Bar Harbor, housing authority spar over project

Posted Jan. 17, 2010, at 8:52 p.m.
Last modified Jan. 30, 2011, at 11:48 a.m.

BAR HARBOR, Maine — More than two years after agreeing in principle to help financially support the development of the Northeast Creek housing project, the town and Mount Desert Island Housing Authority have yet to come to final terms on the agreement.

The delay has been a contentious issue in recent weeks as the housing authority has raised the specter of not being able to make payments on a bank loan it took out to complete the project off Knox Road. At recent Town Council meetings, representatives of the housing authority have discussed the issue at length with council members.

The controversy has hit fever pitch in recent weeks. In an exchange of e-mails between town and housing authority officials, Terry Kelley, executive director of the housing authority, has accused the town officials of having conflicts of interest in the deal while Dana Reed, the town manager, has suggested that the housing authority ultimately is to blame for a final agreement not having been reached.

On Tuesday, Jan. 19, the council is expected to meet in executive session before its regular 7 p.m. meeting in order to discuss the issue with the town’s attorney. During the ensuing public meeting, the council and housing authority representatives are expected to discuss the issue further.

According to town officials, the expected $1 million bond has not been provided by the town to the housing authority because the memorandum of understanding between the two parties, which was endorsed by local voters in June 2007, was never developed into a final agreement that would authorize the release of the money.

The project has been promoted as a way to provide people who work on Mount Desert Island with a way to find affordable housing near their jobs. Despite the relatively low income levels in the area, land prices on Mount Desert Island are higher than in most other parts of the state because the area is appealing to wealthier peo-ple who are looking either to move to Down East Maine or who want to buy seasonal second homes.

According to Kelley, the authority has had trouble selling houses in the environmentally friendly, 31-home development and needs funds from the town to make its bank payments. Kelley has asked the council to approve changes to the deal, including how many homes in the development can be sold at market rate and raising the maximum allowable income for families buying affordable units in the development.

Though the 2007 MOU indicates the agreement can be amended by the Town Council, some town officials have suggested that the proposed changes are significant enough that a new agreement entirely needs to be hammered out and again approved by the voters in order for the town to commit money to the project.

Any such new financial arrangement would have to be agreed upon by both sides in its final form within the next few weeks in order to make it through all the town’s procedural steps for placing it on the town ballot in June for voter approval, according to town officials.

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