Help the Vulnerable; Be Fair to Taxpayers

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Dear Friend,

The Maine Affordable Housing Coalition reports that on any given night nearly 800 of our fellow Mainers sleep at emergency shelters across the state.  Thousands more greatly disadvantaged families wait for safe, warm affordable apartments to call home.  There is a serious shortage of affordable housing in Maine.

During the past several years, the Maine State Housing Authority (MSHA) has funneled federal, state, and local tax dollars to finance the construction of low-income apartments costing up to $292,000 each.  The Elm Terrace units in Portland were recently budgeted to cost $314,000 each. The project was stalled in September because of increased scrutiny by me and four new MSHA board members appointed by Governor LePage.  In December, the executive director approved the 38 Elm Terrace apartments costing taxpayers $265,000 each.

The public debate about affordable housing in Maine is healthy.  As it proceeds, I believe that all of us can agree on one fundamental point: Building a small number of expensive units is unfair to those families desperately in need of a safe place to live, and unfair to the taxpayers who foot the bill.

MSHA plays a central role in addressing the shortage of low-income housing in Maine.  It is a quasi-independent “instrumentality” of state government with 140 employees, a $14 million operating budget, and $1.6 billion of outstanding bonds it has sold to investors to fund some of its programs.  One of its missions is to move as many of our most vulnerable families as possible off waiting lists and out of homeless shelters, and into safe affordable apartments.

State government likely faces shrinking taxpayer dollars to help achieve this important goal.  Even so, I’ve been surprised by the efforts to defend the status quo.  For example, some justify the unacceptably high cost to taxpayers of the once proposed $314,000 Elm Terrace apartments by citing the expensive location in downtown Portland.  The new MSHA board believes that building a small number of expensive units anywhere is unfair to our most vulnerable families and to our taxpayers.

Others downplay the high cost to build affordable housing by arguing that new construction today is more expensive than the market values of comparable existing structures.  Ok, then why not explore the possibility of modifying the less costly current housing stock to provide safe apartments for those families-in-need, instead of building more expensive units from scratch?

Some criticize the comparison of the nearly $300,000 cost of a 1,100-square-foot “affordable” apartment to the $159,000 median price of a 2,000-square-foot single-family home in Maine. Why shouldn’t Maine taxpayers know that they are paying for expensive low-income apartments which greatly exceed the falling values of their own homes?  It’s their money.

In a SunJournal OpEd on December 9, "Time to end the witch hunt," State Senator Margaret Craven (D-Lewiston) states that “costs have been controlled so successfully that the MaineHousing-funded portion of multifamily projects is the same as it was prior to 2006.”  Maine taxpayers also pay federal and local taxes, all of which are used to build the MSHA low-income apartments.  All of it is our hard-earned money.  It doesn’t grow on trees.

On December 11, a Portland Sunday Telegram editorial, "Our View: Treasurer taking cheap shots at housing agency," stated that “not a single dollar of taxpayer money from the state's General Fund will be spent on Elm Terrace.  Instead, federal tax credits were awarded to a private developer, who used them to leverage private investment in a project that would not otherwise be built.”  MSHA uses taxpayer dollars in the form of both cash and state/federal tax credits paid to developers to build low-income housing. Whether cash, or a reduction of income taxes owed because of the tax credits, all of this money comes from those who pay federal, state, and local taxes.

On December 15, State Senator Joseph Brannigan (D-Portland) and Representative Stephen Lovejoy (D-Portland) penned an OpEd in the Portland Press Herald about the affordable housing issue, "Setting the record straight on costs of Maine affordable housing."  They support the restoration of historic buildings.  So do I.  When growing up in Waterville, I remember Main Street lined with old stately brick buildings.  Sadly, the 1960s Urban Renewal brought the wrecking ball to many of those priceless pieces of our history and culture.  But, if it costs too much to construct low-income apartments in some historic buildings, let private developers build luxury condominiums and prime office space there.  Also, building more and less costly apartments will provide more badly needed construction jobs than building a smaller number of expensive units.

Some support urban development of low-income housing for convenience to employment opportunities, public transportation, and public services.  Two months ago I asked the MSHA staff to provide the board with the data showing where Maine families-in-need are located. Maybe there are opportunities to build some less costly apartments along bus lines just outside urban centers that are convenient to malls and other services.  The board has yet to receive this information. 

In a recent email about the topic, State Senator Elizabeth Schneider (D-District 30, Penobscot County) suggests that concerns about wasteful spending at MSHA be discussed with the Legislature.  She has a point.  The MSHA executive director is not accountable to any person or governing body for how hard-earned taxpayer dollars are spent.  The individual is appointed by the governor for a four-year term.  During that period, the executive director does not report to MSHA board.  Board members can ask questions and push for transparency, but cannot provide taxpayers with the same oversight extended at every other quasi-independent Authority.

MSHA has an important role in addressing the shortage of truly affordable housing in Maine. Stretching every taxpayer dollar will enable state government to help more of our most vulnerable fellow Mainers move off waiting lists, out of homeless shelters, and into safe apartments -- while being fair to the taxpayers who foot the bills.

To that end, I suggest that MSHA (1) create financial incentives for developers to lower the cost per apartment; (2) continue the board-initiated elimination of expensive and unnecessary building standards, like solar hot water heaters; (3) explore non-traditional strategies to provide the most cost efficient low-income housing; and (4) require the executive director to report to the board, like at every other quasi-independent Authority in Maine.

As we start the New Year, let’s all embrace Maine’s unique sense of community to address our affordable housing problem.  Let’s be creative and frugal, and use common sense and transparency to help the most vulnerable among us, while being accountable to the taxpayers who pay the bills.

 

Best wishes,

Bruce Poliquin
Maine State Treasurer

 

For related information and media, visit www.maine.gov/treasurer/outreach.