Years of policy changes and public financing have produced more housing in Portland, but rents and home prices remain unaffordable for about half the city’s residents.

A new city report shows that most new construction approved in the last five years is reserved for low-income residents, or caters to those who can pay for high-end rental apartments and condominiums.

What isn’t being built is housing for the “missing middle” – young families looking for their first home or rental apartments for low-wage workers in the city’s large food service, administration and retail sectors.

“Housing is the biggest asset of most families, and that asset is more and more unachievable for most people here,” said at-large Councilor Jill Duson, who chairs the City Council’s housing subcommittee.

“It is a vicious cycle,” she added. “This report is not a declaration of victory; it is an assessment of where we are in a very long race.”

CONSTRUCTION DELAYS

In the last six years, the planning board has approved 2,300 new housing units. That is about 383 units a year, 100 more a year than the goal outlined in the city’s 2017 comprehensive plan.

But more than half that housing has been condominiums or market-rate apartments, according to the report. The median condo sale price was $325,000 this year, according to broker Maine Home Connection. Less than a quarter is subsidized, low-income homes.

Construction of new housing also lags behind. Less than half of the housing units approved since 2014 are finished, according to the city. Only 45 new units were created in 2018, and none had been completed as of August this year.

A delay from city approval to construction is an expected part of the building cycle, said Mary Davis, the city housing director.

“We recognize that it takes time; the planning board process is at the very beginning,” she said.

“I still see it as a positive. People are still willing to look at the possibility of building housing and putting financing together,” she added. “The more projects are approved, the more that will be built.”

INCOME-HOUSING GAP

This is the second biennial report on Portland’s housing situation. In recent years, city politics have focused on a housing crisis, including rents and home prices too expensive for many.

The median household income in Portland is about $51,800 a year, nearly half what is needed to afford the median home price of $316,000. Almost half the city’s renters are paying about a third or more of their income on housing, a standard benchmark of affordability.

Rents have stabilized in recent years, according to a 2018 survey by the city. The median rent for a two-bedroom apartment in Portland was about $1,380 last year, but it’s more expensive in desirable neighborhoods like the East and West Ends.

The housing burden falls the hardest on office, sales and food workers, the city’s three biggest employment blocks and some of the lowest-paid positions in Portland, according to the new report.

City officials have made policy changes to encourage new housing construction. Those changes include requiring new developments to build a certain number of housing units for workforce housing, amending zoning rules to boost housing construction, putting restrictions on short-term rentals and financing projects with tax breaks, federal grants and the city’s housing trust fund.

Low-income housing typically means apartments and homes built with government subsidies and reserved for poor families and individuals that meet income standards. Affordable housing, on the other hand, means that costs do not exceed 30 percent of household income.

“There is no silver bullet; there is not one specific thing that is going to solve the housing issues we have,” Davis said. “We are trying to address it from a variety of different avenues.”

LAGGING WAGES

Portland has made all the right housing policy moves, said Greg Payne, director of the Maine Affordable Housing Coalition and an executive at Avesta, a low-income housing development company.

But officials face a persistent problem confronting booming cities in the U.S. and abroad, Payne said – basic wages have not kept pace with soaring housing costs. Rents in the U.S. increased 13 percent from 2001 to 2018, while inflation-adjusted median wages went up just half a percent in the same time, according to the Center for Budget and Policy Priorities.

The report “clearly indicates a city that is doing its best to look under every rock and nook and cranny to address the problems,” he said.

“I think there is that workforce issue,” he added. “Just the fact the jobs that are available for people don’t pay an adequate wage to afford what the rents are.”

Modest increases in Portland’s housing inventory and complicated policy amendments aren’t enough for people who have nowhere to live, said Jessica Falero, co-founder of the People’s Housing Coalition.

Falero understands there are limits to what city policy can accomplish but believes the problem is not being taken seriously enough. Portland’s homeless resources are overstretched, and the region is facing a surge of homeless youth, Falero said.

“I am honestly appalled by people’s lack of urgency around the lack of affordable housing in Portland,” she said.

The city should be collaborating more with people who want to provide affordable housing and finding creative solutions, not focusing on the barriers to creating more homes, Falero added.

“If the City Council doesn’t move and doesn’t realize the urgency that is here now, we are going to have more homeless youth, more people on the streets panhandling. It is going to get worse,” she said.

MAKING THE NUMBERS WORK

Developers don’t always set out to build luxury homes, but it is frequently the only way to finance new construction without public subsidies.

That is especially true in recent years, as a critical skilled labor shortage in Maine has sent building costs soaring.

“The first thing developers try to do is build workforce housing,” said Brit Vitalius, a residential real estate broker and president of the Southern Maine Landlord Association.

“When that fails, what they have to choose is condos or higher-end rentals just to make the numbers work,” sometimes just to prove there will be enough return to get a bank loan, he said.

Developers are looking for engagement with city government, in the form of tax breaks or other incentives, to make workforce housing projects, Vitalius added.

The report makes no conclusions or policy recommendations, but Councilor Duson favors a plan to make city-owned land available for housing development.

“What is on the list for the last year is to develop a project for the city to provide city-owned land at practically nothing or at very low cost to incentivize development for affordable and mixed-income housing,” she said.

“They may not be the units that provide the highest economic return, but a real boost to the housing in the city.”


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