Controversial Elm Terrace development gets OK at $265K per unit

Posted Dec. 11, 2011, at 5:52 p.m.
Last modified Dec. 11, 2011, at 9:33 p.m.

The head of the Maine State Housing Authority has approved plans for a low-income housing complex in Portland for $265,000 per unit, roughly $50,000 below an earlier cost estimate that has sparked a political showdown with state Treasurer Bruce Poliquin.

Dale McCormick, director of MaineHousing, said Sunday evening that she signed a letter of commitment with the developer late last week to construct a 38-unit Elm Terrace complex after the developer managed to lower the costs from $314,000 per unit.

“It has been approved to go forward and that happened because they found the $50,000 in cost savings that we said they had to find,” McCormick said.

McCormick said her agency first demanded the reduction back in September and never agreed to pay the developer, Community Housing of Maine, $314,000 per unit. That figure has become a political lightning rod in recent weeks, however, with Poliquin citing the per-unit cost as proof of irresponsible spending and other problems at the state agency.

Reached Sunday night, Poliquin said he remains concerned about the cost of the project even at $265,000 per unit given the demand for affordable housing in Maine.

“It is my contention that the best way to do that is to be as cost-efficient as possible, to reduce the costs of every apartment to that we can get more people into those apartments,” Poliquin said.

In many ways, the Elm Terrace project has become another front in the battles in Augusta over government spending, affordable housing and political control of powerful positions.

Located at 66-68 High Street in Portland, Elm Terrace would be built in a historic building owned by the University of Southern Maine that would be renovated for the purpose. The complex would feature 38 units available to low-income families, defined as earning between 50 percent and 60 percent of the federal median household income.

The project would be financed primarily with federal tax credits, with MaineHousing awarding the credits to the developer and acting effectively as the underwriting agency.

But the project’s price tag has irked Poliquin and others nonetheless, who argue that even federal tax credits are paid for with taxpayer dollars.

Even at the lower figure of $265,000, each unit at Elm Terrace still far exceeds the $159,000 median sale price for a single-family home in Maine — a point that Poliquin has hammered home in speeches, on talk-radio shows and in his blog.

Consistent with his pledge to be an “activist treasurer,” Poliquin has been sharply critical of MaineHousing and McCormick, in particular, since early November. He also noted Sunday that MaineHousing has approved renovating other historic buildings for affordable housing with per-unit prices of $292,000, $284,000 and $272,000.

“There have been five years of very expensive projects in historic buildings that have been approved,” Poliquin said.

McCormick, other MaineHousing staffers and the agency’s supporters, in turn, have accused Poliquin of repeatedly spreading misinformation or making incorrect analogies to present a distorted picture about the agency, even after being given correct information.

McCormick’s supporters also accuse Poliquin of using his position on the Maine State Housing Authority Board of Commissioners to pursue a political campaign against her. McCormick was appointed by Gov. John Baldacci, a Democrat.

“I welcome the support of the board on cost control,” she said. “I don’t know why animosity has been injected into the debate. I don’t know why MaineHousing has become the target because we have been working on this.”

McCormick said there are reasons why affordable housing complexes cost more to build, and she insisted it is inaccurate for Poliquin or others to compare multi-unit complexes to single-family homes.

For one, these low-income housing complexes must meet a litany of federal code requirements for safety and handicap accessibility — including elevators — that don’t apply to single-family homes. Additionally, McCormick said it is inaccurate to compare the costs of a single-family home in rural Maine to a prices in downtown Portland, where the median home price is nearly $220,000.

Asked why MaineHousing approves projects in comparatively pricey Portland, McCormick said projects are often targeted for areas based on both need and available services to the residents.

But she said MaineHousing has taken numerous steps in recent years to lower per-unit costs. Those steps include capping the amount of tax credits that can be applied to each unit in order to get more units per dollar, imposing stricter per-unit caps on developer fees and lowering the required number of 3-bedroom units.

“All I know is I have been working on cost control since 2005 when I was first appointed,” she said.

In his criticisms of MaineHousing, Poliquin frequently points out that more than 6,500 people are on the waiting list for so-called “Section 8 vouchers” for subsidized housing. But MaineHousing officials countered that Section 8 vouchers are part of an entirely different federal housing program and that those eligible for vouchers would not qualify for placement in complexes like Elm Terrace because of the narrow income requirements.

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