PORTLAND – The Maine State Housing Authority and the developer of a controversial housing project in Portland have agreed to move ahead on the project, at a lower price than what the developer sought this summer.

The 38-unit Elm Terrace, which will redevelop a historic building at 68 High St. and develop an adjacent vacant lot, has been cited by state Treasurer Bruce Poliquin as an example of a housing project that, in his view, is unnecessarily expensive. Poliquin says the Maine State Housing Authority has lax cost control measures and policies that give preference to costly rehabilitation projects in downtown areas.

Poliquin, who serves on the authority’s board of commissioners, said Monday that the price reduction for Elm Terrace – which amounts to nearly $50,000 per unit – is due to new scrutiny of the authority by him and four new board members appointed by Gov. Paul LePage.

While he is pleased with the lower cost per unit, it is still too high, Poliquin said.

“I am not satisfied that we can’t do better than spend $265,000 for 1,100-square-foot apartments when taxpayers are footing the bill,” he said.

Dale McCormick, the authority’s executive director, disagrees.

She said Monday that the authority has instituted several cost-control measures since she took the job in 2005.

In early September, shortly after learning that the proposed cost of Elm Terrace had increased by close to 30 percent – to $314,000 per unit – she told the developer to reduce that figure by $50,000 per unit.

She said Poliquin and the four new board members had no effect on the project’s costs. The board members took their seats in October.

“We acted way before they knew anything about this deal,” McCormick said.

Cullen Ryan, executive director of Community Housing of Maine, the project’s developer, said McCormick – not the board – told him the authority would reject Elm Terrace unless the cost was reduced. He said he got that news in late August or early September.

He said his group and the project’s investors found savings by breaking up three large apartments into six smaller apartments, slightly lowering the purchase price and subsidizing the development costs.

He said his nonprofit has spent $700,000 so far on the development costs, such as paying for permits and hiring architects and engineers. To make the project work at the lower price, Community Housing of Maine has agreed that it will get only half of that money back, he said.

“We believe in the project. We are well into it,” he said. “It made more sense for our organization to continue on, rather than walk away.”

Community Housing of Maine and the authority signed a letter of commitment late last week. McCormick informed the board of commissioners about the agreement on Sunday. The deal is expected to close by the end of this week.

Ryan said 81 percent of the $10 million project is funded by private investors who buy federal tax credits for low-income housing and restoration of historic buildings. Other funding sources include the city of Portland, through its Community Development Block Grant program.

Affordable housing projects in Maine that are funded in part with historic tax credits cost, on average, $240,000 per unit. Ryan said Elm Terrace is more expensive because Portland has an ordinance requiring developers to build a parking space for every new apartment unit. To meet that requirement, the developer will build a single-story garage on the ground floor of the building in what’s now the adjacent vacant lot.

If the project did not involve rehabilitating a historic building, Ryan said, it would cost $190,000 per unit.

The building on High Street, built 102 years ago, was once a children’s hospital and was used most recently as administrative offices for the University of Southern Maine. It is now vacant.

 

Staff Writer Tom Bell can be contacted at 791-6369 or at: [email protected]