February 26, 2018
Contributors Latest News | Poll Questions | Opioid Epidemic | Joyce McLain | Tourney Time 2018

Affordable housing is broader than rhetoric suggests

By Greg Payne, coordinator of the Maine Affordable Housing Coalition

Affordable housing has received a great deal of attention lately, and for good reason: 86,000 Maine families are both low income and paying more than 50 percent of their income on housing costs. And Maine now has more than twice as many extremely low-income households as it does homes that are affordable and available to them.

Given such serious housing needs and the scarce resources available to address them (waiting lists for affordable homes routinely stretch out for many years), it is vital that the organizations and businesses utilizing those resources do so efficiently. After all, the more efficiently funds are spent, the more families will gain the stability that comes with having a quality, affordable home.

That is why so many of us in the affordable housing sector welcome the attention that Gov. Paul LePage and Treasurer Bruce Poliquin have brought to the issue of cost containment. We successfully worked in concert with them earlier this year to make changes, advocated by stakeholders for years, to development rules that drove up costs. That partnership continues today as we meet regularly to brainstorm ever more ways to responsibly reduce costs.

In recent weeks, however, this issue has become increasingly politicized and the facts have become an unfortunate casualty.

There are three primary types of projects that are undertaken by affordable housing developers — acquisition and rehabilitation of existing housing; new construction; and reuse of historic buildings, such as old schools and mills. All three types of projects are generally similar in cost to market-rate developments, despite the fact that affordable apartments are built to last with restricted rents for the better part of a century, and reduce our dependence on foreign oil through heightened energy efficiency standards.

Over the past five years, the average per-unit cost of affordable acquisition/rehab projects in Maine was $127,000, significantly less than the frequently cited average cost of purchasing an existing home ($159,000).

Over the same period, the average cost of building new, affordable apartments was $192,000 per unit. Market-rate home builders may sometimes beat that price, but more often do not. Especially in the downtown areas where common sense suggests we create housing for Mainers with modest incomes (because of reduced commutes to jobs and services), it is very difficult to acquire land and build new structures for a lower price.

However, it is projects in the third category of development, involving the reuse of historic buildings, which have garnered recent headlines. Such projects cost more to develop (on average, about $240,000 per unit) than those described above, for obvious reasons: governments require a higher standard of care when historically or culturally significant buildings are at stake, and it is also much more complicated to transform a former school or mill into housing units than it is to rehabilitate existing apartments or create them from scratch.

Affordable housing developers have undertaken historic redevelopment projects over the past few years, despite their higher cost, because a bipartisan, overwhelming majority of state legislators have determined that it is good policy to do so. The Legislature approved an expanded state historic rehabilitation tax credit in 2008, in an effort to preserve Maine’s historic buildings and encourage the creation of housing in our downtowns. The program encourages affordable housing development as a conduit for achieving those public policy goals.

It is fair enough for those who oppose these policies to publicly raise their objections, but it is probably less fair to point fingers at developers for doing precisely what the Legislature has encouraged them to do.

It is also important to clarify that no affordable housing project in Maine has been approved or built at a cost of more than $300,000 per unit. Ever. That figure is helpful for creating headlines but simply does not reflect reality.

Finally, the development of affordable homes has served as a lifeline for Maine’s general contractors, architects and engineers during this long and severe economic slowdown, which is now forecast to last for at least another year. Thousands of Maine people have found work creating quality, energy-efficient housing for their low-income neighbors. Such an effective economic development tool should be celebrated in every corner of Maine it touches.

Greg Payne is the coordinator of the Maine Affordable Housing Coalition, an association of more than 70 private and public sector organizations, including architects, engineers, builders, banks, service providers, advocates and others committed to ensuring that all Mainers are safely and affordably housed.

Have feedback? Want to know more? Send us ideas for follow-up stories.

You may also like