Maine Affordable Housing Bonds

Maine Affordable Housing Bonds

The Hyacinth Place complex, consisting of two rehabilitated historic buildings (middle and left) and a new building (right), provides a total of 37 affordable units. Image courtesy of Avesta Housing. In 2013, affordable housing advocates in Maine regained a vital funding source that had been denied them two years earlier. The Green Affordable Housing Bond (GAHB) program, the largest affordable housing investment in Maine’s history, was reinstated when Governor LePage lifted a moratorium that he had imposed in 2011 for budgetary reasons. With GAHB reactivated, housing advocates once again have access to up to $30 million annually. The Maine legislature had created GAHB in 2009 as a supplement to the only state fund for affordable housing development at the time, Housing Opportunities for Maine (HOME), which had been shrinking during the recession. As a result of lifting the moratorium, state funding for affordable housing has rebounded to pre-recession levels.

Affordable Housing Bond Overview

GAHB was adopted as part of An Act Regarding Maine's Energy Future, which was designed to promote energy efficiency and alternative energy programs in Maine. Part E of the legislation authorized a total of $200 million for GAHB with a maximum allotment of $30 million per year. GAHB funds can be used to construct and rehabilitate multifamily housing and to replace manufactured housing that does not meet code. The legislation outlines distribution goals of at least 30 percent for housing for seniors, 30 percent for individuals of any age, 10 percent for people with special needs, and 10 percent for the replacement of substandard manufactured housing. To ensure that the program can serve the state’s rural communities, the legislation’s guidelines for income targets and project size are flexible.

GAHB has financed about $36 million spread over 44 projects since the program began in 2009 and has leveraged about $100 million in additional affordable housing investment. Most GAHB funds have been used for private activity bonds supporting 4 percent low-income housing tax credit projects. In addition to responding to the demand for affordable housing, GAHB has helped stimulate the state’s economy and generate job growth, with up to 35 businesses — contractors, suppliers, fabricators, and service providers — working on each affordable development.

Hyacinth Place

Since the moratorium was lifted, several projects throughout Maine have been able to take advantage of the GAHB program and address community needs. Developer Avesta Housing used GAHB funding to develop Hyacinth Place in the city of Westbrook on the site of the former St. Hyacinth Parochial School and Convent. The project, which included rehabilitating the school and convent and constructing a new building, provides efficiency, 1-, 2-, and 3-bedroom apartments near transportation and other amenities. Of Hyacinth Place’s 37 units, 23 are affordable for households making 50 percent of the area median income (AMI) and 14 are affordable for households earning 60 percent AMI, with an average tenant household income of $20,508. Previously homeless adults occupy seven of the units, and adults with intellectual disabilities who had been displaced from their previous residences occupy seven other units.

A field on the Hyacinth Place property was improved as a public park. Image courtesy of Avesta Housing. The complex features energy-efficient windows, ENERGY STAR® appliances and lighting, building materials with low levels of volatile organic compounds, insulation that exceeds building code requirements, and low-flow plumbing fixtures. Avesta Housing also created a park on the property that includes a jogging path, community gardens, swings, and soccer goals and granted an easement allowing for public use of the facilities.

Financing

The total cost to develop Hyacinth Place was $9.6 million, funded in part by $455,000 from GAHB. Funding sources also included a $245,000 Maine State Housing Authority mortgage, a $20,000 Maine Department of Environmental Protection grant for environmental remediation, and $1.5 million in state historic tax credits. The remaining $7.4 million was funded through federal low-income housing tax credits and federal historic tax credits. According to Greg Payne, development officer with Avesta Housing, the GAHB funding provided a key interest-free funding source that filled a gap in the project budget. Payne observed that “Had we instead been forced to fill that gap with paying debt of some kind, the rents would have had to rise beyond affordable levels.”

Future of the Affordable Housing Bond

Hyacinth Place serves as an example of how GAHB can preserve quality affordable housing that exceeds state energy-efficiency requirements. Representatives of construction companies have noted another benefit of GAHB, acknowledging that without the bond, their businesses — and the workers they employ — would have suffered. Inspired by the program’s success, GAHB advocates are working to secure additional state resources to meet Maine’s affordable housing needs. MAHC and other housing advocates are currently promoting a proposed $65 million bond program to assist with housing the state’s aging population.