WHAT YOU NEED TO KNOW
A new rural rental program is showing signs of success as an incentive to build more affordable housing in Maine, especially in places that haven’t typically attracted major investors. A recent project was one of seven approved under MaineHousing’s new rural affordable rental housing program, which launched last year using $20 million in pandemic relief and other funds. Altogether, the current phase of the program will subsidize construction of about 115 new units in the state.
The rain is just beginning to clear over central Maine as Sam Hight approaches a grassy lot several blocks away from the Madison municipal office. He points to a white, two-story home with a hipped roof and large front porch just across the street, which will serve as a model for two apartment buildings he had planned for this location.
“The building is literally going to look like that, but just larger,” he said. “It’s going to look like it’s always been here.”
Hight sells cars for a living at his family’s dealership. He had never developed housing before, until Madison officials approached him about an empty, municipal-owned parcel. Two years later, Hight and his partners are about to break ground on the structures that will include 18 studio, one and two-bedroom apartments, with rents ranging from about $950 to $1,250 a month, utilities included.
Their project was one of seven approved under MaineHousing’s new rural affordable rental housing program, which launched last year using $20 million in pandemic relief and other funds. Altogether, the program will subsidize the construction of about 115 new units from Bath to Presque Isle.
Under the program, projects must range from five to 18 units, which must be leased to households earning no more than 80% of the area median income. Rents must be capped at a similar rate and the developments must meet affordable housing standards.
By some estimates, Maine will have to build tens of thousands of new affordable homes to meet the needs of its current population and additional workers required to fill open jobs across the state. And as state lawmakers debate solutions to the state’s housing crisis, the rural rental program is showing signs of promise, especially in places that haven’t typically attracted major investors.
The size of the projects — ideal for small towns across Maine — is attractive to some first-time developers. What makes the program particularly appealing is how easily the financing comes through.
“It’s the simplicity of the program,” said Mark Wiesendanger, development director for MaineHousing. “It doesn’t come with all the hoops that low income housing tax programs come with. You don’t have to be very experienced in working with federal or state programs to make this work.”
Traditional low-income housing programs require developers to seek competitive tax credits, which are then sold to an investor in exchange for a portion of the funds needed to pay for construction. Those tax credits typically go to experienced developers looking to build larger buildings in more urban areas.
Under the rural rental program, Wiesendanger said MaineHousing offered up to $185,000 in forgivable loans for the construction of each new unit.
“The biggest problem that people are having right now in creating housing in general is the cost of construction is so astronomically high,” Wiesendanger said. “So there needs to be another resource.”
The program’s simplicity has drawn the interest of first-time developers across Maine, like Sam Hight. But it’s also attracted others like Brandon Roberge, a custom home builder. His contracting company, Newman Homes, is typically handling construction of single or multifamily buildings for someone else. Now, he’s putting together the plans for an 18-unit project in Winslow that would be rented to households earning no more than 80% of the area median income.
Roberge said the idea of building homes for a population he doesn’t usually serve was a motivating factor for him. Plus, he’s receiving some help in navigating affordable housing development for the first time.
“We’re seeing new developers come forward and say ‘I have this experience in developing market rate housing, but I’m seeing the need in my community and all around me for affordable housing and I can put a project together too, but I need the help accessing the resources,’ ” said Liza Fleming-Ives, executive director of the Genesis Community Fund.
The Genesis Fund was hired by MaineHousing to educate prospective developers about the rural rental program through workshops and one-on-one consultation on potential project plans. So far it’s worked with nearly 60 developers in various stages of preparing plans for affordable housing projects.
“It really allows the people we’re funding to plan ahead,” said Wiesendanger. “When people plan ahead this process goes a lot smoother and costs less money. And the less a unit costs on a per-unit basis, it just means that we can create more units.”
New research from the University of Southern Maine suggests the affordable housing gap may be more than 40,000 new units, because the state will need 20,000 new people to move to Maine to fill open job positions.
Local residents initially worried that the modular homes in Hight’s project wouldn’t blend in with the others in Madison, he said. And some had the wrong impression that the apartments would become massive section 8 or public housing complexes.
But once the community realized that young families or older Mainers looking to downsize would be eligible to rent these apartments, Hight said the perception of the project changed.
“These are the people that you want to move into your area, that become invested in your area,” Hight said. “The younger people will move out of there and build. Their kids will go to the school district. It’s cliché, but this a community here. We either let it die, or add some Miracle-Gro to it and let it flourish.”
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