Portland Mayor Ethan Strimling wants to ask voters to borrow $7 million to address housing issues in Maine’s largest city.
During his State of the City address earlier this year, Strimling called on the council to invest $10 million in its housing trust fund, which is used to subsidize affordable housing built by private developers. He said the bond is needed to meet the city’s housing goals, which he said include adding 1,000 units of housing.
Adding incentives for developers could be more palatable to councilors concerned with over-regulating the housing market, he said.
“The housing crisis is still here and the affordability gap in the city is just as strong as it’s ever been,” Strimling said. “We need to get much more aggressive to meet the challenge.”
Strimling will present his proposal to the City Council’s Finance Committee on Thursday. The three-member committee, which includes the mayor, will hold a public hearing at a later date and make a recommendation to the full council. Such a measure would also have to be approved voters.
“This is meeting two of the goals we have put in place in the last couple of years,” Strimling said. “I’m hopeful the council will see the value of trying to capitalize our housing trust and build the housing we need.”
Other councilors on the committee said they support the goal of putting more funding into the city’s housing trust, but were not sure that a bond is the right approach.
Councilor Nicholas Mavodones, who leads the committee, said he’s open to the proposal, but he wondered if an allocation to the housing trust could be made through the city’s Capital Improvement Plan.
“There’s a considerable amount of debt service associated with this” proposal, Mavodones said. “That debt service has to be paid back and housing is really important. But I would look really closely at putting such a high number out.”
He added: “I’m hesitant to put everything that comes to us before the voters. That’s why they elect councilors.”
Councilor Justin Costa said he is looking forward to learning more details about the proposal, especially how it would intersect with the complex web of funding for affordable housing developments. But he generally supports the idea of increasing funding for the housing trust, noting the recent $1 million allocation from the sale of city-owned land to Wex, which is building a new headquarters on he eastern waterfront.
“I think we’ll be open to it, but this is really our first look at what the mayor’s putting on the table,” Costa said. “I think we’d really have to work through the details of it.”
The bond proposal comes on the heals of a $64 million bond to renovate four elementary schools that was approved by voters last November. City officials, who were concerned about the bond’s impact on the city budget, estimated that the four-school bond, which is anticipated to rise to $91 million with interest, would increase taxes by 3 percent over a 26-year period.
According to a Sept. 28 memo from the city’s finance department, annual payments on the $7 million housing bond proposed by Strimling, if borrowed all at once, would range from $647,500 in the first year to $364,875 in the final year. Assuming a 4.25 percent interest rate, the bond would accumulate an additional $3.1 million in interest.
City Finance Director Brendan O’Connell estimated it would add about 8 cents (.4 percent increase) to the city’s mil rate. That rate is currently $22.48 per $1,000 of assessed value, according to the city’s website.
The housing trust is typically used to build housing that’s affordable to people earning up to 20 percent more than the area’s median income.
According to MaineHousing, those income limits range from $75,525 for a single person household to $107,850 for a family of four.
Housing First projects, providing permanent supportive house to the homeless, and low-income housing, which is supported by housing vouchers, are also eligible for housing trust funds, Strimling said.
Strimling estimates that the city could leverage the bond to create 628 to 844 new units of housing. He said the city can afford to make an additional investment into its housing stock even with the school bond, either by adding to the tax rate or borrowing less as current debt is paid off or re-prioritizing its budget.
“I think either way the people of Portland would pass this bond in a heartbeat,” Strimling said. “Housing is infrastructure – it’s just like roads and sidewalks. We clearly can afford to do it.”
Randy Billings can be reached at 791-6346 or at: