By Bruce Poliquin
During the past 18 months, Maine State Housing Authority (MSHA) has been helping to develop the Elm Terrace affordable housing project in Portland. Architects, engineers, developers and lawyers have already spent over $600,000 on the project. The 35 mostly one- and two-bedroom apartments are planned to be constructed within an historic building on downtown Congress Street.
Here’s the problem: Each “affordable” apartment is budgeted to cost $314,000. (This was reported in an October 27 Sun Journal article, “Affordable Housing Project Overrun Raises Stakes for Maine Housing, McCormick.”)
MSHA is one of the eight quasi-independent authorities created by the Legislature to provide valuable services to the people of Maine. MSHA is a complex entity with 143 employees, a $14 million operating budget and $1.6 billion of outstanding bonds that it has sold to help fund its programs.
It distributes federal tax dollars to local oil companies to buy home heating fuels for low-income citizens. It backstops low interest loans to first-time homebuyers offered by Maine banks. It funnels state and federal tax dollars to developers to construct housing that is affordable to low-income fellow Mainers.
As state treasurer, in January I began serving on the boards of seven authorities, including MSHA. Governor LePage has recently appointed four new MSHA board members, including John C. Turner of Auburn. The majority vote is now in the hands of individuals with many years of private sector experience. These are professionals who understand the importance of spending precious capital wisely; they are business people who have been held accountable by their own boards, employees and customers.
During the past five to 10 years, MSHA has created construction standards that drive up the cost to build affordable housing in Maine. Developers bidding to be awarded taxpayer funds by MSHA have been required to install expensive solar hot water heaters and provide health insurance and union wages for construction workers. “Non-profit” developers have been given bonus consideration.
All of these costs add up: for example, see the planned $314,000 “affordable” apartments at Elm Terrace in Portland.
How can Maine taxpayers be expected to help pay for $314,000 “low-income” apartments when the median single-family home sells for $159,000? Why should our fellow Mainers be asked to subsidize housing which they themselves cannot afford to live in?
Another MSHA “affordable” housing project is the 34 mostly one- and two-bedroom apartments constructed within the old Waterville Junior High School. The Gilman Street project was completed in 2009. The cost per apartment was $292,000 for roughly 1,100 square feet. A quick search on Realtor.com finds a 3,328 square-foot single-family home on a 0.79 landscaped acre in neighboring Winslow with 3 bedrooms, 3 baths, hardwood floors, custom kitchen, stone fireplace, finished basement and attached 2-car garage selling for $285,000. What’s wrong with this picture?
The first MSHA board meeting with its new members was held Tuesday, November 15 at the MSHA offices at 55 Water Street in Augusta. All authority board meetings are open to the public. For the first time in memory, the meetings will be audio recorded.
The meeting agenda included a direct discussion about the Elm Terrace project. My questions included: Why did the MSHA staff approve the soaring costs for the 1,100-square-foot apartments, starting with $243,000 per unit in May, 2010? Why wasn’t the board informed of these unacceptable costs? Why do the MSHA affordable housing standards not include incentives to minimize costs?
Given the costly redevelopment of historic properties, why does MSHA allow the construction of “affordable” housing within such buildings? Is MSHA at legal or financial risk for having approved the now stalled Elm Terrace project over the past 18 months?
Doing good doesn’t mean doing it at any cost. Building $100,000 instead of $300,000 affordable housing units would help three times as many low-income Mainers. Public officials at all levels of government are fiduciaries of hard-earned taxpayer dollars. Everyone should be held accountable.