Portland Housing Authority project hinges on investor tax credits
PORTLAND — The Portland Housing Authority's latest venture could be under construction by next spring, if it receives tax credits attractive to investors.
Bayside Anchor, a four-story apartment building planned for 49 Boyd St. in East Bayside, will have 45 apartments, with 36 designated for affordable housing, PHA Executive Director Mark Adelson said July 23.
“This is really critically important to the PHA strategic plan, getting involved and increasing the number of affordable housing units,” he said.
The $7 million project was unanimously approved by the Planning Board July 22, but will not advance until funding is secured.
Adelson said PHS is hoping for $4 million from the Maine State Housing Authority in the form of 10-year, low-income housing tax credits sold to investors.
About $3 million of those credits are awarded annually to MSHA by the IRS. Bill Glover, who oversees the MSHA application process and allocation, said the below-market rate rentals are required for investors working with housing agencies. The initial $3 million becomes $30 million as investors claim the dollar-for-dollar tax credits.
Construction costs for Bayside Anchor are estimated at $5.3 million, according to Planning Board documents, and the building will also be home to the community Head Start pre-school program and a Police Department Community Policing Office.
“I was charged with task of getting the agency into affordable housing," Adelson said. "It's an important part of our mission.”
Unlike the subsidized developments owned by the authority, Bayside Anchor will not be open to renters using housing vouchers for rental assistance. However, four studio apartments, 27 one-bedroom units, and five two-bedroom apartments will be rented within IRS guidelines to tenants earning no more than 50 percent or 60 percent of the average area median income.
“This is not a deep subsidy that provides rental assistance in any fashion,” Glover said July 24.
Bayside Anchor is first on the current MSHA waiting list, which funded six projects in fiscal year 2014, when PHA sought $546,000 in tax credits.
"We had a strong application in (fiscal year) 2014 and this gave us the confidence to continue with the project and seek financing," Adelson said.
The Planning Board decision may be the key to securing funding, he added.
"Last year ... we didn’t have local approvals prior to the application," Adelson said. "(Now) our local approvals will be in place and make the application that much stronger."
Glover said the tax credits are in high demand.
"We are usually oversubscribed, we get two or three times as many applications as we have credit available," he said.
The IRS program has helped fund other affordable housing projects in the city, including Walker Terrace at Walker and Congress streets, and Pearl Place, built by Avesta Housing at Oxford and Pearl streets. Avesta's affordable housing project at 134 Washington Ave. was third on the 2014 MSHA waiting list.
The tax credits are integral to keeping costs low for the agencies, Glover said.
“It brings money to the transaction that doesn't have to be repaid," he said. "Lower debt means they can charge less rent."
Applications to get the tax credits are due Oct. 9 and MSHA will make its allocation decisions by the end of November, Adelson said.