PORTLAND — A proposal to bring affordable housing to Luther Street is facing opposition from Peaks Island residents who say the plan helps a few but ignores many struggling to afford island life.

Home Start, a non-profit development group based on the island, is looking to provide three affordable houses on a single lot at 18 Luther St., which was purchased in 2007.

But the group needs a special contract zone before the project can get underway. The contract zone was presented on Monday to the City Council. The council is expected to vote on the zone July 19 at the 5 p.m. meeting.

There is currently a single-family home on the 16,250-square-foot lot, which critics say is smaller than the 20,000-square-foot lot allowed in the current zoning. If the development goes through, each house will be on an approximately 5,300 square-foot lot.

According to planning documents, the group would like to build two new houses at 18 Luther St. and either refurbish or rebuild the existing home.

Ellen Mahoney, chairwoman of Home Start’s Development Committee and vice president of the Board of Directors, said the residences will be energy-efficient modular homes. One will be sold, one will be rented with an option to buy and the third will be rented.

Mahoney said the project will meet a variety of housing needs for families looking to live on Peaks Island year round. She said many people can’t afford to buy island homes and winter renters are usually forced out during the summer. 

“I think it makes sense,” she said. “We want a thriving year-round community here on Peaks.”

Planning documents indicate the houses will be offered to families earning between 80 and 120 percent of the median income guidelines set by the Housing and Urban Development. Their monthly carrying costs, including mortgage, taxes, insurance, basic heat and electricity, would be capped at 30 to 35 percent of the buyer’s income – that’s $1,675 to $1,954 a month for a family earning $67,000.

Critics say the project will make living on Peaks Island more affordable for only a few families, while ignoring bigger issues that make island life economically unfeasible, like ferry rates and parking fees on the mainland.

Meanwhile, contract zoning on the island will set a bad precedent, they say.

“I know developers are excited there will be a precedent,” Luther Street resident Tom Bergh said. 

Michael Richards, the chairman of the Peaks Island Council, said he opposes the project, because “basically everyone” on Luther Street didn’t want to further develop a densely populated area.

“The down-front area of Peaks Island is overcrowded,” Richards said. “(Residents) didn’t want to lose the green space.”

Mahoney said the group can’t meet current zoning rules because land is a premium on Peaks Island. She added that 20 percent of Peaks property is protected by conservation easements. Also, he said, the group cannot afford to simply buy and rehab existing houses.

“It’s an island; land is a finite resource,” she said. “This (project) fits smart growth principals.”

Bergh said he opposes the project because houses will not be affordable to current residents, many of whom bought their homes years ago and watched their property values and taxes soar.

“How can it be affordable when three-quarters of the people who live next to it can’t afford it?” Bergh said. “The problem with Peaks Island isn’t housing; it’s the huge taxes and the cost of transportation.”

Bergh is concerned that selling houses below market value may adversely affect current residents. He was also critical of a deed covenant that caps the amount of equity the home-buyer can accumulate, which will allow Home Start to fund other projects.

“The people you’re supposed to be helping (will) need help again,” he said.

Mahoney said the equity cap will allow the group to offer more subsidies in the future. She acknowledged the project will not address the larger issues that make island life difficult.

“I think it would be irresponsible to not address the need for affordable housing,” Mahoney said. “It’s not going to be the answer, but it’s a first step. It allows people to get their foot in the door and live on Peaks Island in an affordable way.”

The Peaks Island Council voted 5-2 in May in favor of putting the project before city officials, even though the PIC has no authority over the zoning matter. The Portland Planning Board approved the contract zone in May by a 4-0 vote.

Island Councilor Rob Tiffany voted with the majority, but cautioned that his position should not be mistaken for support for the project.

“We wanted, in effect, to get it off the island,” Tiffany said. “It has been bubbling around the island for about three years with a lot of controversy.”

Randy Billings can be reached at 781-3661 ext. 100 or rbillings@theforecaster.net