Portland is poised to offer $6.5 million in tax breaks for two separate housing projects that could add 135 units of housing, more than half of which would be considered affordable.

The City Council will vote Monday on the two proposals for Tax Increment Financing, which returns a portion of property taxes generated from new developments to the property owner, rather than providing an upfront cash subsidy.

The Portland Housing Authority would receive $2.1 million in tax breaks for its 55-unit project proposed for Boyd Street, while Avesta Housing would get $4.4 million for its 80-unit project on Cumberland Avenue.

Although the TIF agreements would be a significant investment in sorely needed low-income housing in Portland, where construction of market-rate apartments and condominiums is booming, the tax breaks do not guarantee the projects will move forward, since both are contingent on receiving additional subsidies from MaineHousing through a competitive statewide process.

Only a handful of the 15 to 20 affordable housing projects seeking low-income tax credits from MaineHousing get funded each year, and the high cost of developing a project in Portland’s downtown area presents a significant hurdle for the housing agencies here.

But Avesta President and CEO Dana Totman said the TIF, along with an expected Planning Board approval prior to submitting its application to MaineHousing in February, will make the project, which is currently fifth on the waiting list, more competitive.


Avesta would receive 75 percent of the property taxes generated from the new development over a 30-year period, estimated to be $148,000 a year.

“You’re probably not going to be in the running if you don’t have the TIF points. It’s extremely competitive,” Totman said. “I think we will be very competitive. We have a good proposal and we are taking all the right actions. It’s the right location and it’s in a needy market.”

But the proposal most likely to get funding based on last year’s rankings would be the Portland Housing Authority’s Boyd Street project. That proposal fell one point shy of receiving $682,000 of the nearly $3.1 million in tax credits, which went to six projects that produced 332 units of housing.

No affordable housing programs in Portland were approved in 2016.

Under the proposed TIF agreement, the housing authority would receive half of the post-development property taxes, an average of nearly $71,500 a year, totaling $2.1 million over 30 years, to help offset operating costs.

PHA Housing Development Director Jay Waterman said he’s pleased that the city was doing everything it could to help make the project more competitive, but cautioned that the state changes its scoring criteria and point system every year.


“The ways the city can help us win projects for the city is through funding incentives and Planning Board approvals,” Waterman said, noting his project is slated for a Nov. 28 hearing and vote before the board. “With the TIF and Planning Board approval, we think we have a good chance, but you never know what your competition is going to do.”

The Boyd Street project would produce 55 units of mixed-income housing, with 44 units being affordable to people earning up to 60 percent of the area’s median income. A housing report released by the city in October had that income threshold at $34,500 for a single person and $49,260 for a family of four.

The project would include 28 apartments, including three-bedroom units, for people eligible for housing vouchers that require them to pay only 30 percent of their income. Sixteen units would be for people earning 50 to 60 percent of area median income, which varies depending on household size, while 11 units – mostly studios and single-bedroom units – would be market-rate.

PHA estimated back in August that rents would range from $718 to $888 for a studio, $770 to $1,033 for a one-bedroom apartment, $923 to $1,292 for a two-bedroom and $1,067 to $1,539 for a three-bedroom.

A third-party analysis of the TIF request conducted by Anne Boynton of the Washington, D.C.-based Urban Ventures Inc., concluded that the housing authority was “well-positioned to secure all remaining sources needed to complete this project.”

Meanwhile, Avesta Housing’s Deering Place project at 510 Cumberland Ave. would consist of 80 units of mixed-income housing, including 48 units considered affordable to households earning less than 50 percent of area median income. That income limit for 2017 was $28,750 for a single person and $41,050 for a family of four.


In August, Avesta estimated that the rents for the low-income units would range from $680 for an efficiency to $870 for a two-bedroom. Totman said the three-bedroom units, which currently exist and would be renovated, would only cost $800.

Meanwhile, the council is planning on changing its TIF policy to require contractors working on TIF-funded projects to pay prevailing wages established by the Maine Department of Labor, among other things.

The policy review was requested by Mayor Ethan Strimling, who sought additional requirements, such as claw-back provisions for projects that don’t live up to its goals and a requirement that 25 percent of the work hours be performed by Portland residents, minorities, women or veterans. However, those provisions were not included in the proposal recommended by the City Council’s Economic Development Committee.

Instead, the committee recommended adding anti-discrimination language to the city policy and looking at the costs of studying whether there is a disparity in the employment practices of contractors.

The committee also scuttled a suggested requirement that contractors working on TIF-funded projects offer a state- or federally approved apprenticeship program to train young workers. Instead, the committee recommended offering grants to third-party groups to conduct a broader job training program for all types of industries, rather than just construction companies.

Strimling has said, however, that he plans to ask the council to adopt that requirement, which affordable-housing providers fear will burden them.


Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.

filed under: