ways to consistently capitalize the Housing Trust Fund at a time when an important component – fees paid by housing developers – are slowing.

“We leveraged 200 units with $1.2 million; 1,000 may be needed,” Mayor Ethan Strimling said Aug. 3, the day after members of the City Council Finance Committee unanimously endorsed allocating $1 million of the $3.3 million in proceeds from city-owned land to the fund.

The allocation requires a full council vote and, if approved, will boost the fund balance to $2.2 million.

Other council votes expected Aug. 13 will then allocate $925,000 from the fund for rebuilding and expansion of Portland Housing Authority’s Front Street residences, and $300,000 to help fund Avesta Housing’s planned housing at 977 Brighton Ave.

Between $1.2 million in trust fund allocations and $880,000 in available funding from the U.S. Department of Housing & Urban Development, the city could commit itself to spending $2.1 million for housing marketed to people earning 40-60 percent of the area median income.

Included in the HUD funding is $370,000 for construction of senior housing at 178 Kennebec St. in Bayside. The remaining $510,000 will be allocated to PHA’s Front Street project.

In all, 150 new affordable housing units will be built. Both the Kennebec Street and Brighton Avenue projects will provide housing for people 55 and older, and 50 units will be replaced at Front Street.

If councilors approve the trust fund allocations, the balance would be about $1 million. However, the city has traditionally kept $500,000 aside for contingencies, and both Strimling and City Councilor Jill Duson said this could be reevaluated.

Once allocated, funding sources become less certain. HUD funding decisions are made at the federal level. Locally, the Housing Trust Fund has been boosted through fees paid by developers, as required by the city’s inclusionary zoning ordinance.

The ordinance requires all development with at least 10 units to either set 10 percent aside as workforce housing, or pay $100,000 per affected unit.

This year, developers of housing at 443 Congress St. and 62 India St. paid a total of $556,000 into the fund. Developers of luxury condominiums under construction at 20 Thames St. will pay $280,000.

The fund could also get almost $700,000 in the future, including more than $416,000 from the construction of 45 condominiums planned at 218 Washington Ave.

That project was approved last year by the Planning Board but has not started. On Tuesday, developer Vincent Maietta said several other projects in the Portland area have consumed his time.

“There is a 100 percent certainty it will get built; the numbers work,” Maietta said. “The market is only better today than when we got it approved.”

Two other projects that would add a total of $280,000 to the fund have not broken ground.

City data detailing development affected by inclusionary zoning rules show that of two projects approved in 2016 and six approved in 2017, only three have broken ground.

Jonathan Culley is building 10 townhouses at 70 Anderson St. in East Bayside, one of which will be workforce housing.

“All of us feel like we are at a point in the cycle where there are approved projects that won’t get built,” Culley said. “The cost to develop is exceeding the returns.”

Culley’s work dots the city’s peninsula, largely planned and completed when conditions were prime. Increased land and construction costs and rising interest rates now make larger-scale work less desirable, he said.

“When the economics of a deal are good, they tend to get built quickly,” Culley said. “The reality of the current market is, only high-end condos appear to be viable.”

If development is ebbing, the need for affordable housing is not.

At the Aug. 2 meeting, committee members learned there are more than 700 households on Avesta’s city waiting list, and more than 1,100 applicants on the PHA waiting list.

PHA Director Mark Adelson was unable to attend the meeting, but Avesta Director Dana Totman said their household count could translate to 1,600 people. 

Totman noted it is likely the same applicants appear on the Avesta and PHA lists.

“We encourage them to get on as many lists as possible, and we help make that happen,” he said, estimating as many as 15 percent of people on the lists may be homeless.

The greatest demand at both agencies is for one-bedroom units.

On Aug. 3, the mayor said he would like to see the Housing Trust Fund capitalized at $10 million, and he is willing to go into debt to do it.

In his State of the City address in January, Strimling suggested a bond to capitalize the fund. Of late, he has also advocated doubling fees for short-term rentals and eliminating the discount allowed for homeowners.

“I want a fee that is reasonable for the market to bear while helping replace units that are lost. A bond may be a good idea because it can be drawn down when you need it,” Strimling said Aug. 3.

The council Housing Committee was prepared to take action on the requested increase on July 31, but Duson said it will be discussed next month as Strimling could not attend last week’s meeting.

“I don’t think the market for building rental units was ever really flourishing,” Strimling said. 

Duson said she was skeptical about adding more bond debt or increasing rental unit fees. She added she was ready to hear what Strimling might fully propose on either.

“If I had the next new idea,” she said Monday about capitalizing the fund, “I would have put it out there long ago.”

David Harry can be reached at 781-3661 ext. 110 or dharry@theforecaster.net. Follow him on Twitter: @DavidHarry8.

Work has started on 10 townhouses at 70 Anderson St. in Portland, but developer Jonathan Culley warns conditions for building new housing are not as advantageous as several years ago.

The 45 condominiums planned for this site at 218 Washington St. are coming, developer Vincent Maietta said. The project will also add more than $400,000 to the city’s Housing Trust Fund.

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Portland City Hall reporter for The Forecaster. Baltimore native, lived in Maine since 1989. A journalist since 2005, covering much of Cumberland and York counties. I joined The Forecaster in 2012.