PORTLAND, Maine — More than 700 housing units are in development in downtown Portland as Maine is on pace to face a shortage of roughly 84,000 units by the year 2030.
The State of Maine Housing Production Needs Study found Maine is short by about 38,500 units because of historic underproduction. With the expected future need of up to 45,800 units by the year 2030, the state is against the ropes in its struggle to create more housing.
The units are all in the city's Congress Street Historic District. Some are new buildings. For example, the state's tallest building at 201 Federal St. will have 263 units.
However, city staff are also in the middle of rewriting the land-use code for the first time in 50 years. That process allowed old office buildings and parking lots to become places for new housing, including the Time and Temperature Building and the New England Telephone Building on Forest Avenue.
"We are trying to find ways to make sure our regulations don't hinder development," Kevin Kraft, Portland's deputy director of planning and urban development, said. "Our zoning has been intentionally created to be flexible and try to encourage housing creation downtown."
Since 2021, city staff have approved six projects, totaling 708 units.
"It is a huge need in a variety of areas," Kraft said. "It's something that we planned for long-term, and we're now seeing the fruition of that with the tallest building in Maine being constructed and others."
The city of Portland has a "workforce housing" ordinance that requires developers to keep rents affordable for the workforce.
In 2020, An Act to Implement a Green New Deal in Portland required all new housing developments of 10 units or more to meet a 25 percent workforce housing requirement. The cost of those units varies based on the number of bedrooms in the unit and the number of people in the household, using income requirements set by the U.S. Department of Housing and Urban Development.
The state's housing-needs study found that rent costs in Greater Portland increased by 12 percent in 2021, while renter incomes increased by about 8 percent.
"Wages have gone down while cost of living has increased," 23-year-old Andrew Lockwood, who is moving into one of the new buildings, said.
Maine's Affordable Housing Coalition said it believes any new units will help tap away at the state's deficit. Still, the agency is also calling on lawmakers to create more incentives for building affordable housing.
"When there's a shortage of housing, the cost of that supply goes up. If we're 84,000 units short, the value of the existing units is tremendous," BJ McCollister, policy director for the MAHC, said. "People feel it and live it every day. We can't afford to wait on action."
The city distinguishes between "affordable" and "workforce" housing units.
Affordable means the cost of housing expenses (rent or mortgage, plus insurance, HOA fees, taxes, and utilities) does not exceed 30 percent of a household’s gross income. Workforce is broken down into rental units or homeownership units.
Portland's Land Use Code defines "workforce housing unit for rent" as affordable to a household earning 80 percent or less of the Area Median Income (AMI), which the U.S. Department of Housing and Urban Development sets. For homeownership units, the purchase price must be affordable to a household earning 80 percent or less of AMI.
A workforce rental unit is housing that is deemed affordable to a household earning up to 100 percent of HUD Area Median Income (AMI). Annual rent increases for that unit are limited by deed restriction or lease agreements. A workforce homeownership unit is defined as the purchase price that is affordable to a household earning up to 120 percent of Area Median Income (AMI). The resale price is limited by deed restriction for all future sales of the home.
That cost varies based on the size of the unit and the number of people in the household but is supposed to be no more than 80 percent of the area median income (AMI), which is determined by the U.S. Department of Housing and Urban Development. Developers can choose to avoid this requirement by paying a "Fee in Lieu" to the city's Housing Trust Fund.
"We have a demand at every end of the spectrum here in the city, whether that be low-income or multimillion-dollar houses. We have a demand at all levels, so we welcome any supply at all levels," Kraft said. "Anything that we can add to our housing stock is ultimately going to help with our affordability issues both locally and regionally."
Under that city of Portland rule, if developers choose not to keep 25 percent of units affordable, they have to pay a fee to the city's affordable housing trust fund. That fund currently has more than $8,994,682.26, which includes $5,110,000 in ARPA funding.