Ellsworth apartment project receives federal tax credits

Posted Jan. 15, 2011, at 4:45 p.m.
Last modified Jan. 29, 2011, at 12:52 a.m.

ELLSWORTH, Maine — A 29-unit apartment complex on Water Street in Ellsworth is among nearly 200 units across the state that were approved to receive federal tax credits recently by the Maine State Housing Authority.

Housing Authority Director Dale McCormick announced last week that affordable housing projects in six Maine communities will split nearly $30 million in low-income housing tax credits, which are used to attract private investors to finance construction.

“This provides some badly needed affordable rental housing in several Maine communities, and gives Maine’s economy a boost,” McCormick said. “We expect the housing will generate several hundred jobs just in construction alone.”

Penquis of Bangor is the developer for the Ellsworth project.

Stephen Mooers, director of housing services for Penquis, said Hancock County is outside his agency’s traditional footprint, but he also said need played a role in where the funds went.

“This is very competitive money,” he said. “The state doesn’t get a huge amount and most of it goes to southern Maine. But the demand is great here, too.”

The five other cities approved for housing projects include Freeport and Portland, which plan new construction; Biddeford and Berwick, whose proposed developments involve adaptive reuse of historic school buildings; and Lewiston, whose project involves converting a portion of the historic Bates Mill into housing.

The Ellsworth project, titled Straw Way Family Housing, received $5.8 million in tax credits, which will try to lure private investors, such as banks, insurance companies and other large corporations to participate in the ownership of the housing developments. As part of the ownership, they receive the credits and use them to offset federal taxes.

“The tax credits are a public-private partnership to raise private capital to invest in housing with a public purpose,” McCormick said. “Many of our housing programs operate on that same public-private model.”

If private funds are leveraged for construction, the Ellsworth apartments will be built on Water Street adjacent to another federally subsidized housing development, Union River Estates, that is managed by the local housing authority.

“The city was instrumental in helping us find the right location,” Mooers said. “We wanted something that was close to downtown. Finding that type of land can be difficult.”

Capital raised from the tax credits is used as an equity contribution to reduce the cost of the housing and make apartments affordable to lower-income seniors and families.

Most of the new apartments in Maine would be restricted to households earning less than 50 percent of the median income.

The tax credit funds are meant to replace the direct federal rental assistance that once was used to subsidize affordable housing. McCormick said providing affordable housing to working families is essential to attracting and retaining good jobs, and therefore a key component of economic development.

The Ellsworth project would be a combination of two- and three-bedroom units, nine of which will be handicapped-accessible. Mooers said the project is likely 18 months from completion, depending on who chooses to invest.

MaineHousing received applications for funding for 11 eligible developments, and selected the top-scoring six projects for funding. Those not selected are placed on a waiting list. If any of the initially selected developments do not continue through for a final financing commitment, some of those on the waiting list may be financed.

Another Penquis project in eastern Maine, a senior housing development in Brewer, is first on the waiting list. Penquis also recently developed the Lakeview Senior Housing project in Lincoln that was funded largely with federal stimulus funds.

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