South Portland OKs tax subsidy for Avesta Housing project

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SOUTH PORTLAND — An affordable housing plan for Redbank gained traction Monday night when city councilors approved placing the project in a tax increment financing district.

By a unanimous vote and with little comment, the City Council agreed to set aside an acre of land extending from 586-600 Westbrook St. as a TIF district under a 30-year credit enhancement agreement with Portland nonprofit Avesta Housing.

The agency plans to build a 64-unit building, with 52 of the units marketed as affordable.

The TIF and financing arrangements had been discussed at a Nov. 6 Council workshop and Nov. 8 community meeting. Avesta Development Officer Tyler Norod on Monday said approving the TIF will help the proposal’s score in applying for funding from the Maine State Housing Authority.

“Please don’t be shy about asking us for booster points,” Councilor Claude Morgan said in response.

Norod said the project, geared almost exclusively to people earning 50 percent or 60 percent less than the area median income, still needs almost $7 million in low-income housing tax credits distributed by the Maine State Housing Authority to help finance $9.5 million in construction costs.

Norod said the TIF district and credit enhancement agreement will improve Avesta’s points scores with MSHA because the TIF shows local commitment. He anticipates presenting the site plan to the Planning Board at its Dec. 12 meeting, and said plan approval could also boost scores, too.

The deadline for applying to MSHA for tax credits is Feb. 8, 2018. The credits are passed through MSHA from the IRS and last for 10 years. They are intended to attract investment in projects where rents would not cover the costs of construction, debt service and operations.

According to a memo to the council, Avesta is also seeking a $3.8 million loan from the U.S. Department of Housing and Urban Development, and a $500,00 Federal Home Loan Bank of Boston subsidy to pay for development and operations.

The new housing is expected to provide $104,000 annually in new property tax revenues, based on the current tax rate of $18 per $1,000 of assessed value. The 30-year agreement would return $78,000 annually to Avesta for operating costs, and the remaining $26,000 would be allocated to offset School Department costs associated with children who live in the new housing.

The Avesta plan would limit the 12 market-rate units to three studio and nine one-bedroom apartments, while 16 two-bedroom and 10 three-bedroom units would be affordable. In all, at least 33 percent of all affordable units must remain that way for 30 years.

Occupancy of the two- and three-bedroom apartments is expected to add 12 students to area schools, and those new students are expected to require $12,700 each in education costs.

The five-story, 58,400 square-foot project would be built over land that is partly vacant, but also contains a trailer used as a “resource hub” by Opportunity Alliance and a variety store. Both would be incorporated into the new building, but the 4,100 square feet of retail space on the first floor is specifically excluded from the TIF zone.

Norod said the retail element is new to Avesta projects, but also important to the neighborhood.

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

South Portland city councilors on Nov. 20 approved tax increment financing for Avesta Housing to build affordable housing at 586-600 Westbrook St.

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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.

  • SP HUnd

    They estimate 12 students to be added from a total of 26 two and three bedroom apartments? I would say it will easily be double if not triple that.

  • Mainer1

    So South Portland has to put up this ugly building, pay for the added crime, police, drugs, etc. Then they pay almost no property taxes as they put their kids in the school system and the taxpayers have to foot the bill once again. Nice job liberals!